Zacks Industry Outlook Highlights: CF Industries Holdings, Airgas, Air Products & Chemicals, Dow Chemical and DuPont

CHICAGO, Jan. 26, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Chemicals & Fertilizers' Industry, including CF Industries Holdings Inc. (NYSE: CF), Airgas Inc. (NYSE: ARG), Air Products & Chemicals Inc. (NYSE: APD), Dow Chemical (NYSE: DOW) and DuPont (NYSE: DD).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/46513/Chemical+%26amp%3B+Fertilizers+Industry+Outlook+-+Jan.+2011

Chemical companies spent much of the past two years on their core business and tailoring their business processes and structure toward becoming more efficient. Consequently, many of these companies have ended up with excess cash on their balance sheets. Growth by further reducing costs is not a viable option anymore as most companies have already taken drastic measures to cut costs and improve operating efficiencies.

The chemical companies are seeing mergers and acquisitions as an option to grow in the current economic environment. Thus, there has been a pickup in the volume of deals announced during 2010, a substantial increase from the previous year, indicating that that the global economy is stabilizing.

The companies are focused on exploring growth opportunities in emerging markets with strong performance in fast-growing regions of Asia-Pacific and Latin America, particularly China and Brazil. The United States expects growth to continue, albeit at a slower rate than last year. Business conditions are improving, with corporate profits and investments rising and industrial production showing solid gains compared with the year before.

The world's second-largest seed maker, DuPont recently entered into a definitive agreement to acquire Denmark 's Danisco for $5.8 billion in cash and assumption of $500 million of Danisco's net debt. This marks the company's largest acquisition since its $7.7 billion buy of Pioneer Hi-Bred International in 1999. The deal will enable DuPont to expand the company's offerings in more specialized areas like biofuels and food enzyme.

DuPont is focused on capturing $1 billion in working capital productivity gains during the 2011−2013 timeframe. The company is also on track to achieve a cumulative $600 million in benefits from fixed cost productivity and restructuring actions in 2011. It is executing strategies for further development and growth of new products, particularly for agriculture, photovoltaics, alternative energy and materials.

Dow is delivering cost synergies from the Rohm & Haas acquisition and, in its 2010 third quarter, the company delivered more than $975 million in sales on a run-rate basis, already exceeding the year-end target of $500 million. Dow is targeting an acquisition growth synergy run-rate of $2 billion by the end of 2012.

In April 2010, CF Industries Holdings Inc. (NYSE: CF) acquired its long-chased rival Terra Industries for $4.7 billion. With this acquisition, CF has become the global leader in the nitrogen fertilizer industry with a wide geographical footprint and a total capacity of 6.3 million nutrient tons of nitrogen and 2.1 million nutrient tons of phosphate.

Similarly, fertilizer manufacturer Agrium is growing through a combination of acquisitions and organic expansion. Agrium's recent acquisition of AWB Ltd., a leading agricultural retailer in Australia, will broaden its rural product sales business, including fertilizers and herbicides, in Australia, the world's fourth-largest wheat exporter and third-largest shipper of canola.

Another major deal in the chemical space is the pending Airgas Inc. (NYSE: ARG) - Air Products & Chemicals Inc. (NYSE: APD) merger valued at around $5.9 billion, excluding debt. If it materializes, the Air Products and Airgas association would form the world's largest industrial gas company. With the acquisition of Airgas, Air Products plans a foray into the North American packaged gas business.

Dow Chemical (NYSE: DOW), DuPont (NYSE: DD), Agrium, Air Products and CF Industries have long-term Neutral recommendations.

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