Silicones dip contributes to Dow’s first-quarter woes

Midland, Michigan – Dow Chemical has posted a slump in first-quarter operating profit (EBIT) – to $35 million from $595 million in the prior-year period – within its Performance Materials & Coatings segment.

Net sales at the segment, which includes Dow’s silicones business, fell 25% year-on-year in the quarter to $2.3 billion, the US chemicals group reported 25 April.

“Local price decreased 12% year-on-year, primarily driven by lower local prices for siloxanes due to competitive pricing pressure from supply additions in China,” it explained.

Earnings were hit particularly hard by “local price declines in siloxanes and lower demand for silicones and coatings applications.”

On a brighter note, Dow said that, compared to the previous quarter, net sales rose 11% on improved supply and seasonally higher volumes in building & construction end-markets.

Sequentially, operating EBIT increased $165 million, driven by improved supply availability, seasonally higher volumes, and reduced value-chain destocking pressure.

Group-wide, Dow reported a 71% year-on-year decline in operating EBIT to $708 million on sales 22% lower at $11.9 billion – as all operating segments were impacted by global economic slowdown.

“Looking to the remainder of 2023, chairman and CEO Jim Fitterling highlighted Dow’s actions “to navigate the impact of higher inflation on consumer demand and soft global economic activity.”

The US group, he continued, expects “the benefit of our operational and cost actions to continue to build as we progress through 2023.

“We will remain flexible, responding quickly as conditions evolve and expect oil and gas spreads to further support our strategic cost-advantaged positions.”