SCG-DOW Finalize PO Plant Start-up

The Dow Chemical Company ( DOW - Analyst Report ) announced that the SCG-Dow Group, a joint venture between Dow and The Siam Cement Group ( SCG - Analyst Report ) , has finalized the start-up of its propylene oxide (PO) facility in Thailand by successfully completing its full capacity performance test.

The ground for the PO facility was broken in June 2008. Propylene oxide, a versatile chemical intermediate, is used in the production of raw materials for a wide range of industrial and commercial products, including polyurethanes, propylene glycol, and glycol ethers.

In October 2011, the SCG-Dow Group reached a key milestone for the new PO facility in Thailand. The group ramped up the plant to stable production levels while preparing for the full capacity run scheduled for the fourth quarter of 2011. The world-scale plant, located within the Asia Industrial Estates (AIE) site near Map Ta Phut, Thailand will have a name plate capacity of 390 kilotons per annum (KTA) of PO via the innovative hydrogen peroxide to propylene oxide (HPPO) technology jointly developed by Dow and BASF.

However, the new facility met the target on time by successfully completing the full capacity run on November 22, 2011, only two months after starting raw material feeds to this new plant. Additionally, the plant exceeded expectations for all quality and yield performance parameters.

In October 2011, Dow earned 69 cents per share in the third quarter of 2011, ahead of the Zacks Consensus Estimate of 64 cents as well as last year’s 45 cents. However, including one-time charges, the company earned 62 cents per share compared with 54 cents in the year-ago quarter.

Quarterly revenues jumped 17% year over year to $15.1 billion and were above the Zacks Consensus Estimate of $14.7 billion, driven by double-digit gains in all its operating segments and geographic areas, with the largest growth in Latin America (21%) and Europe, Middle East and Africa (EMEA) (19%). In the emerging geographies, sales reached $5 billion, a new quarterly record for the company.

Dow did not provide any financial guidance. However, the company expects demand to 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 fromEI DuPont de Nemours & Co. ( DD - Analyst Report ) .

Currently, Dow has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long- term Neutral recommendation.