Dow Expects 2016 Boost from Texas PDH Plant, Louisiana Enhancements

Researched by Industrial Info Resources (Sugar Land, Texas)--A newly-opened propane dehydrogenation plant in Texas and enhanced ethane cracking operations in Louisiana will boost earnings this year for Dow Chemical Company (NYSE:DOW) (Midland, Michigan), executives said Tuesday. Industrial Info is tracking 118 active Dow projects worth $8.20 billion.

Dow reported its fourth-quarter 2015 net earnings rose fourfold to $3.61 billion from $819 million a year earlier, reflecting a gain from the split-off of its chlorine products business and the sale of its ownership interest in MEGlobal. Sales revenues were $11.9 billion, down 20% from fourth-quarter 2014, due to price declines.

Dow reported full-year earnings of $7.69 billion, compared with $3.77 billion in 2014. Full-year sales were $48.8 billion, down 16% from 2014. Prices were impacted by the 45% drop in oil prices last year as well as currency exchange headwinds.

Capital expenditures for 2016 are expected to be $3.7 billion, according to the company's earnings release, which would be roughly flat with last year.

Dow and E.I. du Pont de Nemours and Company (NYSE:DD) (DuPont) plan to merge. Leaders of the two companies expect to close the mega-merger in the second half of 2016. The company would then separate into three publicly traded businesses--material sciences, agriculture and specialty products.

Dow Chief Executive Officer Andrew Liveris, who plans to step down no later than second-quarter 2017, noted the start-up of its propane dehydrogenation (PDH) plant in December. Chief Financial Officer Howard Ungerleider said full-year propylene production from the 750,000 ton-per-year plant will boost earnings in second-half 2016. Another significant boost will come from enhancements to ethane cracking capabilities in Louisiana, Ungerleider said. Industrial Info is tracking $500 million in upgrades and expansions at Dow's complex at Plaquemine, Louisiana.

Liveris said the company achieved $345 million in productivity savings in 2015 and plans to save an additional $300 million this years. As such, the company plans to reduce its employee headcount by an additional 500 positions this year, bringing the total reduction to 2,200 positions. Dow had about 49,500 employees in 2015.