First-quarter sales at Dow (Midland, Michigan / USA; www.dow.com) plunged 11% to USD 9.8 bn (EUR 8.9 bn) as local prices in all operating segments took a nosedive amidst a decline in global energy prices and the global Covid-19 pandemic. The comparative figures were based on last year’s pro-forma results. Net income from continuing operations shrank by USD 50m to USD 258m. Operating EBIT plummeted USD 300m to USD 843m, with margins contracting notably in the polyurethanes and silicones chains. Earnings from companies where Dow holds substantial equities, such as its Kuwait and Thai ventures, also dropped.

Volume fell 2%. Demand grew in food, health and hygiene packaging, surfactants and solvents for cleaning as well as coatings end-markets. These gains were more than counterbalanced by declines in PU and silicones applications, including automotive and durable goods.

CEO Jim Fitterling said, “Assuming a gradual and sustainable return of global economic activity and reopening of economies in May and June, we expect a recovery will begin to take hold as the year progresses.” The company is taking measures to bolster its financial position including cutting capital expenditure by USD 750m to USD 1.25 bn and slashing operating expenses by USD 350m. It is also idling select manufacturing units but will ensure availability of products essential to consumers and instrumental to containing the global pandemic, such as hand sanitiser and materials for personal protective equipment (see Plasteurope.com of 14.04.2020).

Sales at the Packaging & Specialty Plastics segment eased 10% to USD 4.6 bn as growth in packaging applications was negated by lower ethylene sales. Operating EBIT was USD 580m, down from USD 690m. Lower polyethylene margins and reduced equity earnings had offset cost savings and volume gains in packaging applications.

Industrial Intermediates & Infrastructure – which handles the PU activities as well as chlor-alkali and vinyl – saw sales diminishing by 13% to USD 3.1 bn. Operating EBIT was down at USD 175m from USD 277m on softer demand and margin compression in PU applications and lower equity earnings.

Sales at Performance Materials & Coatings were 11% weaker at USD 2.1 bn. Margin compression in upstream siloxanes and higher planned maintenance spending depressed operating EBIT to USD 162m from USD 271m.

Fitterling told analysts that in the plastics business, Dow is temporarily idling three polyethylene and two elastomers production units for at least 30 days. The plants are located on the US Gulf Coast and in Argentina, with their total capacity of around 0.9m t/y equating to 10% of the business’ global annual capacity. He said Dow’s polyurethanes assets, including propylene oxide and MDI, are now being run at reduced operating rates because the durable goods segments, such as automotive appliances and construction, are impacted by global shutdowns due to the pandemic.

Dow is also running reduced rates across its global grid of siloxane trains, and its Zhangjiagang production facility in China will remain offline on an extended planned turnaround into May.