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Released February 14, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--As it rolls toward its planned split into three companies later this year, DowDuPont (NYSE:DDP) (Midland, Michigan, and Wilmington, Delaware) is expected to keep its capital expenditures in line with what it spent in 2018 -- about $2.5 billion, company executives said recently.
However, some discretionary spending will be deferred amid uncertainty regarding the rate of global economic growth this year, executives said during the company's fourth-quarter 2018 earnings conference call on January 31.
"It won't be anything that will damage plant reliability. We'll still continue to do maintenance and those kind of things, but we'll defer some discretionary spending that we don't need to do right now into latter half of the year or even into 2020, depending on how long the macro [condition] continues," said Chief Operating Officer Jim Fitterling.
"At the macro level, we continue to monitor macroeconomic and geopolitical developments, including ongoing trade negotiations and the pace of economic activity in China. In this environment, we remain focused on the actions in our control including capitalizing on our growth investments, capturing cost synergy savings, delivering productivity actions and advancing on our spin milestones," said Chief Financial Officer Howard Ungerleider.
Industrial Info is tracking more than $2 billion in project activity by DowDuPont globally, including $1.6 billion in the U.S.
The company achieved a number of significant project completions in 2018 as its U.S. Gulf Coast capacity buildup program wound down.
The company brought on line its ethylene propylene diene monomer (EPDM), high-melt index elastomers and low-density polyethylene trains at its complex in Freeport, Texas, and completed a debottlenecking of a high-density polyethylene unit at its St. Charles, Louisiana, complex.
"These were the final units of our Wave One U.S. Gulf Coast investments. Product from each unit is now in the market and we have performed at/or above design rates on each one," Fitterling said. For more information, see November 5, 2018, article - DowDuPont to Complete Key U.S. Polyethylene Projects This Quarter.
However, the company still is looking at nearly $848 million in planned U.S. project completions this year. These include a 1.1 million-pound-per-year unit expansion in Freeport, a 200,000-pound-per-year ethylene unit expansion in Orange, Texas, and a polyolefins catalyst production unit addition in Seadrift, Texas. For more information, see Industrial Info's reports on the Freeport, Orange and Seadrift projects.
DowDuPont reported $475 million in net income in fourth-quarter 2018. During the quarter, the Materials Division's operating earnings before interest, taxes, depreciation and amortization (EBITDA) fell 12% to $2.1 billion, driven by margin compression in isocyanates and polyethylene products.
The drop in crude oil prices and other factors during the quarter weakened the company's natural gas-derived ethane feedstock cost advantage. Fitterling said that Brent crude oil started the quarter at more than $80 per barrel and then steadily dropped throughout the quarter, finishing the year in a low $50-per-barrel range, a drop of more than 35%.
"In addition to that, we saw a 40% compression in the naphtha-to-ethane spread, driven by the oil price drop, as well as weak gasoline demand and higher U.S. natural gas price on cold winter weather," he continued. "These trends compressed our feedstock advantage not just in the Americas, but also for our main joint ventures, and you see that in the nearly $240 million impact, which is split about evenly across our core business and our equity earnings."
DowDuPont was formed by the merger of Dow Chemical Company and E.I. du Pont de Nemours in 2017.
For 2019, company executives said DowDuPont remains on track "for the separation of the new Dow on April 1, followed by Corteva from the new DuPont on June 1. The new Dow will include its Materials Science Division, the Specialty Products Division will become the new DuPont, and the Agriculture Division will become Corteva Agriscience.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
However, some discretionary spending will be deferred amid uncertainty regarding the rate of global economic growth this year, executives said during the company's fourth-quarter 2018 earnings conference call on January 31.
"It won't be anything that will damage plant reliability. We'll still continue to do maintenance and those kind of things, but we'll defer some discretionary spending that we don't need to do right now into latter half of the year or even into 2020, depending on how long the macro [condition] continues," said Chief Operating Officer Jim Fitterling.
"At the macro level, we continue to monitor macroeconomic and geopolitical developments, including ongoing trade negotiations and the pace of economic activity in China. In this environment, we remain focused on the actions in our control including capitalizing on our growth investments, capturing cost synergy savings, delivering productivity actions and advancing on our spin milestones," said Chief Financial Officer Howard Ungerleider.
Industrial Info is tracking more than $2 billion in project activity by DowDuPont globally, including $1.6 billion in the U.S.
The company achieved a number of significant project completions in 2018 as its U.S. Gulf Coast capacity buildup program wound down.
The company brought on line its ethylene propylene diene monomer (EPDM), high-melt index elastomers and low-density polyethylene trains at its complex in Freeport, Texas, and completed a debottlenecking of a high-density polyethylene unit at its St. Charles, Louisiana, complex.
"These were the final units of our Wave One U.S. Gulf Coast investments. Product from each unit is now in the market and we have performed at/or above design rates on each one," Fitterling said. For more information, see November 5, 2018, article - DowDuPont to Complete Key U.S. Polyethylene Projects This Quarter.
However, the company still is looking at nearly $848 million in planned U.S. project completions this year. These include a 1.1 million-pound-per-year unit expansion in Freeport, a 200,000-pound-per-year ethylene unit expansion in Orange, Texas, and a polyolefins catalyst production unit addition in Seadrift, Texas. For more information, see Industrial Info's reports on the Freeport, Orange and Seadrift projects.
DowDuPont reported $475 million in net income in fourth-quarter 2018. During the quarter, the Materials Division's operating earnings before interest, taxes, depreciation and amortization (EBITDA) fell 12% to $2.1 billion, driven by margin compression in isocyanates and polyethylene products.
The drop in crude oil prices and other factors during the quarter weakened the company's natural gas-derived ethane feedstock cost advantage. Fitterling said that Brent crude oil started the quarter at more than $80 per barrel and then steadily dropped throughout the quarter, finishing the year in a low $50-per-barrel range, a drop of more than 35%.
"In addition to that, we saw a 40% compression in the naphtha-to-ethane spread, driven by the oil price drop, as well as weak gasoline demand and higher U.S. natural gas price on cold winter weather," he continued. "These trends compressed our feedstock advantage not just in the Americas, but also for our main joint ventures, and you see that in the nearly $240 million impact, which is split about evenly across our core business and our equity earnings."
DowDuPont was formed by the merger of Dow Chemical Company and E.I. du Pont de Nemours in 2017.
For 2019, company executives said DowDuPont remains on track "for the separation of the new Dow on April 1, followed by Corteva from the new DuPont on June 1. The new Dow will include its Materials Science Division, the Specialty Products Division will become the new DuPont, and the Agriculture Division will become Corteva Agriscience.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
