What a difference two quarters make! Earlier this year, Dow Chemical looked dead in the water. After all, its acquisition of Rohm and Haas had been ridiculed by Wall Street and its highly touted joint venture with the Kingdom of Kuwait was canceled only weeks after its announcement. Through all of that, the recession was taking a toll on many of the sectors in which the company competes. But rather than bury its head in the sand, Dow Chemical stuck to its game plan by divesting non-core businesses and investing in chemistries of the future. As a result, Dow Chemical has emerged stronger than ever, insisted chairman and chief executive officer Andrew Liveris at a recent press event in New York City.
“We’re moving toward becoming a downstream specialty chemical company,” he told the audience. “We’re moving to higher margins with a leaner footprint, and with an enhanced portfolio that is much more market driven.”
With the integration of Rohm and Haas complete, along with the sale of non-core businesses such as the recent sale of its powder coatings business to Akzo Nobel, Dow Chemical has emerged with focused portfolio of chemical solutions for its customers in the household and personal care sector.
The new Dow Chemical portfolio is focused on four key segments:
• Energy, including solar panel technology;
• Instrastructure & Transporation, including resins and coatings;
• Health & Nutrition, such as agchem and pharmaceuticals and excipients; and
• Consumerism, a group that includes home and personal care.
According to Liveris, these four segments, along with the innovation pipeline behind them, are now aligned with global megatrends.
Sales and profits of the new Dow Chemical should grow too. Liveris estimates that the new portfolio will help revenues grow by more than 10%, while EBITDA margins will increase from 12 to 20%, even as the company continues to reduce debt through the sale of non-core business units. In fact, Dow Chemical executives have identified $12 billion in cost savings options. In 2009, the company divested $3.4 billion worth of business units, which puts it well on its reaching its divestiture goal of $5-6 billion by the end of 2010.
Solutions for Home & Personal Care
Marketers of household and personal care products will discover that the new Dow Chemical can offer a wide range of solutions to their most difficult formulation problems, explained Eunice Heath, general manager, household and personal care.That’s because when the teams sat down to review the portfolios of Dow Chemical and Rohm and Haas they discovered that there was no overlap among product offerings. Moreover, the synergies between the two were extraordinary, insisted Heath.
“It really is a case where one plus one adds up to more than two,” said Heath. “We have virtually no overlap in the portfolios, staff or geographic locations.”
No wonder then, that the Dow Chemical team expects a host of innovative products and solutions for the household and personal care industries to begin rolling out over the next several months and years.
For example, beginning in mid-2010, Dow Chemical will bring new consumer benefits in fabric care with the launch of materials that result in cold temperature cleaning that’s equal to warm water to reduce energy usage. At the same time, the company will help formulators eliminate hard-to-remove stains via surfactants, solvents and enzyme stabilization. Also set to debut is the controlled-release of fragrances for the end of the washing process and during wear.
As the U.S. moves toward phosphate-free autodish detergents, Dow Chemical has already introduced unique dispersant technology and low-foam surfactants to enhance shine. Finally, for companies interested in rolling out hard surface cleaners with greener profiles, Dow Chemical has introduced Ecosurf biodegradable surfactants and is developing bio-based solvents to tackle tough stains.
With so many solutions on the table and more on the way, Liveris went so far as to call the chemical business a growth industry, insisting that many of the world’s problems such as energy and water shortages, can only be solved by chemistry.
“Dow Chemical has the depth and breadth to take on these problems,” he insisted. “You can only create sustainable products with sustainable chemistry.”