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Why Did Dow’s Consumer Solutions Segment’s Revenue Rise in 2Q16?


Dec. 4 2020, Updated 10:53 a.m. ET

Dow Chemical’s Consumer Solutions segment

Dow Chemical’s (DOW) Consumer Solutions segment includes the Consumer Care, Automotive Systems, Dow Electronic Materials, and Silicones businesses.

The segment also includes a few businesses from Dow Corning, which was a joint venture between Dow and Corning (GLW). Dow Corning was completely taken over by Dow Chemical on June 1, 2016, and it will be aligned with the company’s Consumer Solutions and Infrastructure Solutions segments.

The Consumer Solutions segment is Dow Chemical’s lowest revenue generator. In 2Q16, the segment reported revenue of $1.3 billion, representing 10.6% of Dow Chemical’s total revenue. On a year-over-year basis, the segment’s revenue rose by 15.4%.

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During 2Q16, the Consumer Solutions segment posted operating EBITDA (earnings before interest, tax, depreciation, and amortization) of $341 million excluding the Dow Corning transaction, compared to $236 million in 2Q15. This rise implied a rise of 44.5% in operating EBITDA on a year-over-year basis.

Highlights of the Consumer Solutions segment in 2Q16

  • Sales volumes positively impacted the segment by 19%. Volumes increased mainly due to the Dow Corning transaction.
  • Price falls impacted the segment by -4%.
  • The segment reported a one-time benefit of pretax operating EBITDA of $1.3 billion arising from the Dow Corning transaction in 2Q16.

Investors can indirectly hold Dow Chemical by investing in the Vanguard High Dividend Yield ETF (VYM), which invested 0.68% of its portfolio in Dow Chemical as of July 29, 2016. The other holdings of this ETF include 3M Company (MMM), DuPont (DD), and Air Products and Chemicals (APD), with weights of 1.2%, 0.67%, and 0.37%, respectively.


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