2030 Dow Center
Midland, MI 48674
Sector: Basic Materials
Industry: Chemicals - Major Diversified
Full Time Employees: 45,856
The Dow Chemical Company engages in the manufacture and sale of chemicals, plastic materials, agricultural, and other specialized products and services worldwide. The company operates in six segments: Performance Plastics, Performance Chemicals, Agricultural Sciences, Basic Plastics, Basic Chemicals, and Hydrocarbons and Energy. The Performance Plastics segment provides automotive products, building solutions, epoxy resins, intermediates and specialty resins, polyurethanes and polyurethane systems, specialty plastics and elastomers, and technology licensing and catalyst products. The Performance Chemicals segment offers polymers, latex, and specialty chemicals. The Agricultural Sciences segment provides pest management, agricultural, and crop biotechnology products and solutions. The Basic Plastics segment offers polyethylene, polypropylene, and polystyrene resins. The Basic Chemicals segment provides chemicals, such as acids, alcohols, caustic soda, chlorine, chloroform, and other chemicals; and ethylene oxide/ethylene glycol chemicals. The Hydrocarbons and Energy segment procures fuels, natural gas liquids, and crude oil-based raw materials, as well as supplies monomers, power, and steam. Its products include benzene; butadiene; butylene; cumene; ethylene; propylene; styrene; power, steam, and other utilities. The company also involves in the property and casualty insurance and reinsurance business through its Liana Limited subsidiaries. It serves various industries, including appliance; automotive; agricultural; building and construction; chemical processing; electronics; furniture; house wares; oil and gas; packaging; paints, coatings, and adhesives; personal care; pharmaceutical; processed foods; pulp and paper; textile and carpet; utilities; and water treatment industries. The Dow Chemical Company was founded in 1897 and is based in Midland, Michigan.
Shares Outstanding5: 949.15M
% Held by Insiders1: 0.18%
% Held by Institutions1: 71.10%
Vancouver 2010 Winter Olympic Games
Dow Chemical Prices Increase
Thursday March 20, 12:58 pm ET
By Paul Raman, CFA
Dow Chemical Company (NYSE: DOW - News) is the second leading chemical company in the world. The company's costs are low due to vertical integration. Financials are solid. Stronger demand in Europe, Asia/Pacific, Latin America, India, Middle East and Africa more than offset the continued economic slowdown in North America.
Moreover, price gains largely offset significant increases in feedstock and energy costs. Sales for the three months ended December 31 were $14.2 billion, 16% higher than the same period in 2006, with 17%, 15% and 14% increases in Europe, Asia/Pacific and Latin America, respectively.
Dow reported earnings of $0.84 per share, a decrease from $0.98 last year due to rise in feedstock and energy costs as well as economic slowdown in North America. Year-over-year, volume improved 4% with particularly robust demand in Europe, Asia/Pacific, Latin America, India, Middle East and Africa.
Compared with the same quarter last year, Dow reported a 12% price increase in all geographic areas and across all operating segments, outpacing the highest ever year-over-year increase of $1.7 billion in feedstock and energy costs with focus on price/volume management as well as cost discipline.
Currently, Dow is valued at 10.7x our 2008 estimate of $3.39. The company's costs are low due to vertical integration. The company recently announced a JV with PIC (Kuwait) to get cash that can be redeployed into the specialty businesses.
Financials are solid. However, 67% exposure to the commodity chemical cycle, where we may be entering the negative phase, along with high raw material costs, force us to rate the stock a Hold with a target of $40. This is 11.8x our 2008 estimate.
King Capital Investment Group