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Company Intelligence: Dow Chemical

Dow Chemical | Strategy and Financial Highlights Information from ICIS

 

Edited from: “To the stockholders”, 10-K and stockholder summary, “Next Steps in Dow’s Transformation” and company website.

 

Dow Chemical states that its key strategic point is to transform itself to an ‘earnings growth company’. On this basis, it will focus on improving earnings consistency and delivering earnings growth; preferentially invest in performance and market facing businesses; strengthen its basics franchise by positioning businesses for growth and competitive advantage; leverage its R&D pipeline for organic growth; invest for growth through bolt-on acquisitions and innovation; and drive sound financial discipline to preserve financial flexibility. 

 

In April 2009, Dow completed its $78/share takeover of Rohm and Haas. The acquired business will be called “Advanced Materials Division” and will be headed by Pierre Brondeau. The Rohm and Haas acquisition is led by the following strategic rationale:

 

(1)   combined best-in-class products and technologies, providing Dow with an “excellent position” in a number of industry segments poised for growth, including architectural and powder coatings, and electronics and display technologies;

(2)   marks a pivotal point in Dow's transformation to an earnings-growth company and creates a leading specialty and advanced materials portfolio with strong growth opportunities;

(3)   complements and expands Dow’s current product offerings in attractive sectors such as water, household and personal care, biocides, and building and packaging materials;

(4)   strengthens Dow’s geographic reach, especially in emerging markets; and

(5)   combines the industry-leading core research and development capabilities of Dow with the strong customer relationships and solutions-based innovation of Rohm and Haas.

 

“The combination of Dow Chemical and Rohm and Haas creates a leading specialty chemical and advanced materials portfolio that will be part of a formidable, performance focused company. Our global reach is unmatched. Our product lines and technologies are world-class. Our innovation pipeline is robust and extensive. And our long-term growth potential is significant”, says president and chief executive officer, Andrew Liveris.

 

In 2009, Dow chemical says it will

 

(1)   successfully integrate Rohm and Haas to capture growth and preserve the business model;

(2)   realise Rohm and Haas cost synergy targets quickly;

(3)   accelerate Dow’s restructuring plan;

(4)   actively manage costs and operations through economic downturn;

(5)   execute a divestment plan to support bridge loan pay down; and

(6)   protect its investment grade rating.

 

Dow’s outlook

 

(1)   Dow will assume that the full year 2009 will be a year of global recession;

(2)   government stimulus efforts hold great potential;

(3)   Dow says it is poised to benefit via market and geographic reach;

(4)   job growth and consumer spending is key to the company;

(5)   it expects a few bright spots in the market;

(6)   agriculture fundamentals remain solid;

(7)   rising global demand for clean water;

(8)   higher energy efficiency standards;

(9)   infrastructure projects play to Dow’s strengths; and

      (10) polyethylene primed for recovery

 

“We have a lot of work ahead. We understand that the economy in 2009 may be as difficult as the one in late 2008. We know there may be a period of painful adjustments. And, most of all, we know that you expect more from us than we were able to deliver in 2008”, says Liveris.

 

“As we face the challenges in the months ahead, we will act with a renewed sense of urgency to restore stability to our company. We are focused on the basics of running our business and on generating cash to help us through this protracted economic downturn. We are working toward a solution to the failed K-Dow joint venture, if not in this down-cycle then in the next up-cycle. And we are working towards integrating the Rohm and Haas acquisition that is so critical to our long-term transformational strategy”, concludes Liveris.

 

Please see Interview: US Dow expects 12-15% annual growth from water business, INSIGHT: Slow growth and opportunities for Dow amid a recovery,  INSIGHT: Dow makes progress with Rohm and Haas but at cost and Interview: Dow sees promise in home healthcare plastics or go to ICIS news.

 

Download the The ICIS Top 100 Chemical Companies listing here

 

Financial highlights: Dow Chemical, year ended 31 December

 

2010

 2009

 2008

 2007

 2006

Sales ($ m)

53,674

44,875

57,361

53,513

49,124

Net Profit ($ m)

2,321

566

626

2,887

3,724

Total Assets ($ m)

69,588

66,018

45,474

48,801

45,581

Diluted earnings per share ($)

1.72

0.32

0.62

 2.99

3.82

Number of Employees

50,000

52,000

46,000

45,900

43,000

 

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Dow Chemical Company Structure

Dow is a global science and technology based company that develops and manufactures a portfolio of chemicals, plastics and agricultural products and services.
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