The Dow Chemical Company
) is joining forces with UOP LLC, a subsidiary of
Honeywell International Inc.
), to produce propylene at its petrochemical facility in Texas.
Dow will be using Honeywell UOP C3 Oleflex technology in its new
propane dehydrogenation unit to convert shale gas-derived propane
to propylene, a product used in the production of packaging,
adhesives, coatings, cleaners and many other end-use applications.
The facility will produce 750,000 metric tons per year of
polymer-grade propylene and is scheduled to start in 2015.
This project would be the first of its kind in the United States
and the largest single-train propane dehydrogenation plant in North
This agreement further enhances DOW's comprehensive plan to
spread its wings and connects the Dow's U.S. operations with
cost-advantaged ethane and propane feedstocks of Honeywell.
In October 2011, 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. The
growth in revenue was driven by double-digit gains in all its
operating segments and geographic areas, with the largest growth in
Latin America (21%) and Europe, Middle East and Africa (EMEA)
(19%). In the emerging geographies, sales reached $5 billion, a new
quarterly record for the company.
Dow did not provide any financial guidance. However, the company
expects 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
Joint ventures and acquisitions are integral parts of Dow's
growth strategy and provide access to potential markets, new
technologies and feedstock, while at the same time lowering capital
investment and risk. Dow Chemical became the world's leading
specialty chemicals and advanced materials company after acquiring
ROH for $16.3 billion.
Dow is targeting faster-growing geographies. The company earns
two-thirds of its income from outside the U.S. Growth in emerging
economies has been especially fast, generating almost 35% of the
company's revenues in 2010. To strengthen its downstream business,
Dow is building an integrated manufacturing facility for
Performance Products, Plastics and Performance Systems businesses
with Saudi Aramco. In its Agro business, Dow is introducing new
products. In November 2010, Dow AgroSciences submitted the global
joint-review dossier for sulfoxaflor insecticide, which will be
launched in 2012. By 2013, Dow projects new product sales to reach
$800 million. The company also started a new business in the Oil
& Gas sector in Latin America.
DOW faces stiff competition from
EI DuPont de Nemours & Co.
Currently, Dow has a short-term (1 to 3 months) Zacks #3 Rank
(Hold) and a long- term Neutral recommendation.
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