Dow has delivered a sharp rebound in third-quarter profitability as higher prices, cost-cutting measures and stronger cash generation helped offset rising raw material and logistics costs, signalling progress in its turnaround strategy amid a challenging global environment.
The company reported net sales of $11.3 billion, up 13% year-over-year, with growth across all operating segments. Operating earnings before interest and taxes (EBIT) surged to $887 million, a $707 million increase from the year-ago period, driven primarily by higher prices and the benefits of its cost-saving initiatives.
GAAP net income stood at $525 million, while operating earnings per share (EPS) climbed to $0.71, compared with a loss of $0.19 a year earlier. GAAP EPS was $0.62.
The improvement came as local prices rose 14% year-over-year, led by Packaging & Specialty Plastics, with polyethylene prices increasing across all regions. Currency had no impact on year-over-year sales growth.
Volumes, however, slipped 1%, reflecting weakness in Asia Pacific, where the impact of the Middle East conflict was most pronounced. Higher volumes in other regions helped limit the overall decline.
Dow said its cost-reduction and restructuring initiatives are gaining traction, with its broader transformation programme expected to deliver substantial benefits over the next two years.
"Dow delivered a solid third quarter, driven by targeted downstream growth and disciplined execution against an evolving macro backdrop," said Karen S. Carter, Dow chief executive officer.
"Our teams are delivering on our unique-to-Dow self-help commitments – including our 2025 $1 billion cost program, our European asset actions, and Transform to Outperform. Specific to the transformation, we are on track to achieve the upsized $700 million in growth and productivity benefits in 2026, as well as the approximately $2 billion in total uplift by the end of next year.
"In addition, we captured sequential gains from the first of our three European asset shutdowns, where the total benefits are expected to build through 2027. We also remain focused on cash, including releasing more than $400 million of working capital during the quarter and reducing debt by approximately $600 million year-to-date. Our near-term actions are building a Dow that delivers stronger, more consistent results and long-term value for our shareholders."
Cash generation strengthened significantly during the quarter. Cash provided by operating activities from continuing operations reached $1.8 billion, up $709 million year-over-year and $515 million sequentially, reflecting improved earnings and working capital performance.
Free cash flow totalled $1.1 billion, while trailing 12-month cash flow conversion stood at 84%. Dow also returned $253 million to shareholders through dividends during the quarter.
The results underscore the impact of higher selling prices and internal efficiency measures on Dow’s earnings recovery. The company is now focused on sustaining those gains through cost discipline, European asset restructuring, productivity improvements and tighter working capital management as it seeks to deliver more consistent financial performance and long-term shareholder value.
