Dow Inc. shares plummet 9.9% after a 50% dividend cut to $0.35 per share and a Q2 2025 loss of $0.42 per share. Explore the chemical giant’s financial struggles, cost-cutting measures, and what lies ahead for investors.
MIDLAND, Mich. — Dow Inc. (NYSE: DOW), a global leader in materials science, saw its shares drop 9.9% in premarket trading on Thursday, July 24, 2025, following a 50% dividend cut and a larger-than-expected quarterly loss. The chemical manufacturer, serving markets in packaging, infrastructure, and consumer applications, attributed the downturn to a prolonged industry slump, high production costs, weak demand, stringent regulations, and trade uncertainties. This marks only the second dividend cut in Dow’s history since 1897, highlighting the severity of the current economic challenges.
Dow Inc. Dividend Halved to Ensure Financial Flexibility
Dow Inc. announced a reduction of its quarterly dividend from $0.70 to $0.35 per share, payable on September 12, 2025, to shareholders of record on August 29, 2025. CEO Jim Fitterling described the move as a “right-sizing” effort to provide “additional financial flexibility” in a challenging economic environment. Despite the cut, Dow emphasized that its dividend yield remains competitive at approximately 5.3% (based on a $26.304 stock price), compared to 2.5% for S&P Chemicals and 1.5% for the S&P 500. This adjustment marks the 456th consecutive dividend since 1912, a testament to Dow’s long-standing commitment to shareholders.
Dow Inc. Q2 2025: First Loss in Five Years
Dow reported its first quarterly loss in five years, posting an adjusted loss of $0.42 per share for the second quarter ending June 30, 2025, significantly worse than analysts’ expectations of a $0.17 per share loss, according to LSEG data. Net sales fell 7% year-over-year to $10.1 billion, with operating EBITDA dropping to $703 million from $944 million in Q1 2025. The Packaging & Specialty Plastics segment, Dow’s largest revenue driver, saw sales decline 8.9% to $5.03 billion, with operating EBIT plummeting 90% to $71 million and margins shrinking to 1.4% from 12.7% a year ago.
The Industrial Intermediates & Infrastructure segment reported an operating EBIT loss of $185 million, worsening from a $7 million profit in Q2 2024, driven by lower prices and higher maintenance costs. The Performance Materials & Coatings segment offered a slight positive, with operating EBIT rising to $152 million from $146 million a year ago, supported by lower input costs and seasonal demand. However, these gains could not offset broader declines across the company.
Dow Inc. Strategic Actions to Navigate Downturn
To address these challenges, Dow has implemented aggressive cost-cutting and restructuring measures. The company announced the closure of three European facilities—an ethylene cracker in Böhlen, Germany, a chlor-alkali complex in Schkopau, Germany, and a siloxanes operation in Barry, UK—by 2027, expected to yield a $200 million EBITDA uplift by 2029 and save $60 million annually in capital expenditures. Additionally, Dow accelerated its cost reduction program, targeting $400 million in savings for 2025 as part of a $1 billion initiative. Capital expenditures were slashed to $2.5 billion, approximately $1 billion below initial plans. The company also secured $2.4 billion from a strategic infrastructure partnership, with potential for an additional $600 million in the second half of 2025, and anticipates $1.2 billion from NOVA litigation proceeds.
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Dow Inc. Analyst Sentiment and Market Outlook
The market’s reaction was swift, with shares falling to $26.304 from a previous close of $30.37. Analysts expressed caution, with Moody’s Ratings downgrading Dow’s senior unsecured credit rating to Baa2 from Baa1, citing depressed earnings and governance concerns. BofA Securities maintained an Underperform rating with a $27.00 price target, while Mizuho lowered its target to $31.00 from $32.00, pointing to weaker polyethylene pricing and industry-wide challenges. Dow’s third-quarter net sales forecast of $10.2 billion falls below analysts’ estimates of $10.6 billion, signaling ongoing headwinds.
Posts on X reflected investor disappointment, with users like @Fin_Eng_Net noting the rarity of the dividend cut and @MarketWatch highlighting the stock’s decline amid the earnings downturn.
Implications for Investors
Dow’s high dividend yield, previously around 9.5% at $0.70 per share, had attracted income-focused investors, but the cut to 5.3% and a high payout ratio—previously reported at 671.33%—raise concerns about sustainability. The company’s debt-to-equity ratio of 1.07 and ongoing margin pressures further complicate its financial outlook. However, trading at a forward P/E of 17.23X, above its five-year median, Dow may offer long-term potential if global demand stabilizes. Investors should monitor U.S.-China trade developments and energy market volatility, which could further impact operations.
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Conclusion
Dow Inc.’s 50% dividend cut and Q2 2025 loss underscore the severe pressures facing the chemical industry, from high costs to trade disruptions. While cost-cutting measures and asset divestitures aim to stabilize finances, the near-term outlook remains challenging. Investors seeking exposure to Dow should balance the risks of a prolonged downturn against the potential for recovery in a more favorable economic climate.
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