Dow, Corning discussing joint venture ownership

Midland, Michigan – Dow Chemical Co. and Corning Inc. are in ongoing discussions regarding the ownership of Dow Corning Corp., the 72-year joint venture between the firms that focuses on silicone- and silicon-based technology.

During Dow’s conference call 22 Oct with media and analysts to discuss its quarterly financial results, Andrew Liveris, Dow chairman and CEO, called Dow Corning a “tremendous asset” focusing on specialty materials and chemicals.

“Dow and Corning are in discussions around a potential transaction involving Corning’s ownership in Dow Corning,” Liveris said. “We will have more to say about this in the not-too-distant future.”

The Dow CEO had said late last year that Corning was looking to ship its 50 percent share in the joint venture.

In response to questions on the 22 Oct conference call, Liveris said both partners know the company inside out, but that synergies were “unique and available to one partner,” that being Dow.

He added that Dow’s business also makes more sense for Dow Corning in terms of market synergies, mentioning such areas as consumer goods, infrastructure, home and personal care, among others. “As we rebuilt our portfolio over the years, Dow has been a much more logical fit on the market side,” Liveris said. “That wasn’t true 10 years ago.”

The discussions, however, only will lead to a deal if it makes sense for both partners, he said, noting that Dow has been very public about its plans to bring joint ventures onto its balance sheet or off. “We anticipate if something happens here (with Dow Corning), it will only be because it’s value accretive,” Liveris said.

Financial results

Sales for the third quarter dropped 16 percent to $12 billion (€10.7 billion), but net income jumped nearly 50 percent to $1.44 billion. “The power and strength of our strategy and our diversified portfolio has now delivered 12 quarters in a row of year-over-year earnings growth,” Liveris said in a statement. “Our entire organization continues to demonstrate the discipline and agility needed to deliver consistent earnings and margin growth as well as strong cash flow.”

For the nine-month period, sales were off 14.8 percent to $37.3 billion, with net income up 38.4 percent to $4.15 billion.

Sales for the Performance Plastics business dropped about 30 percent to $4.7 billion for the quarter. Dow said there were volume gains in all geographic areas that were more than offset by lower pricing in all business and geographic areas, along with currency exchange shifts in the Europe, Middle East, Africa and India region.

Dow Elastomers reported volume gains, mainly in EMEAI, on continued customer preference for Dow products in the transportation, infrastructure and consumer goods markets, according to the company.

In the Performance Materials and Chemicals unit, Dow said polyurethanes showed volume growth on the start-up of a new polyols plant in Thailand and Dow’s broader market participation strategy, along with a market share gain in EMEAI.

Dow also announced that Liveris now will head a new Office of the Chairman and CEO. Reporting to him will be James Fitterling, appointed as vice chairman and chief operating officer, and Howard Ungerleider, who added the title of vice chairman to his existing role as chief financial officer. Fitterling will focus on day-to-day operations, with Ungerleider responsible for key portfolio and strategic initiatives.

Torsten Kraef, corporate vice president of strategy development, will serve as secretary to the newly announced office.