Dow's emulsions business has strong Q2 despite Finnish paper strike

By Liz White, ERJ staff

Midland, Michigan-Dow Chemical Co.'s latex business had a strong second quarter. The group's UCAR Emulsion Systems business reported increases in volume and price across most geographic areas, "led by particularly robust demand in Europe and North America," said Dow's results statement.

Dow said its Emulsion Polymers business also had healthy growth in revenue, which it achieved, "despite the negative impact on latex sales caused by a seven-week strike in the Finnish paper industry."

During the second quarter 2005, Dow's latex business completed the successful start-up of its second styrene-butadiene latex line at Zhangjiagang in China.

In a conference call on the results, Kathleen Fothergill, Dow's corporate director for investor relations said the Performance Chemicals businesses "turned in strong results, with a combination of price/volume management and cost control pushing EBIT for the segment to 18 percent of sales, up 5 percentage points from a year ago."

In the UCAR Emulsion Systems unit, the acrylic latex business "had another strong quarter, with solid gains in price, volume and EBIT, as we improved our position with key paint customers, particularly in the US and Europe," said Fothergill.

Fothergill pointed out that this business is "restructuring its North American operations for greater efficiency, shutting down some non-competitive sites and expanding operations at St. Charles, Louisiana."

In terms of volume, the styrene-butadiene latex part of Dow Latex, "was impacted by softer demand in the coated paper industry in the US and Europe,"-in addition to the paper industry strike in Finland mentioned earlier.

Dow's latex business results are not reported separately, but as part of its Performance Chemicals unit, which has second quarter sales of $1900 million, 19 percent above that in the same period in 2004. This improvement was driven, according to Dow, by a 23-percent increase in price, while volume was down 4 percent "from the particularly strong levels of a year ago."

Performance Chemicals had earnings (EBIT) of $343 million for the second quarter, compared with $113 million in the same period last year, which included restructuring charges of $89 million.