The fourth-quarter earnings report from Dow, the largest US chemical maker, is full of signs that the chemical sector is recovering from the pandemic-driven economic slowdown. Dow’s strong quarter follows similar performance from BASF and other companies that have given early glimpses into fourth-quarter 2020 earnings.
Dow posted sales of $10.7 billion for the period, up 4.9% from the pandemic-free fourth quarter of 2019. Its net income, excluding extraordinary items, for the quarter was $607 million, an increase of 5.2% from a year earlier.
Dow’s increase over the year-earlier quarter
BASF’s increase over the year-earlier quarter
“Overall, our fourth-quarter performance was a strong finish to a year where team Dow overcame significant macroeconomic and other external challenges,” Dow CEO Jim Fitterling told analysts on a Jan. 28 conference call.
Though Dow’s quarterly results suggest that the company has recovered, its full-year figures show that COVID-19 did leave a mark on its finances. Sales for 2020 were $38.2 billion, a 10.3% decline from 2019. Net income, barring one-time items, fell 53.2%, to $1.2 billion.
Bolstered by healthy demand and prices for polyethylene, Dow’s specialty plastics business saw sales for the quarter rise 6%. The company also reports a rebound in polyurethane and construction chemical demand and prices.
Fitterling is optimistic about 2021. “Throughout the pandemic, new consumer behaviors emerged that have driven strong demand for our products, and we expect these trends to continue benefiting Dow’s consumer-led portfolio even as the pandemic diminishes,” he told analysts.
Dow’s results follow estimates from BASF on Jan. 20 that it would post fourth-quarter sales and profit increases of 8.3% and 32.2%, respectively.
Another chemical maker, Lanxess, forecasts pretax earnings for the period at $240 million—a little above its 2019 results and beating analyst expectations. CEO Matthias Zachert says in a statement that the fourth quarter “is expected to be the strongest final quarter we have seen in 8 years.”