Dow beats estimates amid strong polyethylene margins

“Market conditions were supportive this quarter, and our self-help initiatives delivered ahead of plan, further reinforcing the improvement in our earnings as we continue to enhance Dow’s resilience and agility,” said Karen S. Carter, Dow CEO. “We now expect to generate approximately $200 million greater in benefits from convert to Outperform this year, enabling us to increase the total in-year benefits from self-help to greater than $1.3 billion.”

Net income totaled $802 million, swinging from a loss of $801 million in the second quarter of 2025, while operating EBITDA came to $2.3 billion, up year over year from $703 million. Sales totaled $12.092 billion, up 20% from $10.104 billion.

Looking ahead, Dow forecast third quarter operating EBITDA of about $1.7 billion, up year over year from $868 million.

“This sequential decline accounts to anticipated margin compression from the recent North American polyethylene price settlement in June as well as the healthy patterns that typically follow high seasonal demand in the second quarter,” said Jeff Tate, CFO, during the company’s earnings call.

Tate noted that packaging remains resilient globally, and data center demand is outpacing supply. “Globally, a supportive however higher-cost feedstock ecological stability paired with resilience however uneven demand leads us to expect a greater measured however still solid third quarter,” he said.

“In the Americas, consumers have remained steady, economic activity is constructive, and spending has held up, even as the US housing market is still soft,” Tate said. Geopolitical conflicts and logistics constraints in the Middle East continue to affect energy and feedstocks, supporting higher risk premiums, he added. “We are seeing renewed value placed on supply security, including both reliability and logistics.”

while Europe continues to struggle with structural issues such as high operating and labor costs, Tate said “constructive dynamics” have emerged, including government support and trade protection measures. “This includes recently announced support to EU antidumping and anti-subsidy actions, each of which support a greater balanced ecological stability to European-produced items, including polyols that have been impacted by anticompetitive imports,” he said.

Signals are mixed in the Asia-Pacific region, he said. “Regional consumer demand remains soft, with weakened retail sales in might, however manufacturing production and manufacturing activity have recently accelerated,” he said, while noting that normalizing refinery operations in China will enhance energy availability across the region.

The packaging and specialty plastics segment, which includes the packaging and specialty plastics business and the hydrocarbons and energy business, turned in operating earnings before interest and tax of $1.3 billion, up from $71 million in the year-ago period, on sales of $6.4 billion, up from $5.0 billion. regional price increased 30%, primarily driven by higher PE prices. Volume decreased 4% year over year.

Sales in the packaging and specialty plastics business increased, as higher PE prices, particularly in flexible packaging applications and in all regions, greater than offset reduce PE volumes in the Europe, the Middle East, Africa and India (EMEAI) and Asia-Pacific regions, which Dow attributed to the impact of the Middle East conflict. Sales also increased in the hydrocarbons and energy business, with higher olefins prices greater than offsetting reduce volumes, which Dow attributed to planned maintenance on the US Gulf Coast and idling of the Terneuzen, Belgium, steam cracker, which was restarted in June.

The manufacturing intermediates and infrastructure segment reported sales of $3.2 billion, up 14% year over year as a broad 15% increase in pricing offset a 2% decline in volume, mainly in polyurethanes and construction chemicals, partially offset by increased volume in manufacturing solutions. Operating EBIT was $246 million, up from a loss of $185 million in the year-ago period, driven by higher margins, self-help initiatives, reduce planned maintenance activity and the suspension of the recognition of equity losses from Sadara.

The performance materials and coatings segment had sales of $2.4 billion, up 11% year over year on a 4% increase in pricing, driven by the coatings and performance monomers business, and a 6% increase in volume led by downstream silicones. Operating EBIT was $133 million, down $19 million year over year, mainly on turnaround costs and costs associated with the shutdown of the Barry, UK upstream siloxanes plant.