Dow Inc. saw improved results from its plastics-related businesses in the fourth quarter of 2020 as the business continued to recover from the COVID-19 pandemic.
Fourth-quarter sales in the Packaging & Specialty Plastics unit of Midland, Mich.-based Dow were up 6 percent to $5.13 billion for the quarter, vs. the same quarter in 2019. The unit’s operating earnings before interest and taxes (EBIT) were up 20 percent to $780 million in the same comparison.
Dow’s company-wide sales for the quarter were up almost 5 percent to $10.7 billion.
Even with the positive quarter, Dow’s full-year results, released Jan. 28, showed the impact of the pandemic. Full-year sales in Packaging & Specialty Plastics, including one of the world’s largest polyethylene resin businesses, were down more than 9 percent to $18.3 billion. The unit’s operating EBITDA dropped 14 percent to $3.7 billion.
Dow’s overall corporate sales for 2020 were down 10 percent to $38.5 billion, but the firm swung to a $1.3 billion profit after losing a similar amount in 2019. Based on sales, Packaging & Specialty Plastics was the largest of Dow’s three operating units in 2020, generating about 47 percent of the firm’s total.
In a Jan. 28 phone interview, Dow President and Chief Financial Officer Howard Ungerleider said that Packaging & Specialty Plastics was “one of our strongest performing businesses” in 2020.
“There was tight industry balance, but we saw continued, sustained, strong demand,” he said. “We expected demand to go down [during the pandemic], but it went up. There was fundamental demand strength.”
The PE market now is seeing some unplanned outages, as a result of reduced maintenance and capital expense spending, according to Ungerleider.
Earlier in the year, Dow shut down some of its North American PE production for at least a month in anticipation of lower demand. Ungerleider said Jan. 28 that the shutdown “was the right decision at the right time, and we’d do it again.”
“We were focused on cash flow,” he added. “And demand did go down for a short time, but not as much as expected. There were declines in functional goods and durable goods and automotive.”
Looking ahead in 2021, Ungerleider said that the strength that Dow saw in the fourth quarter of 2020 “is expected to continue.” He added that the firm’s customer base has responded well to the pandemic.
“The whole value chain reacted pretty quickly,” Ungerleider said. “Demand proved to be resilient in health and hygiene, home care and other end markets.
“We should see economic growth in 2021 as vaccines get distributed and we return to pre-COVID levels of activity,” he said.
This post appeared first on Plastics News.
