Dow plunges after operating EBIT collapses 93% in Q4
Chemical maker reports $1.5bn GAAP loss as CEO warns of 'unprecedented industry downturn'
Dow Inc reported a catastrophic 93% collapse in operating earnings during the fourth quarter, as the chemical manufacturer grapples with what chief executive Jim Fitterling termed an "unprecedented industry downturn" that has battered pricing and demand across global markets.
Operating EBIT plummeted to $33 million from $454 million a year earlier, driven by an 8% decline in local prices and softer volumes, according to regulatory filings. The Midland, Michigan-based company swung to a GAAP net loss of $1.5 billion, compared with a $35 million loss in the prior-year quarter, after recording $1.81 per share in impairment charges primarily related to its polyurethanes and construction chemicals business.
Revenue fell 9% year-over-year to $9.5 billion, missing analysts' expectations of approximately $10.2 billion. The weakness was broad-based across the company's portfolio, with operating earnings per share turning negative at a loss of $0.34, down from breakeven in the fourth quarter of 2024.
Despite the deteriorating fundamentals, Dow maintained its dividend payout of $251 million for the quarter, signaling management's confidence in weathering the storm. Full-year results painted an equally grim picture: net sales of $40 billion represented a decline from 2024, while the company recorded a $2.4 billion GAAP net loss for the year, reversing a $1.2 billion profit in 2024.
Fitterling acknowledged the severity of the market conditions but pointed to progress on self-help measures, noting that Dow achieved "over half of its more than $6.5 billion in near-term cash and cost support actions," including accelerating over $400 million in cost savings from its $1 billion reduction program. The CEO introduced a new strategic initiative called "Transform to Outperform," aimed at delivering at least $2 billion in additional near-term earnings through comprehensive simplification of the company's operating model.
The restructuring program targets productivity gains across all businesses and functions, with Dow seeking to "reduce complexity, adopt advanced technologies, and streamline end-to-end processes," according to the earnings announcement. These efforts come as the broader chemical industry endures a prolonged downcycle that began in late 2022 and is expected to extend through 2025, driven by persistent oversupply—particularly from new capacities in China—and subdued global demand.
S&P Global Ratings revised Dow's outlook to negative last year, anticipating that the company's EBITDA and credit metrics would remain weak through at least 2025 due to challenging petrochemical market conditions. The rating agency noted that Dow is conducting a strategic review of its European assets, specifically polyurethanes, which represent a significant portion of its EMEA revenues.
Dow's cost-cutting efforts include plans to reduce capital expenditure spending by $1 billion in 2025, bringing total spending to approximately $2.5 billion for the year. The company is also accelerating its $1 billion in targeted cost reductions by the end of 2026.
The chemical manufacturer's shares have struggled amid the industry-wide challenges, with the stock down approximately 25% over the past year as investors brace for an extended recovery period. Analysts remain cautious on the near-term outlook, with Dow underperforming its Materials sector peers with an 8.3% revenue decline through the first three quarters of 2025.
Looking ahead, market participants will be watching for early signs of the promised productivity gains from the Transform to Outperform initiative, as well as any indication that industry supply-demand dynamics are beginning to stabilize. Global chemical production growth is projected at a modest 1.9% to 3.5% for 2025, according to industry forecasts, suggesting any recovery is likely to be gradual rather than rapid.