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Dow Restarts Louisiana Plant

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Chemical giant The Dow Chemical Company (DOW) has resumed operations at its ethylene plant in St. Charles, Louisiana. Dow had shut the plant back in 2009 due to increased competition from natural gas from shale formations in the U.S.

The ethylene plant is owned by Union Carbide Corporation, a wholly-owned subsidiary of Dow. Products made at St. Charles Operations which serves thousands of household, business and consumer segments that improve everyday life. Ethylene is widely used in chemical industry, and is used to make plastics for packaging, auto parts and carpets industries.

Dow manufactures and supplies chemical products used as raw materials in the manufacture of customer products and services worldwide. The company released its third quarter 2012 results in October 2012. It earned 42 cents a share in the quarter, down from 62 cents (excluding special items) posted a year ago. However, earnings in the quarter topped the Zacks Consensus Estimate of 37 cents.

Dow’s profit tumbled 39% year over year to $497 million as lower pricing dragged down its sales in the quarter. The company also saw weak demand for its products in the quarter, largely stemming from the recessionary conditions in Europe.

Revenues slipped 9.7% (or 7% on an adjusted basis) to $13,637 million in the quarter, missing the Zacks Consensus Estimate of $14,130 million. Sales fell across all the segments except Agricultural Sciences. Revenues in Europe slid 10%, largely due to unfavorable currency translation.

Dow competes with DuPont (DD) and currently retains a Zacks #3 Rank that translates to a short-term (1 to 3 months) Hold rating. We currently have a long-term (more than 6 months) Neutral recommendation on the stock.

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