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Dow Inc. DOW is scheduled to report first-quarter 2025 results before the opening bell on April 24.
DOW surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed twice. It has a trailing four-quarter negative earnings surprise of 21.6% on average. Dow posted a negative earnings surprise of roughly 100% in the last reported quarter.
While DOW is expected to have benefited from its productivity initiatives, soft demand due to weak global economic activities and pricing and cost pressures are likely to have affected its first-quarter performance.
Dow’s shares are down 49.1% over the past year compared with the Zacks Chemicals Diversified industry’s 28.5% decline.
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Let’s see how things are shaping up for this announcement.
What do DOW’s Revenue Estimates Say?
The Zacks Consensus Estimate for revenues for DOW for the to-be-reported quarter is pinned at $10,271.4 million, suggesting a year-over-year decline of 4.6%.
Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,172.1 million, calling for a decline of 4.8% year over year. The same for the Industrial Intermediates & Infrastructure segment stands at $2,872.6 million, indicating a 4.5% year-over-year decline.
Our estimate for revenues for the Performance Materials & Coatings segment is pinned at $2,098.2 million, suggesting a fall of 2.5% year over year.
Factors Shaping DOW’s Q1 Results
Dow is expected to have faced headwinds from demand softness in Europe and China in the quarter to be reported. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Construction and manufacturing activities remain soft in the region. Demand in Asia has been affected by weaker demand recovery in China. The property sector remains sluggish in China, with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure, including residential construction, also remains weak. Dow sees softness in automotive in Europe due to low demand. Soft conditions across these markets are likely to have weighed on volumes in the first quarter.
Dow is also being challenged by weak siloxane prices in its Performance Materials & Coatings unit. The segment continues to see siloxane pricing pressure partly due to supply additions in Asia. Siloxane prices remain under pressure due to competitive pricing pressure resulting from additional supply driven by capacity additions in China. While capacity additions have slowed, elevated industry supply is expected to continue to have impacted prices in the March quarter.
The company is also expected to have faced headwinds from higher feedstock and energy costs. Severe cold weather has contributed to an uptick in feedstock prices. Dow expects a $100 million headwind in the first quarter in the Packaging & Specialty Plastics segment due to higher feedstocks and energy costs and lower global integrated margins. It also sees consolidated earnings to decline by $200 million in the first quarter from the prior quarter, factoring in higher expected feedstock costs.
Nevertheless, Dow is likely to have benefited from cost-saving and productivity actions. DOW is implementing targeted actions focused on reducing direct costs and labor costs. It is taking action to cut costs by $1 billion to drive margins. The benefits of DOW’s cost-saving actions are likely to be reflected in its bottom line in the to-be-reported quarter.