24 October 2013 16:38 [Source: ICIS news]
HOUSTON (ICIS)--US-based Dow Chemical expects either a joint venture or a sale of its epoxy resins business will take place in the near term, CEO Andrew Liveris said on Thursday.
"We believe these are great assets," Liveris said during an earnings conference call. "However, as we have carefully evaluated the markets served by the epoxy resins business, it is clear these markets no longer align with Dow's strategic priorities."
He added: "We are evaluating various options to reduce our participation in the epoxy-based value chain."
In the past, epoxy resins had been a strong business for Dow, with margins at about 20% in terms of earnings before interest, tax, depreciation and amortisation (EBITDA), Liveris said.
However, overbuilding, especially in China, has caused an oversupply and that has hurt profitability, he said. Plus, demand from wind turbines has fallen because of a loss of subsidies.
"These have been big dynamics that have come in a hurry," Liveris said. Margins for epoxy resins are now in the high single-digit range.
The company first announced that it was considering a joint venture or sale of the epoxy resins business during its Q2 earnings conference call in July.
Earlier in February, Huntsman said it was considering rationalisation in its basic liquid epoxy resins.
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