In an early indication of how the second quarter could shape up for the chemical industry, Dow reported blowout results marked by surging sales and earnings. Though rising prices, a fallout from the Iran War, provided a tailwind for the company, it also credited “self-help” measures like its recent cost-cutting programs.
Dow’s second-quarter sales rose 20% from the same period last year on the strength of product prices, which also increased 20%. Pretax operating earnings jumped nearly 230%, to $2.3 billion, beating Dow management’s forecast of $2 billion. Net earnings, excluding unusual items, flipped from a $297 million loss in the second quarter of 2025 to a $1 billion profit.
“We delivered solid results in the second quarter,” Dow CEO Karen S. Carter said in her first conference call with analysts since assuming the role earlier this month. “This reflects our industry leadership as we translated improved market fundamentals and disciplined execution into meaningful earnings growth, margin expansion, and cash generation.”
The strongest results came from Dow’s largest business segment, packaging and specialty plastics, where sales jumped 27%. While the unit’s second quarter sales volumes slipped 4% versus that of the previous year, prices surged 30%. Polyethylene prices increased by more than 40%, Dow chief financial officer Jeff Tate said on the analyst call.
Polyethylene prices have been climbing ever since the conflict in the Middle East shut down the Strait of Hormuz. The closure of the shipping lane sharply cut production in that region and slowed output in Asia. North American producers, relatively unaffected by the conflict, have been covering the shortfall.
Dow has also made headway in its streamlining programs. Carter said the company has “materially completed” the $1 billion savings initiative it announced in January 2025. That program eliminated 1,500 jobs.
The firm’s Transform to Outperform program, unveiled this January, has also progressed. The effort is meant to strengthen pretax earnings by $2 billion by the end of 2028, in part by cutting 4,500 jobs, or 13% of the firm’s workforce. As part of that plan, Dow plans to lean more heavily on artificial intelligence to boost productivity.
Carter said Dow has implemented 55% of the layoffs and is on track to save $700 million by the end of this year. The company says it could realize $2 billion in earnings improvement by the end of next year, earlier than previously anticipated.
Tate said he expects Dow’s pretax operating earnings to fall to $1.7 billion in the third quarter, as product prices ease. But Carter said that given the resumption in hostilities in the Middle East, as well as low polyethylene inventories globally, higher prices could provide an upside to the period.
