The Dow Chemical Co. plans to continue its positive momentum by investing in growth, reducing debt and offering shareholder remuneration in 2011. Excluding certain items, earnings were 47 cents per share, up from 18 cents the year before. Dow Chairman and CEO Andrew Liveris called the results a capstone to 2010’s growth, but added that there still is much work to do. “We will not lose the momentum of this transformation, the company could expand in areas like electronics, seeds and water technology. These are high-margin bolt-ons, ones where we can maybe buy small regionally and scale-up globally, so we can get synergies immediately,” Liveris said.
There may be more businesses sold or placed into joint ventures as well as merger or acquisition activity, but “nothing as dramatic as in the last couple of years,” Liveris said.
The company had US$7 bln cash at the end of 2010. The company’s plastics unit was targeted for a joint venture in the failed K-Dow Petrochemicals deal with Kuwait’s Petrochemical Industries Co., but will not see a similar type of arrangement moving forward. Liveris said the division is performing well as it continues to shift to higher-margin specialty segments of the markets. Some assets have been sold to create Styron LLC. A different type of deal using an equity-light approach could still take place if it was at the right price, Liveris said.
Dow has remained in arbitration with PIC since the Kuwaiti company unexpectedly backed out of the K-Dow deal. Liveris said a resolution is expected near the middle of the year.
The company has an innovation pipeline with more than 500 projects with estimated potential value of US$30 bln. Growth synergies from the purchase of Rohm and Haas reached US$1.1 bln in 2010, beating the company’s US$500 million goal for 2010. Liveris said the company’s balanced portfolio of businesses in growing emerging markets and its leadership in developed markets positions it well for growth.
Dow plans to close two vinyl chloride monomer production units this year — one in Oyster Creek, Texas, and another in Plaquemine, La. “This is a continuation of the decisive actions taken by Dow to right-size our core chemicals manufacturing footprint and shift our basic feedstocks toward performance derivative businesses,” said Carlo Guarino, global business director for Dow Chlor-Vinyl.