Dow delineates long-term strategy

MIDLAND, Mich. -- At its 2012 Investor Forum, The Dow Chemical Co. shared with investors “strategic interventions and key catalysts that will enable Dow to achieve near-term targets and drive sustainable earnings growth.”

“We have built a more simplified organization – concentrating only on those things that increase cash flow, improve return on capital and drive earnings growth,” said Dow Chairman and CEO Andrew N. Liveris.

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During the event, Liveris presented several key drivers that will fuel Dow’s near-term earnings growth:

Dow says it has deployed $2.5 billion of “aggressive” measures in 2012. These actions are expected to deliver $1 billion in cost and cash “interventions” in 2013, of which $500 million will impact EBITDA. With nearly 40 project cancellation and plant shutdowns announced this year, the Company is taking swift steps to improve asset utilization, drive down structural costs – particularly in Europe – and enhance return on capital.

The company says it remains on schedule to restart its St. Charles Operations ethylene cracker, which is expected to deliver a $150 million increase in EBITDA in 2013. Taken on the whole, Dow’s U.S. Gulf Coast investments in ethylene and propylene integration, coupled with favorable shale gas dynamics, are expected to deliver $2 billion in additional EBITDA in 2017. The company also reaffirmed that its Sadara joint venture remains on track, with an anticipated construction workforce peak of about 60,000 people next year, and operations slated for start-up in 2015.

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Over the last several years, Dow says it has successfully rebalanced its innovation pipeline toward commercialization. Today, programs in the implementation stage of Dow’s R&D pipeline represent a net present value of $7 billion – an approximate $200 million increase versus 2011. Importantly, the company has also reduced exploration programs. In addition, Dow has announced it is halting growth projects where significant market shifts and government policies have triggered fundamental changes, such as alternative energy.