Wednesday, October 24, 2012

Focus on growth projects having positive returns

The largest U.S. chemical maker - Dow has spent much of 2012 grappling with weak demand, but still company posted a better than expected quarterly profit, helped in by cost cuts. The company decided to slash spending on capital projects, saying the cuts will not deter the chemical maker from meeting aggressive earnings targets.

Andrew Liveris, Chief Executive of Dow Chemical said they will reduce the capital expenditure budget by $100 million in 2012 and $700 million in 2013. Reducing spending on growth projects saves cash in the short term but can limit options in the future if certain projects haven't been properly funded. Company must stop future growth projects that are no longer affordable in this environment. The company will focus on growth projects with positive returns in the far-distant future.

Dow announced another expansion project, saying it would build a world-scale synthetic rubber plant somewhere on the U.S. Gulf Coast and hopefully have it online by 2016.

Read lot more in Rubber4U – 1st November 2012 issue

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