Dow (DOW) to Build Industrial Scale Production Unit in France

Zacks Equity Research

Dow Inc.’s DOW business unit, Dow Polyurethanes, announced a breakthrough in its Renuva Mattress Recycling Program, with plans to build a pioneering industrial-scale manufacturing facility at Orrion Chemicals Orgaform in Semoy, France. Notably, the installation is anticipated to occur during the second half of 2020.

The program will take discarded mattress foam and will turn it back into polyol through chemical recycling. Eventually, the new raw material can be utilized in foam products. The first batch of Renuva polyols is expected to be delivered in the first half of 2021.

Notably, the latest development builds on the company’s existing collaboration with H&S Anlagentechnik.

The latest initiative is expected to allow a more circular economy for polyurethanes. Moreover, it can help the EU meet its goal of recycling 65% of municipal waste by 2030.

Per management, the development will be a crucial move toward achieving circularity for a product that historically faces major recycling challenges. Moreover, the company’s aim through Renuva is to address some of the circular economy goals set out in the EU’s Green Deal and national waste management strategies of countries, including France.

The company’s shares have lost 19.5% in the past year compared with the 13% decline recorded by the industry.

 

 

Dow, on its first-quarter earnings call, said that it is seeing indications of a recovery from the virus outbreak in China, while still assessing the impacts of the pandemic in other major geographies. Factoring in a gradual and sustainable return of global economic activities, and the reopening of economies in May and June, the company expects recovery as the year progresses.

Dow also said that it is taking actions to further strengthen its financial position. These include the reduction of operating expenses by $350 million and further trimming of capital expenditure target to $1.25 billion (a $750-million reduction from that in 2019). The company is also temporarily idling certain manufacturing units to balance the production to the demand across markets, which have been significantly affected by restrained economic activities.

Dow Inc. Price and Consensus

 

Dow Inc. Price and Consensus

Dow Inc. price-consensus-chart | Dow Inc. Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the basic materials space are Agnico Eagle Mines Limited AEM, Equinox Gold Corp. EQX and Barrick Gold Corporation GOLD.

Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 75.3% for 2020. The company’s shares have gained 41.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinox Gold has a projected earnings growth rate of 65.5% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 55.5% in a year.

Barrick has a projected earnings growth rate of 64.7% for the current year. The company’s shares have rallied around 83% in a year. It currently has a Zacks Rank #2.

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