October 25, 2012
Dow Chemical (NYSE: DOW ) released its third-quarter results for 2012, and they just didn't stack up to those of the same time last year. Sales were down 10% and the bottom line earnings were down 39%. To counter this, DuPont (NYSE: DD ) had year-over-year sales drop by 9%, and earnings plummeted from $452 million in 2011's third quarter to $10 million this year. So why was Dow up 4.66% on the day while DuPont dropped over 9% yesterday?
Well, they both announced large cost savings initiatives through labor cuts and plans to take the scalpel to operational expenses. Becoming leaner and driving toward productivity and growth were initiatives of both C-suites. It appears that Dow is driving a much harder line though. Its plan involves cutting 2,400 jobs, or 5% of its total workforce versus, while DuPont has plans to cut 2% of its employees. Dow also has some key strategic plans involving a joint venture with Saudi Aramaco and ethylene production along the Gulf Coast that will be insulated form these planned cuts.
Both of these companies are well-diversified and see positive signs on the horizon. For the short term, however, Dow seems to be on the right side of the trading aisle.Take a look at the video below for a better comparison between the two and some commentary on two other companies looking to profit from low-cost ethylene production in the United States.
In its report, Dow Chemical's CEO mentioned that he has seen an uptick in infrastructure spending in China lately. Caterpillar is one company that would be more than happy to take advantage of this. CAT is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand new report. Just click here to access it now.