Dow says it expects a $350-million headwind to second-quarter EBITDA, mostly due to a slower-than-expected demand recovery in the automotive and consumer durables end markets.
The demand decline will particularly impact Dow’s polyurethanes business, where second-quarter demand is expected to decline by about 25–30% year on year (YOY). Dow had previously expected a 15–20% YOY demand decline for polyurethanes in the second quarter.
About two-thirds of the EBITDA impact “can be attributed to the delayed and slower recovery in the automotive, construction, appliance, and furniture sectors,” Dow president and CFO Howard Ungerleider said in a virtual conference presentation this morning. The rest “is being driven by margin pressure due to lower demand, which is negatively impacting pricing power, along with MEG softness,” he added.
On the positive side, volumes in plastics have been “resilient,” and will be roughly flat YOY for the quarter, according to Ungerleider. The do-it-yourself (DIY) coatings end market has also held up well, he says. “Solid demand trends continue in the packaging, home care, industrial and institutional cleaning, and health and hygiene industries,” Ungerleider adds.
Due to the lower-than-expected demand and profits, Dow “will be taking further cost actions,” according to Ungerleider. Details of additional cost reductions have not been disclosed, and will be announced when the company releases second-quarter earnings. Dow has previously announced plans to cut over $1 billion in cost, including reductions in capital expenditure and operating expenses.
Despite the slow recovery in some end markets, Dow says that sales are on the rise. “It is encouraging to see the pace of recovery accelerate in June in almost every value chain in our portfolio,” according to Ungerleider.
By: Vincent Valk
Source: Chemical Week
3M and Dow have announced they are cutting thousands of roles from their global workforces in response to economic pressures. Dow has said it will cut 2,000 jobs across its global workforce (around 5%) in a bid to save US$1bn in 2023. The company says it will also cut costs by shutting down “select assets”, though it did not note where it would halt operations.
Sweden’s state mining firm has discovered what could be Europe’s largest rare earths deposit, and says it could help the bloc reduce its reliance on imports of minerals needed to manufacture clean technologies and meet climate targets.
Henkel and Avantium have been partners since 2019, when Henkel joined the PEFerence consortium. This consortium of partners, coordinated by Avantium, aims to establish an innovative supply chain for FDCA and PEF (polyethylene furanoate).
