Dow Inc.

This is our first report on Dow Inc., a behemoth in the global chemicals industry. The company is a material science leader providing customers with cutting-edge, eco-friendly packaging and infrastructure solutions. Dow delivered a disappointing result in the fourth quarter as it dealt with slower GDP growth, complex energy markets, and client destocking. The demand for higher-value products was prioritized in markets with stable demand. The company proactively reduced operating rates to manage working capital, effectively implemented operational mitigation plans and cost-saving measures and lowered operating rates. Economic conditions deteriorated due to prolonged pandemic lockdowns, inflation, rising interest rates, and lingering geopolitical concerns. The demand for energy markets is constant in the Industrial Intermediates & Infrastructure area. The management anticipates reduced seasonal volumes in the building construction end markets while inflationary pressures in contracting PMIs continue to have an impact on industrial demand. Furthermore, they anticipate a resurgence in demand for performance silicones in the Performance Materials & Coatings segment. In the Deer Park acrylic monomer plant in Performance Monomers, Dow anticipates higher scheduled maintenance turnaround costs in this segment. On the other hand, the company expanded its line of silicon sealant products to include materials for the construction of photovoltaic modules by introducing the Dowsil PV Product Line. We initiate coverage on the stock of Dow Inc. with a ‘Hold’ rating.