Dow CFO explains path to its first emission-free facility

Materials manufacturer Dow Inc. (DOW) — one of the parent companies of the Dow Chemical Company — is talking about its growth outlook and climate-related endeavors at its investor day on Thursday.

Dow CFO Jeff Tate tunes into the Morning Brief from the New York Stock Exchange, attributing the company's strategic growth plans to its diversity of use cases and applications across several industries, which also serves to offset higher for longer interest rates.

"What we're seeing right now, certain areas are really strong and resilient, such as infrastructure, electronics," Tate explains. "So you think of data centers, you think of AI support, pharma continues to be strong for us. Packaging has been resilient throughout for us over the past two years and continues to have strong export performance as well as local performance."

Tate also comments on Dow's ESG initiatives (Environmental, Social and Governance) to decarbonize and reach net zero emissions for its facilities: "We're mitigating a lot of those potential risks that you can have as we focus on not only decarbonizing, but more importantly, create net value."

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Video Transcript

Companies are doubling down on growth strategies in 2024.

And Dow Inc is one of them.

The company announcing further plans to deliver on its strategic vision, financial targets and climate projects as well.

During its investor, day to day shares are up over 7% so far in 2024.

For more on this, let's bring in Jeff Tate.

Dow CFO joining from the New York Stock Exchange Great to see you here this morning, Jeff.

You were at Dow many, many moons ago.

You're a boomerang to the company here.

So you've seen this company over many iterations?

What is the core difference between Dow now versus what it was back in the nineties and even early two thousands.

Good morning, Brad.

It's awesome to be here with you today, and you're right.

I am a boomerang.

But it's been so exciting to be back at Dow for the past six months or so.

And from my vantage point, Dow has never been in a stronger position, both financially as well as operationally.

Brad, When I look at our ability right now to be able to prepare for growth in this up cycle that we're looking to see here.

We could not be in a better position to do that, and I think it starts with our culture.

It also goes along with our financial position.

Our balance sheet is the strongest it's been in decades, and we've got the innovation pipeline that surely positions us well for that future growth.

Jeff talking about that future, I'm curious just what you're seeing from a macro perspective, some of the challenges out there right now how you're navigating those headwinds here at Dow.

And as we talk about the fact that we could be in this high for longer rate environment, what specifically does that mean for your business?

Well, for us, we've got a very diverse portfolio and one of the things that serves us well, it's not only being diverse from an application standpoint, but also diverse from a geo geographical perspective.

What we're seeing right now, certain areas are really strong and resilient, such as infrastructure electronics.

So you think of data centres.

You think of a I support pharma continues to be strong for us.

Packaging has been resilient throughout for us over the past two years and continues to have strong export performance as well as local performance.

Now there are some areas that are still challenged, as you mentioned for us, those things that are more interest rate sensitive, such as housing, looking at appliances, furniture those spaces for us are still relatively soft and relatively slow.

But again, having that diverse portfolio for us has really served us well in working through the cyclicality of our industry.

Jeff.

It's been an interesting time to hear about some of the ESG investments that companies are making because investors are trying to to figure out when that will ultimately pay off.

Investors are also going to hear Dow talk about some of those climate initiatives today, and they're going to have to wrap their minds around what it means for a company to either prioritise eradicating emissions from operations that could have a financial impact versus purchasing offsets.

How is Dow approaching that?

We're approaching it as the power of an Brad A and D for us.

We're going to do both.

We're going to look to Decarbonize.

We're also going to look for profitable value creation and as an example, our path to zero project at Fort Saskatchewan, Alberta, is a significant example of that where we're going to have the first zero emissions, major ethylene and derivatives complex in the world.

And in fact, in November of last year we actually got the final investment decision, and this will be an opportunity for us to take full advantage of the ethane advantage that we have in Canada today.

We're going to build this facility on an existing Dow site so the infrastructure costs will be much lower.

We also have a great opportunity today in which we're doing this to lock in a lot of the ethane requirements that we'll have.

We're locking in long time lead equipment, and we've already been able to hedge 100% of the currency that's associated with this.

So we're mitigating a lot of those potential risks that you can have as we focus on not only decarbonizing, but more importantly, creating that value and understanding where some of those operations are taking place.

US versus other parts of the world.

As you were mentioning in Saskatchewan, we have to think about, of course, the other risk that's out there in a general election year, how you could see a changing of the guards in DC and And what?

That would mean for a lot of companies who have prioritised some of the goals that you just laid out and where that could have another financial implication for the company.

How are you kind of monitoring that?

And, uh, and gaming to mitigate that risk.

Well, what we look at is that, you know, regardless of who wins from an administration perspective, Dow feels like we're well positioned, Brad, to be able to operate, effectively operate profitably, but also be able to meet our sustainability targets that we've set out there.

Which one of those is to be net zero carbon and carbon neutral by 2050.

And so, as we look at the investments we're making not only in the US but around the world, we're well on our way to making progress in that space.

Jeff Tate, Dow CFO from the New York Stock Exchange There great backdrop.

Great to see you here this morning, Jeff.

Thanks so much for taking the time