DOW Lags Q2 Earnings and Sales Estimates on Lower Prices

Dow Inc. DOW recorded a loss (on a reported basis) of $835 million or $1.18 per share for second-quarter 2025. This compares to a profit of $439 million or 62 cents per share a year ago. The bottom line was hurt by lower prices and restructuring charges.

On an adjusted basis (barring one-time items), DOW logged a loss of 42 cents for the reported quarter against earnings of 68 cents a year ago. The figure was wider than the Zacks Consensus Estimate of a loss of 11 cents.

Dow recorded net sales of $10,104 million for the quarter, down 7% year over year. It missed the Zacks Consensus Estimate of $10,277 million. The top line was adversely impacted by lower sales across all segments.

Volume declined 1% year over year, with growth in the United States and Canada outweighed by reductions in Europe, the Middle East, Africa and India (EMEAI). On a sequential basis, volume fell 2%, as seasonal increases in Performance Materials & Coatings, particularly in downstream silicones, were offset by declines in Packaging & Specialty Plastics.

Dow’s Segment Highlights

Packaging & Specialty Plastics: The division’s sales fell 8.9% year over year to $5,025 million in the reported quarter. The figure missed our estimate of $5,197.9 million. Volume grew 1% year over year, led by greater energy sales and polyethylene volumes, which were slightly offset by decreased volumes in functional polymers. Local prices fell 10% year over year, primarily due to lower downstream polymer pricing.

Industrial Intermediates & Infrastructure: Sales for the unit were down 5.6% year over year to $2,786 million. The figure lagged our estimate of $2,884.6 million. Local prices fell 5% year over year, indicating reductions in both businesses. Volume fell 2% due to lower volumes in Polyurethanes and Construction Chemicals, which were partly offset by higher volumes in Industrial Solutions.

Performance Materials & Coatings: Revenues from the division fell 5% year over year to $2,129 million. The figure missed our estimate of $2,142.1 million. Volume fell 3% year over year, as gains in downstream silicones were more than offset by decreased volumes in coatings applications and upstream siloxanes. Local prices fell 3% year over year due to losses in both businesses.

DOW’s Financials

Cash flow from operating activities for continuing operations was negative $470 million, representing a decline of $1.3 billion from the same period last year and a $574 million drop from the previous quarter. This decrease was primarily due to lower earnings resulting from margin compression. Shareholder returns for the quarter amounted to $496 million in dividends.

Dow’s Outlook

Dow noted that its strategic initiatives help the company navigate the evolving challenges within the industry. However, the emergence of new market entrants exporting at anti-competitive prices is creating signs of oversupply, highlighting the need for broader industry collaboration and further regulatory intervention to re-establish fair market conditions. 

The company’s near-term growth projects—all set to be fully operational in the third quarter—along with its long-term strategic investments, are expected to enhance Dow’s presence in high-value applications and attractive markets that are less affected by such anti-competitive pressures. These efforts aim to support more stable earnings and deliver strong returns to shareholders. In addition, Dow remains committed to structurally reducing its cost base, optimizing its global asset network and upholding operational excellence to further reinforce its competitive edge.

DOW Stock’s Price Performance

DOW’s shares are down 43% in a year compared with the industry’s 15.9% decline.

DOW’s Zacks Rank & Key Picks

DOW currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks worth a look in the basic materials space include Royal Gold, Inc. RGLD, Kinross Gold Corporation KGC and Agnico Eagle Mines AEM.

Royal Gold is slated to report second-quarter results on Aug 6. The Zacks Consensus Estimate for earnings is pegged at $1.70. RGLD beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 9%. RGLD carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross is scheduled to report second-quarter results on July 30. The Zacks Consensus Estimate for KGC’s second-quarter earnings is pegged at 27 cents. KGC beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 16.1%. KGC currently carries a Zacks Rank #1.

Agnico Eagle is slated to report second-quarter results on July 30. The consensus estimate for AEM’s earnings is pegged at $1.66. AEM, carrying a Zacks Rank #1, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 12.3%. 

 

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This article originally published on Zacks Investment Research (zacks.com).

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