Dow Chemical & Ube Deal Approved - Analyst Blog

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The Dow Chemical Co. ( DOW ) announced the approval of its joint venture with Ube Industries in Japan for the manufacturing of formulated electrolytes for lithium-ion battery cell manufacturers.

The two companies will form Advanced Electrolyte Technologies ( AET ), which will produce up to 5,000 tons of electrolytes per year at a Dow facility in Midland. Production startup for the new facility is expected in late 2012. AET also has future plans to construct manufacturing facilities in China and Europe.

The partnership gives Dow the ability to provide cell manufacturers with a robust offering of material technology that meets demanding battery performance requirements. Combining Dow's material science strength and global footprint with Ube's expertise in electrolyte technology will deliver significant growth opportunities for both companies.

The joint venture also complements the growth strategy of Dow's Energy Materials business by adding formulated electrolytes to an integrated product portfolio that addresses the rapidly expanding energy storage industry.

Recently, Dow released its third-quarter 2011 results. Dow earned 69 cents per share in the third quarter of 2011, ahead of the Zacks Consensus Estimate of 64 cents as well as last year's 45 cents. However, including one-time charges, the company earned 62 cents per share compared with 54 cents in the year-ago quarter.

Quarterly revenues jumped 17% year over year to $15.1 billion and were above the Zacks Consensus Estimate of $14.7 billion, driven by double-digit gains in all operating segments and geographic areas, with the largest growth in Latin America (21%) and Europe, Middle East and Africa (EMEA) (19%). In emerging geographies, sales reached $5 billion, a new quarterly record for the company.

Dow did not provide any financial guidance. However, Dow anticipates demand to improve further, especially in Asia with the global economic recovery. The US and European markets have also started showing signs of improvement. Dow is also optimistic on major consumer-markets, including electronics, coatings, automotive and packaging. However, construction markets are expected to remain weak.

DOW faces stiff competition from EI DuPont de Nemours & Co. ( DD ).

Currently, Dow has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long- term Neutral recommendation.

DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report
DOW CHEMICAL ( DOW ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: AET , DD , DOW , EI

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