Dow posts lower profit, announces ‘world-scale' recycling projects

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Dow Inc. posted mixed results in the second quarter, with sales up but profit and earnings down compared to the same quarter last year.

Overall sales at Midland, Mich.-based Dow grew 13 percent to $15.7 billion for the three-month period, as profit dipped more than 10 percent to $1.7 billion. The firm’s operating earnings before interest and taxes (EBIT) dropped 14 percent to $2.4 billion.

In a July 21 news release, Dow CEO Jim Fitterling said that in the quarter Dow’s “competitive advantages and relentless focus … enabled us to navigate the impacts of pandemic-related lockdowns in China, continued logistics constraints and higher energy and raw material costs.”

“We continued to progress our strategy to grow our underlying earnings over the economic cycle by investing in higher-return, faster-payback projects while capitalizing on long-term growth opportunities,” he added.

Dow’s Packaging & Specialty Plastics unit — including polyethylene resin — saw second-quarter sales grow 15 percent to $8.2 billion, although operating EBIT slid 30 percent to $1.4 billion. In a news release, officials said the unit’s sales volume was up 5 percent for the quarter, primarily from gains in energy, infrastructure and packaging.

In Dow’s Industrial Intermediates & Infrastructure unit, including polyurethanes, second quarter sales grew 5 percent to $4.4 billion as operating EBIT declined 34 percent to $426 million. The unit’s sales volume for the quarter was down 6 percent.

Dow also announced July 21 that it was working with chemical recycling company Mura Technology Ltd. to address the global problem of plastic waste. The companies will build multiple world-scale, 265-million-pound-capacity chemical recycling units in the U.S. and Europe, collectively adding as much as 1.3 billion pounds of annual capacity.

In the partnership, London-based Mura will provide recycling technology, with Dow becoming a key user of the circular feedstock produced. Derived from plastic waste that would be headed for landfill or incineration, this feedstock will allow Dow to develop new, virgin-grade plastics which are in high demand from global brands, officials said.

The collaboration will also create a recirculation path for waste plastic into global supply chains, helping to advance a circular economy for plastics and increase the value of plastic waste, they added.

“By investing in new applications, Dow is working to meet increased demand for recycled material from its customers and make a meaningful impact on the supply chain,” said Marc van den Biggelaar, advanced recycling director for Dow.

“The global plastics issue is one of the most pressing environmental issues to date. There is simply no time to waste,” Mura CEO Steve Mahon said. “This next step in our partnership and the resources provided by Dow will allow us to finance and dramatically increase recycling capacity.”

Mura’s first plant is currently under construction in Teesside, England, and is expected to be operational in 2023. In April 2021, Dow and Mura signed an agreement under which Dow will become an offtaker of the output of that plant — of almost 45 million pounds per year — as well.

Dow also plans to build a major hybrid recycling site in France, to be owned and operated by French recycling company Valoregen SAS, that will secure a source of post-consumer resins for Dow. The Damazan plant in France will have a plastic waste processing capacity of more than 150 million pounds per year. As a hybrid plant, it will combine advanced and mechanical recycling facilities in one ecosystem.

In the U.S., Dow has signed a letter of intent with Nexus Circular LLC to create a circular ecosystem in Dallas for previously unrecycled plastic. That agreement builds on Dow’s previous Hefty EnergyBag collaboration with Nexus and Reynolds Consumer Products.

Looking ahead, Fitterling said that long-term fundamentals driving growth across Dow’s end markets “remain attractive.”

“While near-term market conditions are dynamic, we will continue to leverage our diverse, global portfolio and flexible operating model to capitalize on attractive growth opportunities,” he added. “The actions we’ve taken to enhance the resiliency of our business position us well to deliver value across a variety of economic environments.”

On Wall Street, Dow’s per-share price was down more than 3 percent to $50.90 in early trading July 21. The Dow Jones Industrial Average was down almost 1 percent at that time. Dow’s per-share stock price is down more than 10 percent since the start of the year, with the DJIA down more than 13 percent.

Dow employs almost 36,000 worldwide. The firm ranks as one of the world’s largest producers of PE and other specialty plastics and chemicals.