Dow reports continued strong demand in first-quarter results

Dow Inc. is off to a good start in 2022, posting strong financial results for the first quarter of the year.

Overall sales at Dow, a major materials supplier based in Midland, Mich., were $15.3 billion for the quarter, up almost 29 percent vs. the same period in 2021. The firm's profit for the quarter was up 54 percent to $1.56 billion.

"We've really seen good demand strength, even in our functional polymers outside of packaging," Dow Chief Financial Officer Howard Ungerleider said in an April 21 phone interview with Plastics News. "Inflation is affecting costs across the board, but it doesn't seem to be affecting demand. Consumers had built up savings these last couple of years."

Dow, entering its 125th year in business, delivered top and bottom-line growth sequentially and year-over-year, Chairman and CEO Jim Fitterling said in a news release. That demonstrates the advantage of its "differentiated portfolio, feedstock flexibility and continued focus on disciplined execution."

"Despite higher energy costs, we captured healthy end-market demand and achieved solid volume growth, price gains and margin expansion," he added.

First-quarter sales in Dow's Packaging & Specialty Plastics unit — including polyethylene resin — were up almost 25 percent to $7.6 billion. The unit's pretax operating earnings were flat at $1.2 billion.

Officials said the P&SP unit saw 4 percent volume growth in the quarter, due in part to industrial and consumer packaging and flexible food and beverage packaging.

Like many petrochemical firms, Dow is seeing supply chain constraints in shipping and other areas and higher feedstock costs based on oil and natural gas.

"Polyethylene demand is still good, but feedstocks [prices] are increasing, which drives higher [PE] prices," Ungerleider said.

He added that strong seasonal demand and upcoming maintenance turnarounds could tighten short-term PE supplies. Some North American PE makers have had difficulty exporting material because of shipping challenges, but Ungerleider said he didn't think those situations would lead PE makers to reduce production rates.

Dow's Industrial Intermediates unit, including polyurethanes, saw first-quarter sales grow 25 percent to $4.5 billion, as operating profit more than doubled to $661 million. Strong demand for PU and construction chemicals was restrained somewhat by supply availability, officials said.

The Ukraine crisis has had "minimal impact" on Dow, according to Ungerleider, since the firm generates "1 percent or less" of its sales from Russia. "We stand with the people of Ukraine," he said. "We're pro-democracy and pro-peace."

Dow previously said that it was reducing its operations in Russia and suspending purchases of feedstocks and energy from that country. The firm also has reduced its product offerings in Russia to essential goods such as food packaging, hygiene, cleaning and sanitation products and household goods.

Dow also has provided evacuation support, financial assistance, shelter and other support to employees and their families in Ukraine and Russia and has donated $275,000 to help meet humanitarian needs.

Along with first-quarter results, Dow published its annual benchmarking that showed the firm meeting financial targets with top-quartile EBITDA margins, return on capital, free cash flow yield and debt reduction. Dow also recently announced a new $3 billion share repurchase program.

Looking ahead, Fitterling said that Dow "sees strong demand across our end-markets."

"While the geopolitical environment remains dynamic, our global scale, cost-advantaged positions, and industry-leading feedstock and derivative flexibility continue to enable resilient financial and operating performance," he added.

Dow employs almost 36,000 worldwide. The firm ranks as one of the world's largest producers of PE and other specialty plastics and chemicals.