Sector News

Dow expects lower EBITDA due to slow recovery in consumer, automotive sectors

June 30, 2020
Energy & Chemical Value Chain

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

comments closed

Related News

March 24, 2024

Thomas Gangl leaves Borealis

Energy & Chemical Value Chain

Appointed Borealis CEO in 2021, Thomas has led key initiatives including the sale of the nitrogen business, acquisitions of Rialti Spa and Integra Plastics AD, and Borouge’s IPO. He also made the final investment decision for the Borouge 4 plant, set to be the world’s largest polyolefin complex.

March 24, 2024

Chemours names Dignam permanent CEO

Energy & Chemical Value Chain

The Chemours Co. today named interim CEO Denise Dignam as the company’s permanent CEO and president, as well as a member of the board of directors, effective immediately. Dignam has been interim CEO since late February, when former CEO Mark Newman was placed on leave due to an internal investigation.

March 24, 2024

Neste merges three business lines into new Renewable Products unit

Energy & Chemical Value Chain

Neste Corp. (Espoo, Finland) has completed its organizational change process, announced on 1 November 2023. Neste informed that it will merge its three renewable business units into one Renewable Products business unit as well as restructure its functions to better support business-driven ways of working.

How can we help you?

We're easy to reach