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The Dow Chemical Company Message Board

  • dow_knight dow_knight Feb 11, 2013 4:12 PM Flag

    Dow-BASF Return on Investment Comparison

    If one looks at the return of investment over any period and especially during Liveris' reign, it is very clear that the performance of the Dow stock is dismal compared to BASF. Run the charts: 1y Dow -5%, BASF +20%; 2y Dow -15%, BASF +20%; 5y Dow -10%, BASF +200%. BASF has some back integration into gas and oil, but that can not solely explain this big difference. Despite all promises that Dow would be less volatile being a diverse chemical company after the Rohm & Haas take over, the opposite is true. BASF, heavily situated in Europe, is in quiet waters compared to Dow. I wonder why nobody seems to notice this. Where would you put your money? Facts speak.

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    • BASF's 2012 results just published. Comparison: Sales BASF - € 78.7 billion (+7%), Dow - $ 56.8 billion (-5%) ; EBITA BASF - € 8.9 billion (+5%), Dow - $ 7.5 billion (-11%); Net debt BASF - € 11.6 billion, Dow - $ 20 billion (excl. other liabilities); dividend yield = comparable. Which strategy works? Numbers speak.

    • History repeats: In the recent headcount reduction a lot of excellent people had to go, and the worst performer stays on top. Something's fundamentally wrong here, a blend of Animal Farm and North Korea.

      Sentiment: Hold

      • 1 Reply to s_strong_b_buy
      • S-strong, I don't know about your plant but here, I didn't see middle managers get laid off. They were all salary but most had no employees. A couple oversaw a tempo who had been assigned because the employee was overloaded. What I saw was a reduction in salary people in the age group of 50 years old and older. In one instance there were only two people who did a certain job. Dow laid off the older experienced guy and left the younger more inexperienced guy (who is now scared to death because he didn't bother to learn the more technical stuff. He always let the older man handle it). Makes me wonder if anyone gets to normally retire from Dow if they are not executives or hourly.

    • dow_knight asks where would I put my money?

      My Z factor analysis of competitive chemical companies placed BASF well ahead of Dow, followed by Praxair.. One poster asked the value of ZFactor. This was an excellent example. I've tracked the two companies for over ten years and the same factors apply that BASF is by far the outstanding winner. Praxair is a close second.

      Have I put any money into this analysis? No. I'm all set on another dividend, value track that lets me sleep at nights. My beta mix = 0.39.


    • I have noticed. Liveris is the worst performiong CEO in Dow history yet there is no ground-swell to boot his #$%$ I don't understand how a performance-driven organization (his words) can continue to allow his existence.

      • 1 Reply to rrocket_man
      • Just some additional numbers: Since Liveris took the helm in November 2004 the Dow stock has dropped by 32%, excluding the loss in dividend. The acquisition of Rohm & Haas was $16.2 billion. Dow market cap currently is $ 36 billion, which is the same as in 2005. Remember the Union Carbide merger was $ 9.3 billion. Clearly the strategy is not delivering: No market cap addition, lower dividends, no earnings stability. Liveris also has a poor track record. When he ran the chemicals business, he bought Ascot for $ 440 million. Later sold big parts for change: Haltermann to Chemoxy and Chirotech to Dr. Reddy. Accountability?

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