Dow's Q4 2024: Strategic Contradictions in European Assets, Operating Rates, and Polyethylene Pricing

These are the key contradictions discussed in Dow's latest 2024Q4 earnings call, specifically including: Strategic Review of European Assets and Capacity Strategy, Operating Rate Expectations, and Polyethylene Pricing and Margins:



Revenue and Operational Performance:
- Dow reported net sales of $10.4 billion in Q4, which was down 2% year-over-year, reflecting pricing pressure across the industry.
- Operating EBITDA was $1.2 billion, approximately flat compared to the same period last year.
- The company delivered year-over-year volume growth of 3% excluding merchant hydrocarbon sales in 2024.
- Challenges included weak macroeconomic conditions and pricing pressure in the industry.

Cost Reduction and Strategic Review:
- Dow announced cost reductions of $1 billion on an annual run rate basis by 2026, focusing on third-party contract labor and purchased services.
- The company also plans to reduce its CapEx spending by $300 million to $500 million in 2025 compared to the previously disclosed target of $3.5 billion.
- A strategic review of select European assets, particularly in the polyurethanes business, is underway due to structurally challenged demand and high costs.

Supply and Demand Dynamics:
- Dow observed local price declines of 3% year-over-year and 1% in Q4, with declines across all operating segments.
- Demand growth in packaging was noted, particularly in North America, while Europe remained soft.
- The company's Industrial Solutions business benefited from improved supply availability, while softness persisted in polyurethanes and construction chemicals.

Outlook and Market Conditions:
- The company expects first-quarter earnings to be $1 billion, down $200 million quarter-over-quarter, due to higher anticipated feedstock costs and planned maintenance.
- Margins are anticipated to be pressured by feedstock and energy costs outpacing price increases, especially in P&SP.
- The macroeconomic environment remains challenging, with weak global demand for some segments and ongoing affordability challenges in housing and durable goods sectors.