Dow Inc. DOW said that it will retrofit its proprietary fluidized catalytic dehydrogenation (FCDh) technology into one of its crackers in Plaquemine, LA, to make on-purpose propylene. The move is part of its low capital intensity, high-return incremental growth investments.
The FCDh technology retrofit will allow reliable and cost-efficient supply of more than 100,000 metric tons of additional propylene at full run-rate, enabling Dow to address rising customer demand for its businesses across major end-markets such as consumer, infrastructure and packaging.
The retrofit also improves the company’s ability to source the most advantaged feedstocks. The project is expected to start production by end-2021.
The FCDh technology can reduce energy usage and greenhouse gas emissions by up to 20% and lower capital outlay by up to 25%. This will improve overall sustainability vis-à-vis traditional propane dehydrogenation technologies.
Dow expanded the ethylene capacity of the same Plaquemine cracker in 2016 by more than 225,000 metric tons. It also added the capability to crack ethane while keeping the flexibility to crack propane, butane and naphtha.
Dow’s shares are down around 14% over the past three months, compared with the roughly 10.2% decline recorded by its industry.
Dow’s adjusted earnings of 86 cents per share for the second quarter beat the Zacks Consensus Estimate of 85 cents. Its revenues of $11,014 million, however, missed the Zacks Consensus Estimate of $11,300.9 million.
Dow, in its second-quarter call, said that the pace of global economic growth has slowed as buying patterns remain cautious amid trade and geopolitical uncertainties. In this backdrop, the company remains focused on maintaining cost and operational discipline through cost synergy and stranded cost removal initiatives. The company noted that it is lowering its planned capital spending for 2019 to $2 billion from $2.5 billion in response to the prevailing market environment.
Zacks Rank & Stocks to Consider
Dow currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks worth considering in the basic materials space include Kinross Gold Corporation KGC, NewMarket Corporation NEU and SSR Mining Inc. SSRM.
Kinross has projected earnings growth rate of 150% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have surged around 64% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.
NewMarket has an expected earnings growth rate of 16.2% for the current year and carries Zacks Rank #1. Its shares have gained around 19% in the past year.
SSR Mining has an estimated earnings growth rate of 165.2% for the current year and carries a Zacks Rank #1. Its shares have shot up roughly 80% in the past year.
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