DOW Dow Inc

The largest U.S. containing alkali maker, Dow Chemical Co. (DOW) announced that it will suspend dock operations at two factory sites in Louisiana in anticipation of potential flooding from the swollen Mississippi River.

Though the company does not expect floods at its Plaquemine and St. Charles sites, it is suspending dock work based on water-level projections. However, the company’s logistics professionals continue to work diligently to minimize the impact of this situation on the company’s customers.

Dow has 3 ethylene plants, well known as crackers, along The Mississippi River in Louisiana. South of Baton Rouge is Plaquemine 2, which can provide 499,000 tons of ethylene a year, as well as Plaquemine 3 that can furnish 758,000 tons, according to Bloomberg. West of New Orleans at St. Charles in Hahnville is Taft 1, which can have 610,000 tons of ethylene a year.

Recently, Dow reported its first quarter of 2011 results. The company earned $0.82 per share in the first quarter of 2011, ahead of the Zacks Consensus Estimate of $0.67 per share as well as last year’s $0.43 per share. However, including one-time charges, the company earned $0.54 per share compared with $0.41 per share in the year-ago quarter.

Quarterly revenues jumped 20% year over year to $14.7 billion and were above the Zacks Consensus Estimate of $13.8 billion. Volume and pricing gains across all business segments and geographical regions, particularly North America and Europe, yielded healthy revenue growth.

North American revenues grew 8.1% while that of Latin America shot up 13.7%. Demand increased by 12.9% in Europe, the Middle East and Africa, and 4.9% in Asia Pacific. Latin American volumes were up 1%. Volume in Asia Pacific decreased 4% and in North America decreased 2%.

A stronger top-line growth resulted in an increase of over 34% in EBITDA (adjusted) to $2.4 billion. EBITDA margin was up 300 basis points year over year. Dow’s global operating rate was 83%, flat year over year but up 2% sequentially.

Dow anticipates that demand would 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 #1 Rank (Strong Buy) but a long- term Neutral recommendation.

 
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