DOW Chemical CEO Andrew Liveris spoke with FOX Business Network’s (FBN) Maria Bartiromo about regulation. Liveris said, “we in the business community are very engaged in trying to work out the forward-looking rules” and “what we need in this country is an energy policy where we work on inputs and efficiency, not on regulating outputs.” Liveris went on to talk about his company saying, “Two thirds of our portfolio is based on innovative new products.”

Andrew N. Liveris Dow Chemical

Andrew Liveris on the regulatory side of the business:

“Well, I think the rule making has been very, very onerous, and certainly, whether it be EPA or the other regulatory bodies out of D.C. I mean, I would tell you that we in the business community are very engaged in trying to work out the forward-looking rules. The look-back staff is tied up in legalities and almost no change possible and the ability to really address issues like climate change, for example, like these ozone rules and greenhouse gas emission rules. You know, what we need in this country is an energy policy where we work on inputs and efficiency, not on regulating outputs. Regulating outputs like emissions is backwards and I’ve been saying this for about 10 years and I think the country still lacks in energy policy.”

Andrew Liveris on the energy market:

“Two thirds of our portfolio is based on innovative new products. We actually are generating over 5,000 new products a year. We’re at record patents.  So what we’ve done is we’ve actually worked both sides of the equation. We’ve gone to where low energy costs exist and invested. Here in the United States and in Saudi Arabia, we’re bringing on really big new assets here in the next six months. So we’ve taken care of the low-cost footprint under all oil and gas conditions.  But on the other side of the house, we haven’t allowed ourselves to be commoditized by having these high-value products I just referred to and the right of generation of innovation is exceeding the right of commoditization and that is, in essence, a structurally-hedged portfolio that can operate under all volatility of conditions and frankly.”

Andrew Liveris on the Chinese market:

“Well, so, if you look at our numbers, we actually showed quarter – second quarter year-on-year volume growth of eight percent. So you can achieve about GDP growth in China if you have the right product mix, which we believe we do. But you’re right. It’s soft and it’s getting softer.  So really, what we’ve got is technologies and products – If you look at the environmental quality, their health issues, safety, food safety, water quality, these are the products we sell into China that are showing that growth I just talked about. So there is growth. It’s spotty. You have to go find it and you have to position yourself for it. Frankly, that’s the world today and that’s been the world now for the last many years. This has been the sort of world where you have to go and target your growth and portfolio manage aggressively so that you can actually go get that growth by pointing your resources.  You know, our cash flows, if you look at our cash flows, we have $2.7 billion to date, $7.2 for the last 12 months, and we returned $4.4 billion for our shareholders, all the while while you aggressively portfolio manage and take on this part of the economy, you actually should be funding growth and rewarding your shareholder and that’s what fundamentally our cash flow story these next many years will do.”

Andrew Liveris on the quarter:

“I was just hearing the previous conversation, we are maybe a contrarian as an industrial science-based company. We actually had our eleventh straight quarter of year-on-year earnings growth, EBITDA Dow growth, EBITDA Dow margin growth. And if you look at this volatility that we’ve all been living with now for three straight years, we’ve been able to do that by going where growth is, aggressively managing margins in our portfolio. Actually, this is a record Q2 EBITDA number for us and a record first-half EBITDA Dow number and seven straight quarters of year-on-year volume growth. Actually, we haven’t seen margins like this since the bubble economy of 2005, which really basically says what we’ve been doing here at Dow is making hay under all weather conditions. We don’t just need sunshine. Self-help, intervention and going where growth is and I think the quarter is a characteristic of what we’ve been saying now for a while.  China’s transition, the U.S. coming back, but slowly, but still probably the best bright spot out there. Europe, you know, for us, stable and, you know, some of that oil savings money is finding its way to consumption, especially here in the United States and a little bit in Europe.”

Andrew Liveris on whether he is expecting growth in the second half of the year:

“Yeah, so we don’t give our guidance, but I would tell you just keep – We’re going to keep doing more of the same. Self help, intervention and yes, we don’t want to break that record now but, you know, I’ve got to tell you, it’s week-to-week block and tackling that got this result and we’re going to keep week-to-week block and tackling. Used to be a rugby player. I know what that’s like.”