Dow Inc. (NYSE:DOW) shares are trading lower on Thursday after the company said during the first quarter conference call that there were supply disruptions due to the Middle East conflict.
• Dow stock is among today’s weakest performers. Why are DOW shares down?
Earnings Snapshot
Revenue fell 6% year-over-year to $9.79 billion, slightly missing the $9.646 billion estimate.
The chemical giant reported an adjusted loss of 14 cents per share, beating Wall Street’s projected 29-cent loss, according to consensus estimates.
Overall, volume fell 2% Y/Y, on declines in Industrial Intermediates & Infrastructure due to the Middle East conflict. This was due to lower merchant olefins sales in Europe, the Middle East, Africa, and India (EMEAI), following the idling of a regional cracker earlier in the year. Local price declined Y/Y in the quarter.
Jim Fitterling, Dow chair and CEO, said, “In the first quarter, our results reflect the growing impact of Dow’s self-help actions. Additionally, the margin backdrop began to positively inflect in March following global supply constraints, as impacts from the conflict in the Middle East quickly became widespread.”
Profitability and Cash Flow
Dow posted a GAAP net loss of $445 million for the quarter, compared to a loss of $290 million in the same quarter a year ago.
Additionally, operating EBIT stood at $154 million, down from $230 million in the same period a year ago.
Operating cash flow from continuing operations was $1.12 billion, an increase of $1.0 billion Y/Y, aided by working capital improvement and receipt of payment from NOVA Chemicals.
The company returned $252 million to shareholders through dividends in the quarter.
Fitterling added, “We are already seeing rapid positive momentum from our announced pricing actions in every business and every region, as well as constructive impacts to our operating rates.”
Weak Sales Across Segment
Packaging & Specialty Plastics revenue fell 7% Y/Y to $4.9 billion, as local prices fell 9% Y/Y, on weaker polyethylene prices.
Also, Industrial Intermediates & Infrastructure revenue declined 8% Y/Y to $2.6 billion, due to a decline across both businesses.
Performance Materials & Coatings revenue remained flat Y/Y at $2.1 billion. Local price dipped 4% Y/Y owing to a decline in Coatings & Performance Monomers.
Outlook & Conference Call Takeaways
Dow sees second-quarter 2026 net revenue of $12 billion versus the consensus of $11.07 billion and EBITDA of $2 billion, led by improved pricing and higher asset utilization.
Dow continues to focus on its "Transform to Outperform" program and internal efficiency initiatives and delivered $193 million in cost savings in the first quarter. The company targets about $2 billion in near-term EBITDA uplift from the initiatives.
Also, Dow identified over $400 million (of the committed $1.3 billion) in productivity improvements from site transformation programs across ~25% of large sites.
The company also announced leadership changes, with Karen S. Carter set to assume the CEO role in July.
Dow expects supply chain disruptions linked to the Middle East conflict to continue through 2026.
The company’s planned shutdowns of European assets are expected to start delivering benefits in 2026, including the reduction of roughly 25% of siloxane production capacity in the region.
Management reiterated its commitment to delivering a 5%+ earnings growth path, supported by cycle resilience and ongoing pricing recovery through 2026.
DOW Price Action: Dow shares were down 3.80% at $37.34 at the time of publication on Thursday, according to Benzinga Pro data.
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