MOSCOW (MRC) -- Dow reported a loss of USD1 million in the third quarter as results rebounded significantly from second-quarter pandemic lows. The company reported earnings of USD347 million the same year-ago quarter and a loss of USD217 million in the second quarter, said Chemweek.
Net sales were USD9.7 billion, down 9.8% YOY and up 16% sequentially from the second quarter. Reported adjusted earnings were 50 cts/share, down 46% YOY but well above analyst estimates of 33 cts/share on resilient demand in plastics and home care, improved demand in durables, and expense reductions, which were offset by lower price and margin compression. “We increased our operating rates to match rising demand as the recovery gained momentum,” said Dow CEO Jim Fitterling. “In polyethylene, we achieved pricing gains of 12% over the prior quarter as demand for packaging remained resilient, and in polyurethanes, we delivered higher volumes and margins underpinned by improving consumer durable demand."
Volume declined 1% YOY. Sequentially, volume increased 9% from the second quarter with all operating segments and regions delivering gains on improved demand across furniture & bedding, appliances, packaging, construction and automotive end markets.
Recovery is expected to continue in the fourth quarter with typical seasonality as economic indicators signal momentum broadening, said Dow president and CFO Howard Ungerleider. Significant capacity remains offline from US storm impacts and other unplanned outages and tight market conditions should support upward pricing and margins, Dow said.
"We enter the fourth quarter with sequential momentum, improved financial flexibility, and a consistent focus on cash," said Fitterling. "Although the third quarter rebound was significant, the recovery has been uneven across markets, and we expect this will continue in the near term."
Packaging and specialty plastics segment revenue was USD4.6 billion in the third quarter, down 10% on weaker prices. Segment volume was up 1% YOY on plastics demand growth. Operating EBIT was USD647 million, down 19% YOY as cost savings and volume gains were more than offset by margin compression.
Industrial intermediates and infrastructure segment revenue was USD3.1 billion, down 9% YOY. Volumes were down 3% YOY on reduced demand in automotive, industrial and energy. Segment operating EBIT of USD104 million was down 46% YOY on weaker demand and margin compression.
Performance materials and coatings segment sales was USD2 billion, down 11% YOY. Volume was down 5% as home care and DIY coatings growth was more than offset by declines in automotive, construction, and oil and gas markets. Operating EBIT of USD75 million was down 63% on margin compression in siloxanes and reduced demand.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.