The Dow Chemical Co. (DOW) through its global business unit, Dow Coating Material, is investing in a new emulsion plant in China. Dow is expanding operations in China by constructing a new $17 million emulsion plant at the company’s Zhangjiagang site in the eastern Chinese province of Jiangsu.
Construction on the new plant is expected to begin in the fourth quarter of 2010. The facility will also supply products for Dow’s Adhesives and Functional Polymers business as well as the Building and Construction Business Unit.
According to DOW, East China remains one of the most dynamic and fastest growing regions in the already expanding Chinese coatings market. The company is expecting profit growth of 10% annually in its Advanced Materials business. Dow Coating Materials is the supplier of products and technologies to architectural and industrial coatings manufacturers worldwide.
Earlier, Dow’s Advanced Materials business unit had projected revenues of $12 billion by 2012 and $16 billion by 2015. Dow anticipates a boost in profit margins in the near term. Dow also has plans to build a new research and development facility in Korea and expand the Dow Water & Process Solutions facility in Fobmio, Italy .
Dow’s current business profile has an anticipated growth rate of about 4% for the period 2010 to 2012. Dow Chemical became the world’s leading Specialty Chemicals and Advanced Materials company after acquiring Rohm and Haas for $16.3 billion. The Rohm and Hass acquisition is rooted in faster growing segment with an expected growth rate between 5% and 9%. On a consolidated basis, the growth rate of the combined portfolio over this period is expected to be within 5% to 7%. It is likely to boost Dow’s earnings by 5% in 2010 and 13% in 2011.
Dow is targeting faster-growing geographies. The company earns two-thirds of its income from outside the U.S. Growth in emerging economies has been particularly rapid, generating almost 28% of Dow’s revenues. Stronger demand in Asia-Pacific, Latin America, India, the Middle East and Africa has resulted in price gains, largely absorbing the significant increases in feedstock and energy costs.
However, with about 40% of its total revenues coming from North America, the economic slowdown in this region is a concern. We remain Neutral on Dow Chemical.
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