Dow Announces Fourth Quarter 2021 Financial Results

Financial Summary

· Earnings per share on a GAAP basis were $2.
32; operating earnings per share were $2.
15, compared to $0.
81 in the year-ago period
.
Operating earnings per share exclude certain item costs of $0.
17 per share for the quarter, primarily related to tax-related items
.

· Net sales were $14.
4 billion, up 34% year over year,

Growth was achieved across all operating segments, business segments and regions
.
Net sales decreased 3% sequentially, primarily due to lower polyethylene volumes due to supply constraints and lower olefin and by-product prices
.

· Local prices rose 39% year-on-year, with increases across all operating segments, business segments and regions
.
Up 1% sequentially, with price increases in two operating segments, Functional Materials & Coatings, Industrial Intermediates and Infrastructure, driven by demand from industrial, construction, and personal care applications, as well as continued tight supply of siloxanes
.

Sales volumes were down 4% year over year and 3% sequentially, with supply constrained primarily due to facility overhauls, the ongoing impact of COVID-19, climate-related disruptions, and global logistics constraints in several key value chains
.

· Equity income was $224 million, up $118 million year-over-year, primarily due to higher margins in Sadara and the joint venture in Thailand and Kuwait
.
Equity earnings decreased by $25 million sequentially primarily due to the impact of Sadara's planned overhaul projects
.

· GAAP net income was $1.
8 billion
.

Operating earnings before interest and taxes (EBIT) were $2.
3 billion, up $1.
2 billion year-over-year, with higher margins and higher equity gains across all operating segments
.
Operating EBIT decreased by $621 million sequentially as higher prices in the Performance Materials and Coatings, Industrial Intermediates and Infrastructure operating segments were more than offset by higher raw material and energy costs and supply constraints
.

· Cash from operating activities (ie, continuing operations) was $2.
6 billion, up $901 million year-over-year and down $162 million sequentially
.
Free cash flow was $2.
1 billion
.

· Total return to shareholders for the quarter was $912 million, including $512 million in dividend returns and $400 million in share repurchases
.

CEO Commentary

Jim Fitterling, chairman and CEO of Dow, had this to say about the quarter's results :

"In the fourth quarter, the Dow team again delivered year-over-year revenue and profit growth across all operating segments
.
Strong underlying demand and continued discipline in business operations allowed us to overcome supply and logistics constraints and rising raw material and energy costs
.
"

"Q4 results capped Dow's record 2021.

We delivered full-year sales of $55 billion and operating EBIT of $9.
5 billion, with growth across all operating segments, Margins improved, cash flow from operations reached $7.
1 billion, and annual return on capital exceeded 22%
.
We achieved financial priorities through aggressive debt management actions throughout the year, including reducing total debt by $2.
4 billion, selective Pension contributions of $1 billion while cumulative shareholder returns reached $3.
1 billion
.
Importantly, we also announced plans to decarbonize assets while increasing earnings, allowing Dow to continue to achieve a base of more than $3 billion Earnings growth, advancing our sustainability leadership and creating long-term shareholder value
.
”

Outlook

Fitterling said: “We expect that in 2022, as industrial production continues to increase and consumer spending continues to increase, demand in end markets will continue to be strong
.
After a year of supply constraints and logistics challenges caused by the new crown epidemic, We are working to normalize operating rates, inventory and service levels
.
"

“While the global economy continues to be impacted by supply chain pressures, these logistical constraints are expected to ease throughout the year, allowing us to fulfill backlogs and meet pent-up customer demand
.
Amid these short-term dynamics, We will continue to be disciplined in the implementation of our strategy and advance high-reward, low-risk growth projects and efficiency initiatives
.
We will also further advance key sustainability projects to decarbonize our assets while meeting our clients' desire for low-carbon and growing demand for circular economy solutions
.
”