Dow Reports Third Quarter Results

  • Earnings Per Share of $0.63; Operating Earnings Per Share of $0.91, up 11%
  • Volume Grows 10%, or 6% Excluding Divestitures and Acquisitions, with Gains in all Geographic Areas
  • EBITDA of $2.1 Billion; Operating EBITDA Rises $118 Million to $2.5 Billion
  • EBITDA Margin of 17%; Operating EBITDA Margin Expands to 20%
  • More than $900 Million Returned to Shareholders through Paid Dividends and Share Repurchases

Third Quarter 2016 Highlights

  • Dow reported earnings per share of $0.63, or operating earnings per share of $0.91(1). This compares with earnings per share of $1.09 in the year-ago period, or operating earnings per share of $0.82. Certain Items in the quarter primarily reflected a $0.13 per share charge related to the Dow Corning ownership restructure and a $0.11 per share charge for transactions and productivity actions. Results in the year-ago period reflect a $0.32 per share gain from the Agrofresh divestiture.
  • Sales were $12.5 billion, up 4 percent versus the year-ago period, with gains in all segments except Performance Materials & Chemicals, which declined primarily as a result of the Dow Chlorine Products divestiture.
  • Volume grew 6 percent excluding the impact of divestitures and acquisitions, reflecting broad-based, consumer-driven demand with gains in all geographic areas – Europe, Middle East, Africa and India (EMEAI) (up 9 percent); North America (up 6 percent); Asia Pacific (up 4 percent); and Latin America (up 1 percent). Regional highlights included Europe (up 9 percent), the United States (up 6 percent) and Greater China (up 6 percent).
  • Operating EBITDA(2) rose 5 percent versus the year-ago period to $2.5 billion, with gains in Consumer Solutions, Agricultural Sciences and Infrastructure Solutions. The increases were driven by continued growth in consumer-driven demand, seed sales increases in Latin America, productivity measures and the contribution of Dow Corning’s silicones business. Performance Materials & Chemicals declined mainly due to margin compression.
  • Operating EBITDA margin(3) expanded 25 basis points compared with the year-ago period to 20 percent, primarily reflecting continued actions that further shifted the business mix toward stable and growing consumer-driven end-markets, coupled with ongoing productivity and cost cutting savings.
  • Productivity and cost cutting savings totaled $76 million in the quarter, bringing the year-to-date contribution to $254 million, on track to exceed the 2016 target of $300 million.
  • Dow returned $928 million to shareholders through paid dividends ($512 million) and share repurchases ($416 million).
  • The Company’s strategic investments for growth also achieved several milestones. Dow made significant progress on the integration of Dow Corning’s silicones business, reaching a cost synergy run-rate of more than $200 million – over half way toward the two-year target. The Sadara joint venture in Saudi Arabia also successfully started up its multi-feed cracker and a third polyethylene train, which added to the two polyethylene trains already in operation.


Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:

“We have now achieved four full years – 16 consecutive quarters – of year-over-year operating earnings growth and margin expansion, during which time Dow has also delivered three consecutive years of volume growth. We accomplished all of this in the face of a persistently slow-growth global economic environment.

“These results reflect our resolute focus and action to continue to drive greater resilience and predictability in our business model, our targeted market participation, a strong innovation agenda, a commitment to continuous productivity and self-help actions, and strategic investments that will deliver the next level of earnings and cash flow.

“Our increasingly consumer markets-oriented portfolio was once again on display, with strong results reported in the businesses that serve the packaging, automotive, electronics, construction and agriculture markets. In our newest business addition – Dow Corning’s silicones business – we delivered double-digit earnings growth, while disciplined execution yielded synergies ahead of plan. And finally, we were pleased with the ongoing advancement of our strategic growth investments, most notably the successful startup of the largest unit at our Sadara joint venture and steady progress on our Texas ethylene plant, which is now more than 85 percent complete.”


Three Months Ended

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Operating Earnings per Share



Agricultural Sciences

Agricultural Sciences reported third quarter sales of $1.2 billion, up 6 percent versus the year-ago period. Price and volume each rose 3 percent.

Strong demand conditions in Latin America drove double-digit sales gains in Seeds, with price and volume both rising by double-digits. Corn seeds sales nearly tripled primarily on double-digit volume and price growth in Latin America as the business increased share and met early season demand. Soybean sales nearly tripled as well, reflecting higher price and volume due to early orders for the Latin America planting season.

Crop Protection sales declined modestly due to lower volumes and currency headwinds as gains in Latin America were more than offset by declines in all other geographic areas. Insecticides improved on increased price, while herbicides and fungicides each declined due to lower price and volume, respectively.

EBITDA for the segment decreased to $101 million from $582 million in the year-ago period, which reflected the gain on the AgroFresh divestiture. Operating EBITDA was $102 million, up from a loss of $39 million in the year-ago period. This significant increase was a result of share gains, price improvement, continued self-help actions, the introduction of new technologies, as well as early orders for the Latin America growing season, which more than offset challenging industry fundamentals and low crop commodity prices.

Equity earnings for the segment were $8 million, compared to $2 million in the year-ago period.

Consumer Solutions

Consumer Solutions delivered third quarter sales of $1.6 billion, up from $1.1 billion in the year-ago period, reflecting the full contribution of Consumer Solutions – Silicones.

Volume increased 45 percent, reflecting the addition of Consumer Solutions – Silicones which had robust demand in Asia Pacific, led by demand for automotive applications. Excluding acquisitions, the segment volume grew 3 percent, with gains across all businesses and double-digit growth in Greater China. Dow Automotive Systems continued its trend of growing at a rate faster than the global automotive end-market, driven by a double-digit gain in Asia Pacific and continued adoption of structural adhesives by original equipment manufacturers. Consumer Care expanded its market share on gains in home care market sectors and innovative new products targeting personal hygiene solutions, which more than offset the volume impact of the business’s decision to reduce its participation in lower margin industrial market segments. Dow Electronic Materials grew its volume above leading industry indicators on new business wins and share gains for semiconductor, interconnect and display technologies in smartphones.

EBITDA for the segment was a third quarter record of $375 million. Operating EBITDA rose to an all-time quarterly record of $492 million, up significantly from $289 million in the year-ago period. The increase in operating EBITDA reflects the contribution from Consumer Solutions – Silicones, new commercial wins, and market share gains.

Equity earnings for the segment were $9 million, compared to $14 million in the year-ago period.

Infrastructure Solutions

Infrastructure Solutions reported third quarter sales of $2.5 billion, up from $1.9 billion in the year-ago period, reflecting the addition of Infrastructure Solutions – Silicones, which more than offset lower pricing in all businesses.

Volume increased 38 percent, reflecting the addition of Infrastructure Solutions – Silicones which saw strong demand for building and construction applications. Excluding acquisitions, the segment volume declined 3 percent. Dow Building & Construction delivered volume growth on demand for acrylic-based construction chemicals and continued adoption of BLUEDGE™ polymeric flame retardant technology. Energy & Water Solutions reported volume declines due to soft demand for reverse osmosis membranes used in industrial water applications and continued weakness in the energy sector. Dow Coating Materials achieved a volume increase, led by strong growth in Asia Pacific and gains in both the architectural and industrial market sectors. Performance Monomers reported a volume decline, as double-digit demand growth in vinyl acetate monomer was more than offset by the business’s ongoing strategy to reduce its merchant acrylic monomer exposure.

EBITDA for the segment was $285 million versus $325 million in the year-ago period. Operating EBITDA was $379 million, up from $325 million in the year-ago period. The contribution of Infrastructure Solutions – Silicones more than offset soft demand in Energy & Water Solutions.

Equity earnings for the segment were $25 million, flat versus the year-ago period.

Performance Materials and Chemicals

Performance Materials & Chemicals reported third quarter sales of $2.4 billion, down from $3.1 billion in the year-ago period, reflecting the impact of the split-off of Dow Chlorine Products and pricing declines in all businesses.

Volume was down 16 percent, reflecting the impact of the Dow Chlorine Products transaction. Excluding divestitures, volume increased 4 percent as double-digit gains in EMEAI and Asia Pacific more than offset a decline in the Americas. Polyurethanes volume growth was led by a double-digit increase in demand for downstream, higher-margin systems applications, particularly for use in thermal efficiency solutions. Industrial Solutions volume rose across all geographies, except Latin America which remained flat, led by growth in oxygenated solvents and demand for heat transfer fluids into solar applications. Chlor-Alkali and Vinyl volume was flat as planned turnarounds in several facilities offset market demand improvement in EMEAI for vinyl chloride monomer and caustic soda.

EBITDA was $322 million, down from $540 million in the same period last year, primarily driven by pricing pressures that resulted in margin compression, reduced earnings due to prior-period divestitures and the impact of lower equity earnings.

Equity losses for the segment were $6 million, down from equity earnings of $54 million in the same quarter last year. More than half of the year-over-year decline was due to higher Sadara start-up costs, while the remainder was driven by reduced earnings from the Kuwait joint ventures due to lower monoethylene glycol prices and the change in ownership of the MEGlobal joint venture.

Performance Plastics

Performance Plastics reported third quarter sales of $4.70 billion, up from $4.67 billion in the year-ago period, as volume gains in all businesses more than offset price declines in all businesses.

The segment reported volume growth of 10 percent. Excluding the impact of divestitures, volume grew 11 percent, with gains across all businesses. Dow Packaging and Specialty Plastics achieved a third quarter record sales volume on continued manufacturing excellence that met robust demand conditions, highlighted by double-digit growth in developed geographies. Dow Elastomers also achieved a third quarter record sales volume, led by strong demand for automotive plastic components due to increasing global consumer preference for larger vehicles that incorporate more Dow content. Dow Electrical and Telecommunications grew volume, led by double-digit growth in the Americas on power cable installations and continued demand for fiber optics. The Hydrocarbons and Energy businesses reported volume gains.

EBITDA for the segment was $1.25 billion, down from $1.35 billion in the year-ago period. Robust consumer-driven demand conditions in packaging, transportation and infrastructure market sectors was more than offset by lower margins in Europe and higher costs due to planned turnaround activity.

Equity earnings for the segment were $39 million, a decline from $50 million in the same quarter last year, primarily due to Sadara start-up costs, which were partially offset by gains at the SCG-Dow group.


Commenting on the Company’s outlook, Liveris said:

“We see steady growth in North America and Europe continuing, with Dow’s new innovations and products outpacing the market. The strength of the consumer and emphasis on growth in Southeast Asia and second-tier cities in China continue to drive our results in Asia Pacific. Latin America is showing strength in the Andean economies and Mexico, and Brazil is beginning to recover from a low base.

“Consumer-led demand remains a notable bright spot, and we expect continued robust growth fundamentals in our core markets of packaging, automotive and construction, adjusting for traditional end-of-year seasonality. Our competitive advantages in these attractive, high-growth markets continue to be further enhanced by the growth synergies inherent in our Dow Corning integration.

“Going forward, our team remains relentlessly focused on our priorities – delivering the operating and financial plan through disciplined execution on margin and volume management, self-help and cost cutting; accelerating earnings growth and value creation through the continued integration of Dow Corning; and successfully closing the DowDuPont transaction. Our four-year streak of year-over-year operating earnings growth and margin expansion fuels our excitement about the future and confidence in our path toward the intended creation of three focused, industry-leading companies that will further maximize shareholder value.”


Dow will host a live webcast of its third quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 9:00 a.m. ET on

(1) Operating earnings per share is defined as earnings per share excluding the impact of “Certain Items.” See Supplemental Information at the end of the release for a description of these items, as well as a reconciliation of operating earnings per share to “Earnings per common share – diluted.”

(2) EBITDA is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" is provided following the Operating Segments table. Operating EBITDA is defined as EBITDA excluding the impact of “Certain Items.”

(3) EBITDA margin is defined as EBITDA as a percentage of reported net sales. Operating EBITDA margin is defined as operating EBITDA as a percentage of reported net sales.

(4) “Adjusted Sales” is defined as “Net Sales” adjusted for divestitures and acquisitions.


About Dow

Dow (NYSE: DOW) combines the power of science and technology to passionately innovate what is essential to human progress. The Company is driving innovations that extract value from material, polymer, chemical and biological science to help address many of the world’s most challenging problems such as the need for clean water, clean energy generation and conservation, and increasing agricultural productivity. Dow’s integrated, market-driven, industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high-growth sectors such as packaging, electronics, water, coatings and agriculture. In 2015, Dow had annual sales of nearly $49 billion and employed approximately 49,000 people worldwide. The Company’s more than 6,000 product families are manufactured at 179 sites in 35 countries across the globe. On June 1, 2016, Dow became the 100 percent owner of Dow Corning Corporation’s silicones business, a global company with sales of greater than $4.5 billion in 2015, 25 manufacturing sites in 9 countries and approximately 10,000 employees worldwide. References to “Dow” or the “Company” mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at

Use of non-GAAP measures: Dow’s management believes that measures of income excluding certain items (“non-GAAP” measures) provide relevant and meaningful information to investors about the ongoing operating results of the Company. Such measurements are not recognized in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP measures are provided in the Supplemental Information tables.

Note: The forward looking statements contained in this document involve risks and uncertainties that may affect Dow’s operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission (“SEC”). These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that Dow’s expectations will be realized. The Company assumes no obligation to provide revisions to any forward looking statements should circumstances change, except as otherwise required by securities and other applicable laws.