sees the global economy slowing down and is preparing for weakness by cutting costs and focusing on cash generation. That’s the right playbook for a weak operating environment. Still, no one, especially employees, likes to see business weakness.
(ticker: DOW) reported fourth-quarter earnings per share of 46 cents from sales of $11.9 billion. Earnings before interest, taxes, depreciation and amortization, or Ebitda, came in at $1.3 billion.
Dow’s numbers were a little light. Wall Street was looking for earnings of 57 cents a share and $1.4 billion in Ebitda from $12 billion in sales.
Sales “beats” and “misses,” however, aren’t all that significant for chemical producers. Input costs fluctuate significantly and companies are typically judged more on the spread they can earn between raw material and product prices.
Cash from operations continued to be strong at more than $2 billion, up from the $1.9 billion generated in the third quarter of 2022.
A year ago, in the fourth quarter of 2021, Dow earned $2.15 a share and $2.9 billion in Ebitda from $15.3 billion in sales.
“Team Dow continued to proactively navigate slowing global growth, challenging energy markets, and destocking,” said CEO Jim Fittterling in a news release. “In response, we shifted our focus to cash generation in the quarter as we lowered operating rates, implemented cost savings measures, and prioritized higher-value products where demand remained resilient.
Dow plans to reduce costs by $1 billion to offset any economic weakness. That includes laying off about 2,000 workers.
Dow shares were up 0.6% in premarket trading.
futures rose 0.3%.
Dow Jones Industrial Average
futures were flat.
Investors appeared to be fine with results and ready to hear about economic weakness.
Management will host a conference call at 8 a.m. Eastern time to discuss results. Investors and analysts will want to hear more about what 2023 will bring. For the coming year, Wall Street is looking for profit of $4.20 a share and $$7.2 billion in Ebitda from $51.9 billion in sales.
Dow stock is trading at about 14 times estimated 2023 earnings. The S&P 500 trades for about 16 times estimated earnings.
Write to Al Root at email@example.com