Dow Chemical 2013 Annual Report Download - page 12

10 The Dow Chemical Company
Buig Vue Thrgh
In an unpredictable global business environment, we are driving higher operating performance across
our enterprise. Our strengthened balance sheet and ongoing execution of business-specific actions
to improve return on capital demonstrate how Dow continues to leverage operational productivity to
accelerate value. This in turn enables us to focus our resources more deeply in high-growth businesses,
enhance financial flexibility and increasingly reward our shareholders.
Op d l Ec
Strengthening Our Balance Sheet
to Reward Shareholders
In2013,wecontinuedtoidentifynewwaystorelease
morecashandvaluefromourbalancesheet,while
reducingdebtandinterestexpense.
• In2013,wegenerated$7.8billionincashowfrom
operations–representinganewrecord,evenexcluding
theafter-taximpactofthecashpaymentfrom
PetrochemicalIndustriesCompany(PIC)ofKuwait.
• Additionally,themajorityofthisapproximately
$2.2billioncashawardreceivedin2013wasallocated
towardpayingdowndebt,helpingtobringourdebt
toequityratioswellbelowhistoriclevelsandreducing
ourinterestexpense$170millionyearoveryear.
• Overthepastthreeyears,Dowhasmorethandoubled
shareholderreturnsintheformofdeclareddividends
andsharerepurchases.Asourcashowandearnings
continuetogrow,weremainfocusedonrewarding
shareholdersandfundingorganicgrowth.
Improving Return on Capital
Ourongoingexecutionofourrestructuringactions
coupledwiththeprioritizationofourgrowthinvestments
reinforceourcommitmenttoenhancingreturnoncapital
andimprovingoveralloperatingperformance.
• Weacceleratedourcostsavingsandportfolio
managementactionsthroughouttheyear,
exceedingourgoaltodeliver$500millionin
costreductionsin2013.
• Weadvancedkeygrowthinitiativeswiththemajority
ofourforwardcapitalallocationputtowardthese
high-returnprojects.Thishasenabledastrongbridge
tonewearningsstreamsthatwillcontinuetoramp
upin2015wheninvestmentsinSadaraandournew
PDHunitontheU.S.GulfCoastcomeonline.
Clear Cash Priorities
(dollars in billions)
Cash Flow from Operations
Net Debt to EBITDA1
Net Debt to EBITDA
Cash Flow from Operations ($B)
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
20102009 2011 2012 2013
Accelerate Share Repurchases
Expanded programs to $4.5B
Increase Dividend
15% increase in 1Q14 dividend
High-Return Organic Growth
CapEx of $3.3B$3.5B in 2014
Record cash flow from operations
$7.8B in 2013
Stronger balance sheet
1.4 net debt to EBITDA
Non-strategic business and
asset divestitures
$3B$4B in 201315
After-tax Impact
of KDow Award
q Increasing cash flow and a stronger balance sheet enable increased
remuneration and funding for high-return growth projects.
1 Net debt to EBITDA is defined as net debt divided by “Adjusted EBITDA.” Net debt equals total debt (“Notes Payable”
plus “Long-term debt due within one year” plus “Long-term debt”) minus “Cash and cash equivalents.”