How DOW (Dow) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a materials and chemicals leader like DOW makes money is essential for investors and anyone interested in the business of advanced materials and specialty chemicals. In this post, we break down DOW's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick DOW Overview

DOW operates as a global provider of materials science solutions, specializing in the production of plastics, industrial intermediates, coatings, and silicones. Revenue comes primarily from the sale of packaging and specialty plastics, industrial intermediates, and performance materials to a broad range of industries, including packaging, infrastructure, and consumer goods. The business is organized into three main segments: Packaging & Specialty Plastics, Industrial Intermediaries & Infrastructure, and Performance Materials & Coatings, each serving distinct end markets.

Revenue Breakdown

• Total Revenue (Q3 2025): $10.9B (+0.0% YoY)
  • Packaging & Specialty Plastics: $4.89B (45.0% of total, -11.3% YoY)
  • Industrial Intermediaries & Infrastructure: $2.83B (26.1% of total, -4.3% YoY)
  • Performance Materials & Coatings: $2.08B (19.1% of total, -6.0% YoY)
  • Other Revenue by Product: $0.91B (8.3% of total)
  • Other: $0.17B
• Growth is powered by resilience in core packaging applications and ongoing demand for industrial intermediates, though segment-level revenue declined YoY due to challenging macroeconomic conditions.

Gross Profit and Margins

• Gross Profit: [Data not disclosed for Q3 2025]
  • Cost of Revenue: [Not disclosed]
  • DOW maintains moderate margins due to its scale, integrated production, and focus on higher-value specialty products.
• Most costs come from raw materials, energy, and manufacturing operations, reflecting the capital-intensive nature of the chemical industry.

Operating Income and Expenses

• Operating Income: [Not disclosed for Q3 2025]
• Operating Expenses: $604M (-11.2% YoY)
  • R&D: $208M (0.0% YoY, 1.9% of revenue) — Focused on innovative materials, process improvements, and sustainability initiatives.
  • SG&A: $396M (0.0% YoY, 3.6% of revenue) — Covers sales, marketing, administrative, and corporate functions.
  • DOW continues to control costs and invest in innovation, balancing operational efficiency with strategic R&D.

Net Income

• Pre-Tax Income: [Not disclosed for Q3 2025]
• Income Tax: [Not disclosed]
• Net Income: $240M (+13.7% YoY, 2.2% net margin)
• DOW converts a moderate portion of sales into profit due to its scale, operational leverage, and disciplined cost management.

What Drives DOW's Money Machine?

• Packaging & Specialty Plastics: 45% of revenue, serving global packaging and consumer markets.
• Volume and pricing: Key metrics include sales volumes and average selling prices, both sensitive to global demand and commodity cycles.
• R&D investment: $208M in Q3 2025, targeting sustainable materials, advanced polymers, and process innovation.
• Future growth areas: Circular economy solutions, bio-based plastics, and advanced coatings, though these are not yet major profit contributors.

Visualizing DOW's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after significant investments in innovation and efficiency, 2.2% of revenue drops to the bottom line.

Key Takeaways

• DOW's money comes overwhelmingly from packaging and specialty plastics sales.
• High gross and net margins illustrate the power of DOW's integrated, scale-driven business model.
• Heavy investment in R&D and process innovation, balanced by efficiency in operating costs.
• Ongoing growth is driven by packaging demand, industrial intermediates, and sustainability trends.

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FAQ About DOW's Income Statement

1. What is the main source of DOW's revenue in 2025?

DOW generates over 45% of its revenue from Packaging & Specialty Plastics, with additional contributions from Industrial Intermediaries & Infrastructure 26.1% and Performance Materials & Coatings 19.1%. Other product and miscellaneous revenues make up the remainder.

2. How profitable is DOW in Q3 2025?

DOW reported net income of $240M in Q3 2025, with a net margin of approximately 2.2%, reflecting moderate profitability driven by operational scale and cost control.

3. What are the largest expense categories for DOW?

The biggest expenses on DOW's income statement are operating expenses, particularly Research & Development (R&D) at $208M and Sales, General & Administrative (SG&A) at $396M in Q3 2025. R&D investment is focused on advanced materials and sustainability.

4. Why does Performance Materials & Coatings operate at a loss?

Performance Materials & Coatings, despite generating $2.08B in revenue, faces margin pressure due to high input costs and ongoing investments in new product development, as DOW seeks to position this segment for long-term growth—even if the division is unprofitable today.

5. How does DOW's effective tax rate compare to previous years?

DOW's effective tax rate for Q3 2025 was [not disclosed], making direct comparison unavailable. Historically, DOW's tax rate has been influenced by international structuring and tax benefits from R&D credits.