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    DOW
    Earnings call· Mar 2026(Q1 FY26)

    DOW Q1 FY26 earnings call DOW

    Apr 23, 2026 Source

    Executive summary

    Dow Q1 FY26 — Strong Operational Execution Amidst Middle East Conflict

    Dow delivered solid Q1 FY26 results, demonstrating strong operational execution and cost management amidst significant global supply disruptions stemming from the Middle East conflict. The company is leveraging its advantaged asset footprint and feedstock flexibility to capture pricing momentum, while advancing strategic self-help initiatives like Transform to Outperform to drive long-term earnings improvement. A leadership transition sees Karen Carter stepping into the CEO role, with a continued focus on disciplined execution and value creation.

    Highlights

    5

    • Achieved 3% sequential volume growth in Q1 FY26.

    • Delivered net sales of $9.8 billion in Q1 FY26.

    • Reported operating EBITDA of $873 million in Q1 FY26.

    • Generated approximately $193 million in period cost savings in Q1 FY26.

    • Polyethylene volumes increased in all regions, both year-over-year and quarter-over-quarter.

    Concerns

    5

    • Middle East conflict expected to cause supply disruption throughout 2026.

    • Industrial Intermediates & Infrastructure net sales were down 8% year-over-year due to lower prices and volumes.

    • Higher planned maintenance activity impacted Operating EBIT in Packaging and Specialty Plastics.

    • Rising propylene costs are likely to delay seasonal demand uplift in Performance Materials & Coatings.

    • Sadara equity losses reached $1.4 billion, leading to suspension of further recognition under U.S. GAAP.

    Guidance & targets

    10
    CategoryTargetConfidence
    Q2 Revenue
    Approximately $12 billion
    high materiality
    High
    Q2 EBITDA
    $2 billion
    high materiality
    High
    Transform to Outperform EBITDA improvement
    At least $2 billion
    high materiality
    High
    Transform to Outperform ramp
    $400 million
    medium materiality
    High
    Cost savings from 2025 program
    Remaining $600 million
    medium materiality
    High
    Growth and productivity improvements from Transform to Outperform
    $500 million
    medium materiality
    High
    Sadara cash commitments
    Approximately $100 million
    medium materiality
    High
    Polyethylene margin improvement
    $0.26 per pound
    high materiality
    High
    Polyethylene price increase (April)
    $0.30 per pound
    high materiality
    High
    Polyethylene price increase (May)
    $0.20 per pound
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Packaging and Specialty Plastics
    Net sales reflected price decline versus prior year. Polyethylene volumes increased globally, supported by flexible food and specialty packaging. Operating EBIT was driven by lower integrated margins and higher planned maintenance, partly offset by higher polyethylene volumes and cost reduction efforts. A U.S. Gulf Coast cracker turnaround is complete, with a second planned for Q2.
    Polyethylene volumes: increased in all regions (YoY and QoQ)
    		$4.9 billion——$208 million Operating EBIT
    Industrial Intermediates & Infrastructure
    Net sales were down 8% year-over-year due to lower prices in both businesses and lower volumes in polyurethanes, impacted by the Middle East conflict. Proactive cost savings provided tailwinds. Volume declined primarily due to the shutdown of higher-cost upstream propylene oxide assets, rationalizing approximately 20% of North American PO industry capacity. New alkoxylation assets are driving growth in Industrial Solutions.
    		$2.6 billiondown 8%——
    Performance Materials & Coatings
    Net sales were flat year-over-year, with higher volumes in both businesses, particularly in downstream silicones for electronic and home/personal care end markets. The business is shifting its mix towards higher-value products and markets and rightsizing higher-cost upstream capacity, including the planned shutdown of the basics siloxanes plant in Barry, U.K. by mid-year, representing 25% of European siloxane industry capacity.
    Volume: increased 2% YoYDownstream silicones volume: high single-digit improvement QoQ
    		$2.1 billionflat——

    Operational metrics

    26
    Net Sales
    $9.8 billion
    Q1 FY26

    Company-wide net sales for the first quarter.

    Operating EBITDA
    $873 million
    Q1 FY26

    Company-wide operating EBITDA for the first quarter.

    Period cost savings
    $193 million
    Q1 FY26

    Cost savings delivered in the first quarter from self-help actions.

    Sequential volume growth
    3%sequential
    Q1 FY26

    Company-wide sequential volume growth.

    Working capital improvement
    >$300 millionYoY
    Q1 FY26

    Year-over-year improvement in working capital.

    Total liquidity
    $14 billion
    Q1 FY26

    Total liquidity inclusive of cash on hand and committed bilateral credit lines.

    Cash on hand
    $4 billion
    Q1 FY26

    Cash balance at the end of the first quarter.

    Nova litigation tax withholdings
    $300 million
    FY26

    Expected to be received later this year.

    Sadara cumulative equity losses
    $1.4 billion
    Q1 FY26

    Cumulative equity losses for Sadara, matching existing relevant obligations and commitments.

    Sadara equity loss recognition
    suspended
    Q1 FY26

    Suspended in accordance with U.S. GAAP as the carrying value of liabilities reached total obligations.

    Senior leadership headcount reduction
    20%
    Q1 FY26

    Reduction in headcount at the senior leadership level.

    Senior leadership cost reduction
    20%
    Q1 FY26

    Reduction in cost at the senior leadership level.

    Site transformation run rate EBITDA improvement
    $80 million
    Run rate

    Identified at the first site undergoing transformation assessment, exceeding initial projections.

    Global oil capacity offline
    20%
    Current

    Estimated percentage of global oil capacity currently offline due to the Middle East conflict.

    Global ethylene and polyethylene supply offline/constrained
    50%
    Current

    Estimated percentage of global ethylene and polyethylene supply either offline, constrained, or directly impacted by the conflict.

    Announced global capacity additions impacted by conflict
    75%
    Current

    Estimated percentage of announced global capacity additions that would be directly impacted by the conflict or dependent on constrained supply chains.

    Industry operating rates (polyethylene)
    97%
    March

    Industry operating rates for polyethylene surged in March.

    DDI (polyethylene)
    declined
    March

    DDI for polyethylene declined in March.

    Polyethylene sales (exports + domestic)
    second highest month ever
    March

    Combined exports and domestic sales for polyethylene in March.

    Polyethylene total sales
    record
    March

    Overall total sales for polyethylene in March.

    Polyethylene price increase
    $0.05
    January

    Polyethylene price increase in January.

    Polyethylene price increase
    $0.10
    March

    Polyethylene price increase in March in relation to the Middle East crisis.

    Polyethylene price increase
    $0.30
    April

    Announced polyethylene price increase for April.

    Polyethylene price increase
    $0.20
    May

    Announced polyethylene price increase for May.

    European siloxane industry capacity rationalized
    25%
    Mid-year FY26

    Capacity represented by the shutdown of the basics siloxanes plant in Barry, U.K.

    North American PO industry capacity rationalized
    20%
    Late FY25

    Capacity rationalized by Dow's shutdown of higher cost, upstream propylene oxide assets.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price split3% volume growth; price decline; lower prices; 2% volume increase%
    Productivity cost savings program$1 billion program; $2 billion; $400 million; $80 millionUSD

    Capital programs

    4
    New world-scale polyethylene train in Freeport, Texasunderway

    Benefit: incremental growth investments

    Our new PolySeven assets will enable our teams to capture improved margins.

    Alberta projectunderway

    Benefit: growth in resilient high-value applications like pressure pipe, wire and cable, and food packaging

    Making progress on our Alberta project, where the overarching merits of this investment and the cost advantage Americas are further reinforced by the current global dynamics. The revised time line, our Alberta project will enable growth in resilient high-value applications.

    European asset shutdownsunderway

    Benefit: benefits from previously announced shutdowns

    Benefits from our previously announced European asset shutdowns began this year. Shutdown of higher cost upstream assets in Europe that will begin later this year.

    Shutdown of basics siloxanes plant in Barry, U.K.underway

    Benefit: rightsiz[ing] higher cost upstream capacity, represents 25% of European siloxane industry capacity

    Shutdown of our basics siloxanes plant in Barry, U.K. by the middle of this year. This capacity represents approximately 25% of European siloxane industry capacity.

    Risks & headwinds

    4
    Middle East conflict and supply chain disruptionThroughout 2026; extended period

    Approximately 20% of global oil capacity offline; approximately half of global ethylene and polyethylene supply offline, constrained or directly impacted.

    Mitigation: Leveraging advantaged manufacturing footprint; activating pricing levers; cost reduction efforts.

    Higher global oil and naphtha pricesOngoing

    Steepening global cost curve.

    Mitigation: Feedstock flexibility in Europe; cost-advantaged footprint in Americas.

    Prolonged weak demand landscape across building and constructionProlonged

    Reflected in Industrial Intermediates & Infrastructure and Performance Materials & Coatings segments.

    Mitigation: New alkoxylation assets driving growth in Industrial Solutions; shifting mix to higher-value products in Performance Materials & Coatings.

    Rising propylene costsQ2 FY26

    Likely to delay seasonal demand uplift.

    Mitigation: Working to move prices up.

    What to watch in Q2 FY26

    5

    Middle East supply chain normalization

    6-18 months
    CurrentUnprecedented disruption, 275 days or longer to unwind
    TargetSigns of normalization or further disruption

    Why it matters

    The duration and severity of supply chain constraints will significantly impact global supply/demand balance and pricing power.

    I mentioned that we did some modeling at that time that it would be 275 days or longer for the supply chain disruption🌐 to unwind. And a lot's changed since then. There's been more attacks in the Middle East. There's been more assets have to be shut down.

    Q&A highlights

    7

    What are the timelines for supply chain normalization post-conflict, and how sustainable are the current polyethylene pricing initiatives given consensus estimates for a V-shaped recovery?

    Management believes supply chain disruption will take 275 days or longer to unwind, potentially 6-18 months, due to ongoing attacks, infrastructure damage, and logistical challenges. They expect strong demand and tight supply to sustain pricing momentum, with current price increases baked into Q2 guidance and further upside potential.

    “I mentioned that we did some modeling at that time that it would be 275 days or longer for the supply chain disruption to unwind. And a lot's changed since then. There's been more attacks in the Middle East. There's been more assets have to be shut down.”

    asked by Hassan Ahmed · answered by James Fitterling

    2 min read7 chapters

    Detailed Narrative

    01

    Impact of Middle East Conflict and Supply Chain Disruption

    The Middle East conflict has created unprecedented🌐 supply chain disruption🌐s, with approximately 20% of global oil capacity and about half of global ethylene and polyethylene supply currently offline or constrained. This has led to significant impacts on logistics costs and transit times, particularly affecting Asia and Europe. Dow anticipates these constraints will persist throughout 2026, potentially leading to accelerated capacity rationalization and delays in planned capacity additions, while steepening the global cost curve.

    02

    Leadership Transition

    Effective July 1, Jim Fitterling will transition from CEO to Executive Chair, and Karen Carter will assume the role of Chief Executive Officer. This follows a multiyear succession process, ensuring continuity in strategy execution. Karen Carter, having spent her entire career with Dow, will focus on driving operational excellence, disciplined capital allocation, and advancing high-value growth in core markets.

    03

    Strategic Self-Help Initiatives and Cost Savings

    Dow is on track to deliver the remaining cost savings from its previously announced $1 billion program by year-end. The 'Transform to Outperform' initiative is expected to deliver at least $2 billion in near-term EBITDA improvement, with approximately two-thirds from productivity gains and one-third from growth. Early opportunities include site transformations, with the first identified site showing $80 million in run-rate EBITDA improvement, and a targeted $400 million ramp in the second half⚖️ of the year.

    04

    Advantaged Asset Footprint and Feedstock Flexibility

    Dow's cost-advantaged footprint in the Americas, including assets in the U.S., Canada, and Argentina, allows for high operating rates and feedstock security amidst global supply strains. In Europe, feedstock flexibility is a critical differentiator, enabling optimization across feedstocks to protect and expand margins. The company's higher North American capacity in Packaging and Specialty Plastics, supported by the upcoming Polyseven polyethylene train, further strengthens its competitive position.

    05

    Market Dynamics and Pricing Momentum

    Petrochemical prices, especially polyethylene, were at multiyear unsustainable lows before the Middle East conflict. However, demand in core polyethylene packaging markets remains resilient. The conflict has triggered significant pricing momentum, with polyethylene price increases of $0.05/lb in January, $0.10/lb in March, and further announcements of $0.30/lb for April and $0.20/lb for May. This is expected to drive significant sequential improvement in Q2.

    06

    Sadara Joint Venture Update

    Dow's cumulative equity losses for Sadara reached $1.4 billion in Q1 FY26, matching its existing relevant obligations and commitments. Consequently, Dow has suspended further recognition of Sadara equity losses under U.S. GAAP. Jim Fitterling will continue to work on restructuring negotiations with Saudi Aramco to address the venture's leverage and balance sheet issues, with an update expected midyear.

    07

    Capital Allocation and Financial Discipline

    Dow maintains a consistent capital allocation framework, prioritizing safe operations, a solid balance sheet, and an investment-grade credit profile. Capital expenditures are expected to be at or below depreciation and amortization across the cycle, focusing on high-return organic investments. The company ended Q1 with over $4 billion of cash on hand and approximately $14 billion of total liquidity, positioning it well to manage volatility.

    AI-generated summary of the company’s earnings call. Not investment advice.