FINANCIAL HIGHLIGHTS

• GAAP earnings per share (EPS) was $0.85; operating EPS1 was $0.46, compared to $2.15 in the year-ago period and $1.11 in the prior quarter. Operating EPS excludes significant items in the quarter, totaling $0.39 per share, primarily due to the successful and final resolution and recognition of a long-running patent infringement award.

• Net sales were $11.9 billion, down 17% versus the year-ago period and 16% sequentially, reflecting declines in all operating segments driven by slower GDP growth and customer destocking.

• Local price declined 5% versus the year-ago period, driven by Packaging & Specialty Plastics. Sequentially, local price decreased 6% with declines in all operating segments and regions. 

• Currency decreased net sales by 4% year-over-year and 1% versus the prior quarter, reflecting the impact of broad-based strength of the U.S. dollar. 

• Volume decreased 8% versus the year-ago period, led by an 18% decline in Europe, the Middle East, Africa, and India (EMEAI), and destocking in building & construction and consumer durables end-markets in the U.S. & Canada. Sequentially, volume decreased by 9% with declines in all regions. 

• Equity losses were $43 million, $267 million lower than the year-ago period, with declines at the Company’s principal joint ventures. Equity earnings improved by $15 million from the prior quarter, due to improved earnings at the Thai and Sadara joint ventures.

• GAAP net income was $647 million. Operating EBIT1 was $601 million, down $1.7 billion versus the year-ago period and down $594 million sequentially, with declines in all operating segments due to lower pricing and reduced operating rates to match market dynamics. 

• Cash provided by operating activities – continuing operations was $2.1 billion, down $479 million year-over-year and up $138 million compared to the prior quarter. Free cash flow1 was $1.5 billion. 

• Returns to shareholders totaled $620 million in the quarter, including $495 million in dividends and $125 million in share repurchases. 

• The Company delivered 2022 full year net sales of $56.9 billion, versus $55 billion in 2021. GAAP net income was $4.6 billion, versus $6.4 billion in 2021. Operating EBIT was $6.6 billion, versus $9.5 billion in 2021. Cash provided by operating activities – continuing operations was $7.5 billion, up from $7.1 billion in 2021. The Company delivered a cash flow conversion1 of 80% and returns to shareholders totaled $4.3 billion, through $2.3 billion in share repurchases and $2 billion in dividends. 

CEO QUOTE

Jim Fitterling, chairman and chief executive officer, commented on the quarter: 

“In the fourth quarter, Team Dow continued to proactively navigate slowing global growth, challenging energy markets, and destocking. In response, we shifted our focus to cash generation in the quarter as we lowered operating rates, implemented cost savings measures, and prioritized higher-value products where demand remained resilient. These actions resulted in $2.1 billion of cash flow from operations.

“Dow’s distinct competitive advantages and our operational and financial discipline enabled us to deliver resilient performance in 2022, despite a challenging second half of the year. For the year, we generated $7.5 billion of cash flow from operations – up more than $400 million year-over-year – and returned a total of $4.3 billion to our shareholders while continuing to advance our Decarbonize and Grow strategy. In addition, our ongoing higher-return, lower-risk, and faster-payback investments in our global operations will continue to create long-term shareholder value as we meet the growing customer demand for innovative and more sustainable solutions.”

OUTLOOK

“As we enter 2023, we remain focused on managing near-term dynamics while continuing to position the company for long-term value creation,” said Fitterling. “While we see initial positive signs from moderating inflation in the U.S., improving outlook for energy in Europe, and re-opening in China, we continue to be prudent and proactive by implementing a playbook of targeted actions focused on optimizing labor and purchased service costs, reducing turnaround spending, and enhancing productivity. These actions are collectively expected to deliver $1 billion in cost savings. Going forward, we will continue to maintain our disciplined and balanced approach to capital allocation and focus on cash flow generation, while executing our strategic priorities for long-term sustainable and profitable growth.”