Dow Chemical announced that after separation from DowDuPont on 1 April, it will set an initial annual dividend payment of $2.1 billion and launch a $3-billion stock buyback program.
The company will target shareholder remuneration of approximately 65% of operating net income across the cycle, including dividend and share repurchases.
Dow confirmed its plans to keep capital expenditures at or below depreciation and amortization, comprised of incremental, high return on invested capital growth investments, with a near-term spending range of $2.5 billion – $2.8 billion for at least the next three years.
The company expects a total of approximately $800 million of cost synergy and stranded cost savings yet to be delivered, of which 75% will be additive in 2019 versus last year.
Dow Chemical also said that it will target adjusted gross debt to EBITDA ratio of 2.5x – 3.0x.
“New Dow will be well positioned to drive best-in-class financial performance and shareholder returns,” said Jim Fitterling, chief executive officer of Dow. “We have a focused playbook of cost and growth drivers, clear and disciplined capital allocation priorities and a strong balance sheet. Our path to shareholder value creation is straightforward and in our control.”