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Dow Chemical (DOW) is the largest producer of plastics and the second leading chemical company in the world. Vertical integration keep costs low.
Further, the acquisition of Rohm and Haas (ROH) will consolidate higher margin and higher growth specialty businesses and reduce volatility in earnings and cash flow. However, Dow has a high exposure to the commodity chemical cycle.
The cancellation of the joint venture agreement with Petrochemical Industries Company (PIC) of Kuwait expects to have an adverse impact on the company and could mar its attempt to reduce cyclicality in the chemical business. Thus, we expect earnings to remain under pressure and maintain our Hold rating for the stock
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