Dow lists in New York, readies $3bn stock repurchase

Source: ICIS News

2019/04/02

LONDON (ICIS)--Dow, the former materials science business of DowDuPont, has completed the separation from its former parent company and launched on the New York Stock Exchange (NYSE) as an independent business on Tuesday.

Each existing stakeholder is expected to receive one Dow share for every three DowDuPont shares held, and the company is expected to pursue a $3bn stock repurchase programme as early as 2 April.

Known as Dow, the business will be split into six global units focused on three business divisions.

The performance materials and coatings division produces a portfolio of acrylic, cellulosic and silicone-based products for architectural and industrial coatings, while the industrial intermediates and infrastructure division, produces ethylene and propylene oxides, cellulose ethers, latex polymers and acrylic emulsions.

The third division, packaging and specialty plastics, comprises the widest polyolefins portfolio in the sector, as well as hydrocarbon and energy products.

The separation is the first of three anticipated for DowDuPont, which merged in late 2017 as a means of siloing the specialties chemicals, performance materials and agricultural chemicals assets of Dow and DuPont into three separate companies.

The company is now looking to split off Corteva, the agricultural business, which will leave the specialties business to trade under the DuPont banner.

The separation of Dow from its former parent comes at a time of substantial bearishness for DowDuPont and particularly the newly-independent Dow, which is the main cause of a first-quarter profit warning issued by the company last week.

Material science divisions sales ($m) Q4 2018 Q4 2017 Change
Performance materials & coatings 2,196 2,210 -1%
Industrial intermediates & infrastructure 3,695 3,554 4%
Packaging & specialty plastics 5,868 6,092 -4%

DowDuPont is projecting a high teens percent year-on-year drop in earnings for the quarter, driven by margin compression for Dow’s operations driving operating earnings before interest, taxes, depreciation and amortisation (EBITDA) down by $100m compared to previous guidance.

Flooding in the Midwestern US during the quarter is expected to cut agriculture earnings by $125m-150m compared to the same period a year earlier, while specialties earnings – the assets that will eventually trade as DuPont – are expected to perform better.

DowDuPont’s materials science division posted a 12% year-on-year drop in fourth quarter 2018 operating EBITDA despite an 11% increase in sales over the same period as a result weaker margins for polyethylene and isocyanates chain products.

Materials science divisions operating EBITDA ($m) Q4 2018 Q4 2017 Change 
Performance materials & coatings 421 400 5%
Industrial intermediates & infrastructure 553 677 -18%
Packaging & specialty plastics 1,104 1,274 -13%

-

Pictured: Dow's CEO Jim Fitterling rings the opening bell at the NYSE on Tuesday
Source: NYSE