(DOW) The Dow Chemical Company in Joint Venture with Ube Industries

The largest U.S. chemicals manufacturer, The Dow Chemical Company (DOW) and Japanese chemical company Ube Industries Ltd. entered into a joint venture to capitalize on the growing demand for lithium-ion batteries and expand its alternative energy offerings.

The Midland, MI-based chemical giant’s joint venture with Ube Industries Ltd. will manufacture electrolytes for lithium-ion batteries that are used in hybrid and electric vehicles as well as other applications. It will be the first time Dow’s Energy Materials business will have access to formulated electrolytes, a key component in the development of battery cells.

The joint venture also complements the growth strategy of Dow’s Energy Materials business by adding formulated electrolytes to an integrated product portfolio that addresses the rapidly expanding energy storage industry.

Both the companies will have equal stake in the joint venture and the new company will be called Advanced Electrolyte Technologies LLC. The joint venture is expected to be finalized later this year pending regulatory approval.

The venture will supply to all the battery cell manufacturers in the advanced battery market.

The partnership gives Dow the ability to provide cell manufacturers with a robust offering of material technology that meets demanding batteryperformance requirements. Combining Dow’s material science strength and global footprint with Ube’s expertise in electrolyte technology will deliver significant growth opportunities for both companies.

The joint venture’s first manufacturing facility is expected to be built at Dow’s home base in Midland, Mich. for start-up next year.

Last month, Dow also entered into joint venture with Aksa Akrilik Kimya Sanayii (AKSA) AS, a Turkish maker of synthetic acrylic fibers, to make carbon fiber and derivatives.

Through this partnership the companies plan to examine opportunities to produce a broad range of carbon fiber-based composite materials and provide technical support to customers.

The company’s products have a vast array of applications and are used by various industries including farming, construction, transportation, electronics and consumer goods. Dow enjoys a good reputation in sustainability, as demonstrated by its 2015 Sustainability Goals to reduce energy consumption and emissions.

Recently, Dow reported its first quarter 2011 results. The company earned $0.82 per share in the first quarter of 2011, ahead of the Zacks Consensus Estimate of $0.67 as well as last year’s $0.43. However, including one-time charges, the company earned $0.54 per share compared with $0.41 in the year-ago quarter.

Quarterly revenues jumped 20% year over year to $14.7 billion and were above the Zacks Consensus Estimate of $13.8 billion. Volume and pricing gains across all business segments and geographical regions, particularly North America and Europe, yielded healthy revenue growth.

Dow anticipates that demand would improve further, especially in Asia with the global economic recovery. The US and European markets have also started showing signs of improvement. Dow is also optimistic on major consumer-markets, including electronics, coatings, automotive and packaging. However, construction markets are expected to remain weak.

DOW faces stiff competition from EI DuPont de Nemours & Co. (DD).

Currently, Dow has a short-term (1 to 3 months) Zacks #3 Rank (Hold) but a long- term Neutral recommendation.

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