Dow Expects to Boost EBITDA With U.S. Market Expansion

Jun. 3.11 | About: Dow Chemical (DOW)

Chemical giant The Dow Chemical Company (NYSE:DOW) expects its earnings before interest, taxes, depreciation and amortization (EBITDA) to rise by $1 billion by 2016, driven by expansion in the U.S. market.

Last month, 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, surpassing the Zacks Consensus Estimate of $13.8 billion. Besides, volume and pricing gains across all business segments and geographical regions, particularly North America and Europe, yielded healthy revenue growth.

Dow anticipates demand to improve further, especially in Asia, due to the global economic recovery. Moreover, the US and European markets have also started showing signs of improvement. Dow is also optimistic about major consumer-markets, including electronics, coatings, automotive and packaging. However, construction markets are expected to remain weak.

Dow supplies high-performance materials, agricultural products, plastics (polyethylene and polypropylene) and industrial chemicals to industries and consumers globally. The company’s products have a vast array of applications and are used by various industries including farming, construction, transportation, electronics and consumer goods.

DOW faces stiff competition from EI DuPont de Nemours & Co. (NYSE:DD).

Currently, Dow holds a short-term (1 to 3 months) Zacks #1 Rank (Strong Buy) but a long-term Neutral recommendation.