Dow Inc. (NYSE:DOW) shares are trading higher on Thursday after the company reported second-quarter earnings results.
Adjusted EPS of $1.44, surpassing the $1.28 analyst estimate. Revenue rose 20% year over year (Y/Y) to $12.09 billion, ahead of the $12.03 billion consensus forecast.
The increase was primarily due to a 20% rise in local pricing, led by higher polyethylene prices, while volumes declined 1% because of planned maintenance in Packaging & Specialty Plastics.
Management noted that supportive market conditions and stronger-than-expected self-help initiatives helped improve earnings performance.
Profitability and Cost Savings
Operating EBITDA rose significantly to $2.3 billion from $703 million a year ago due to earnings growth, margin expansion, and cash generation.
Operating cash flow from continuing operations totaled $1.3 billion, reflecting improved earnings despite higher working capital needs. The company also returned $253 million to shareholders through dividends during the quarter.
The company achieved more than $300 million in quarterly benefits from self-help initiatives. The company completed its $1 billion 2025 cost-savings program.
Dow continues to prioritize growth in higher-value markets, portfolio optimization, and disciplined capital allocation, with no major debt maturities until 2029. During the quarter, it shut a high-cost siloxanes unit in the U.K. and restarted its lowest-cost European cracker in Terneuzen.
Strong Sales Across Segment
- Packaging & Specialty Plastics revenue rose 27% Y/Y to $6.4 billion, driven by a 30% increase in pricing from higher polyethylene prices across regions. Volume declined 4% Y/Y due to planned maintenance activity.
- Industrial Intermediates & Infrastructure sales increased 14% Y/Y to $3.2 billion, supported by 15% higher pricing across businesses and regions. Volumes declined 2% Y/Y, impacted by lower polyurethane demand and Middle East-related disruptions.
- Performance Materials & Coatings revenue grew 11% Y/Y to $2.4 billion, with higher pricing and a 6% Y/Y volume increase driven by strong demand across businesses, particularly downstream silicones.
Self-Help and Transformation Initiatives
Dow raised its 2026 self-help benefits target to more than $1.3 billion, up $200 million from its prior outlook.
The company expects its Transform to Outperform program to deliver about $700 million in benefits this year, while the company remains on track for its $2 billion cumulative savings goal by 2027.
Dow also completed around 55% of planned workforce reductions, expected to generate more than $200 million in EBITDA benefits in the second half of 2026.
Site transformation initiatives took place at six major manufacturing facilities with about $50 million in projected EBITDA improvement during the second half.
Outlook & Conference Call Takeaways
For the third quarter, Dow expects EBITDA of about $1 billion, reflecting normalized seasonal demand and lower polyethylene pricing after June settlements.
The company anticipates around $130 million in sequential benefits from self-help initiatives, including Transform to Outperform and early gains from the Barry shutdown, which are expected to offset higher maintenance costs and the absence of the Q2 Taiwan land sale benefit.
Management also highlighted continued investment in specialty silicones, long-term customer partnerships, and opportunities driven by demand from data centers and consumer electronics despite ongoing geopolitical and macroeconomic uncertainty.
DOW Stock Price Activity: Dow shares were up 2.50% at $32.03 at the time of publication Thursday.
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