Here's a chart that has tempted me lately.....but I think lower lows are in the immediate future.....
A ten-year look at Dow Chemical:
siliconinvestor.com
The lowest point it has hit in the last ten years is right now.
Fundies also look weak, as discussed in this rating downgrade this morning:
siliconinvestor.com
Fitch Lwrs The Dow Chemical Co.'s L-T Rtg To
`A' Rtg Outlook Neg
CHICAGO, Jan 16, 2002 (BUSINESS WIRE) -- Fitch has lowered the senior unsecured rating of The Dow Chemical Company (Dow) to `A' from 'A+'. The short-term rating has been affirmed at 'F1'. The Rating Outlook has been changed to Negative from Stable. The rating downgrade reflects increased leverage associated with acquisitions at a time when cash flows are expected to remain cyclically weak in the near term. The Negative Rating Outlook reflects significant supply overhang in one of Dow's key commodity chemical segments as well as muted concerns over potential asbestos-related cash outflows in excess of insurance coverage.
The one notch rating downgrade and shift to a Negative Rating Outlook comes largely as a result of significantly increased debt levels and the likelihood that debt levels are going to remain high for a period of years given the outlook for free cash flows. Near-term asset sales are somewhat restrained by the pooling of interests treatment given the Dow-Carbide merger.
Dow operates an equal mix of commodity and performance chemical businesses. Operating profit margins in commodity chemicals have been hard hit during the current cyclical downturn and are likely to take longer to recover once global economic growth improves. The expectation for delayed recovery is based in part on the supply overhang facing ethylene, a key commodity chemical for Dow. Performance chemical margins have declined to a lesser extent and are expected to recover more quickly as a result of better demand-supply fundamentals. Overall, the potential for 2002 profitability improvement over 2001 levels is expected to be modest. Furthermore, a significant portion of expected 2002 operating profit margin improvement is expected to come as a result of cost savings related to the merger with Union Carbide Corporation.
Dow's short-term debt levels have been reduced to about $1 billion through long-term debt issues that totaled approximately $3 billion in 2001. Dow has unused and available credit facilities with various U.S. and foreign banks totaling $3.1 billion. Additional unused credit facilities totaling $1.1 billion are available for use by foreign subsidiaries. Debt maturities in 2002 and 2003 are $465 million and $769 million, respectively.
Near term, Fitch does not expect Dow's asbestos-related liability to result in large net cash outflows as a result of significant insurance coverage held by Dow. Fitch also expects that insurance payments of asbestos-related settlements will be timely. Longer term, uncertainty surrounding the ultimate size of the asbestos-related liability leaves open the possibility of future cash outflows.
As a result of the merger with Union Carbide Corporation, The Dow Chemical Company is now the largest chemical company in the world, with leading market share in a number of commodity chemical segments. The United States accounts for 43% of sales, Europe 31% and the rest of the world accounts for 26% of sales. Chemical operations are highly integrated resulting in cost advantages across the business cycle. Business segments are hydrocarbons & energy, chemicals, plastics, performance plastics, performance chemicals and an expanding presence in agricultural products. Dow Chemical is also a 50% owner of both Dow Corning and UOP LLC. |
