Reuters: Global Markets: Dow Chemical CEO says can't afford some growth projects

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Dow Chemical CEO says can't afford some growth projects Oct 24th 2012, 15:37 By Ernest Scheyder Wed Oct 24, 2012 11:37am EDT (Reuters) - Dow Chemical Co (DOW.N) Chief Executive Andrew Liveris defended on Wednesday his decision to slash the largest U.S. chemical maker's capital budget and growth projects, a day after the company announced it would cut 5 percent of its workforce. Dow posted better-than-expected quarterly profit late Tuesday night and said it would lay off 2,400 workers and close 20 plants. The news, which was inadvertently released two days earlier than Dow planned, saw its shares rise 7.1 percent in Wednesday morning trading. Dow plans to cut growth projects by $200 million and reduce its capital expenditure budget by $100 million in 2012 and $700 million in 2013. Dow spent $2.69 billion in 2011 on capital expenditures. Reducing spending on growth projects saves cash in the short term, but can limit options in the future if certain projects haven't been properly funded. Liveris said the company must now "stop future growth projects that are no longer affordable in this environment." "We cannot keep funding a wide spectrum of opportunities in a world where markets are volatile and in many cases receding," Liveris said on a conference call with investors. "I am acutely aware that we need to demonstrate the Dow can deliver against targets." The company will focus on growth projects with "positive returns in the far-distant future," Liveris said. He cited the company's investment to expand production of the key chemical ethylene on the U.S. Gulf Coast and build a new chemical plant in Saudi Arabia. Neither set of projects is expected to be online until later this decade. Liveris said Wall Street can "rest assured" the Midland, Michigan-based company will achieve its goal to have annual earnings before income taxes, depreciation and amortization (EBITDA) of $10 billion "in the next several years." He declined to be more specific on timing. In 2011 the company reported EBITDA of $7.79 billion. Shares of Dow rose 7.1 percent to $30.58 in Wednesday morning trading. The stock has gained 4.3 percent so far this year. (Reporting By Ernest Scheyder; Editing by Tim Dobbyn) Link this Share this Digg this Email Reprints

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