Zacks Industry Outlook Highlights: The Dow Chemical, EI DuPont de Nemours & Co, Eastman Chemical, Celanese and The Dow Chemical

Sep 19, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 19, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Chemicals, including The Dow Chemical Company (NYSE: DOW), EI DuPont de Nemours & Co (NYSE: DD), Eastman Chemical Company (NYSE: EMN), Celanese Corp. (NYSE: CE) and The Dow Chemical Company (NYSE: DOW).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at

http://www.zacks.com/stock/news/60954/Chemical+Industry+Stock+Outlook+-+Sept.+2011

The recession had hit the chemical industry hard. As a result of lack of demand, chemical companies shelved their growth plans. With plants idled or running at historically low rates, the companies tried to protect their earnings power by streamlining operations and increasing productivity. Accordingly, they resorted to restructurings, plant closures and layoffs. Cost-cutting initiatives at industry majors like The Dow Chemical Company (NYSE: DOW) and EI DuPont de Nemours & Co (NYSE: DD) helped them save billions of dollars.

With the economic turnaround, the global chemical industry is recovering from the recession-hit lows. Domestically, chemical production volumes increased across all regions in 2010, reversing the steep declines experienced in 2008 and 2009. The largest gains occurred in the Gulf Coast and Ohio Valley regions, boosted by export demand for basic chemicals and plastics. Output is expected to grow moderately in all regions in 2011 and continue to improve through 2012.

Concerns about the U.S. economy's growth momentum have increased lately following the sub-par growth pace in the first half. But all evidence points towards the economy maintaining positive, though below-average, growth going forward. While recessionary risks have no doubt increased, we remain comfortable with our view that the U.S. economy will be able to stay positive.

End-markets for chemical products are showing strong growth. This growth has been reflected in the earnings releases of most chemical companies for second quarter 2011. Eastman Chemical Company (NYSE: EMN), for example, reported a 26% increase in sales revenues, primarily due to growth in plasticizer product lines, increased demand for acetyl chemicals, the fourth quarter 2010 restart of a previously idled olefins cracking unit at the Texas facility, and strengthened end-market demand primarily in the packaging, transportation and durable goods markets.

Combined with the restructuring and cost-saving programs that many chemical companies implemented last year, output growth is driving high earnings across the sector, to the extent that many companies are confident of out-performing full-year forecasts.

Based on the strong second quarter results, Eastman Chemical Company expects third quarter 2011 earnings per share to be slightly higher than second quarter 2011 and full-year 2011 earnings per share to be slightly higher than $9.25.

Celanese Corp. (NYSE: CE) revenue also grew 16% year over year to $1.75 billion in second quarter 2011 driven by higher volumes across all business segments and favorable currency impacts. Encouraged by the second quarter strength, the company raised its outlook for full-year 2011.

The company now expects 2011 operating EBITDA to be at least $275 million higher than 2010's $1,122 million and adjusted earnings per share to be at least $1.20 higher than 2010's $3.37, based on a tax rate and diluted share count of 17% and 159.2 million shares, respectively.

The Dow Chemical Company (NYSE: DOW) revenue grew 17% year over year to $16.0 billion by volume (9%) and pricing (19%) gains across all business segments and geographical regions, particularly Latin America and Asia Pacific.

Growth in export markets has been driven by several factors. These include favorable energy costs (natural gas) due to the abundance of newly found shale natural gas and demand from emerging markets, where recovery and expansion have been the strongest. As per the American Chemistry Council (ACC), U.S. exports would grow by 9.7% in 2011, outpacing the expected 7.8% growth in imports.

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