Dow Chemical 2009 Annual Report Download - page 73

Table of Contents
assets related to the FTC required divestiture, and a $47 million increase in cost of sales related to the fair valuation of Rohm and Haas inventories. As a result
of these charges and the decrease in sales, EBITDA declined despite the benefit of lower raw material and freight costs, and lower SG&A expenses. EBITDA
for 2008 included a restructuring charge of $17 million.
2008 Versus 2007 (Actual Comparison)
Coatings and Infrastructure sales increased 45 percent to $2,654 million in 2008, compared with $1,836 million in 2007. Volume increased 40 percent and
prices increased 5 percent primarily due to a favorable currency impact. The improvement in volume was primarily due to the formation of the Dow Coating
Materials business where sales were previously included in Epoxy. EBITDA for 2008 was $134 million, compared with $51 million in 2007. EBITDA
increased in 2008 due to higher sales volume. EBITDA for 2008 was reduced by restructuring charges totaling $16 million related to the closure of several
manufacturing assets announced in the fourth quarter. EBITDA in 2007 was reduced by restructuring charges totaling $20 million. See Note C to the
Consolidated Financial Statements for additional information on restructuring charges.
Coatings and Infrastructure Outlook for 2010
Coatings and Infrastructure sales are expected to increase in 2010 driven by continued recovery in the construction and housing industries, impacting demand
for insulation products and architectural coatings.
Adhesives and Functional Polymers sales are expected to increase modestly due to higher demand for packaging, especially in the emerging economies.
Price increases are expected to be driven by higher raw material costs. Adhesive tapes sales will likely be under pressure, particularly in Europe and Asia
Pacific, due to higher raw material costs and increased competition.
Dow Building and Construction sales volume is expected to increase due to a modest recovery in residential construction in North America and Japan,
partially offset by lower commercial construction, especially in North America and Europe. Further, it is expected that the implementation of more stringent
energy codes and new insulation system solutions will provide higher sales for construction and building products. Prices for insulation products are expected
to rise modestly, driven by higher raw material costs.
Dow Coating Materials sales volume is expected to increase, especially in the emerging economies. Demand for architectural coatings is expected to
increase modestly, driven by the gradual recovery of the housing industry in North America.
HEALTH AND AGRICULTURAL SCIENCES
2009 Versus 2008 (Pro Forma Comparison)
Health and Agricultural Sciences sales were $4,537 million in 2009, down from $4,609 million in 2008. Sales decreased 2 percent, as prices declined
6 percent (half due to currency), while volume increased 4 percent. Reduced farm income and tighter credit markets in many regions created significant
downward pricing pressure during 2009. Prices declined as farm income was negatively impacted by falling crop commodity prices combined with the
relatively higher costs of purchases made earlier in the year. The commodity product glyphosate accounted for the vast majority of the overall decline in prices
compared with 2008. Volume increased as new seed acquisitions and growth in the corn, soybean and sunflower portfolios resulted in a 33 percent sales
growth in the seeds, traits and oils business. Volume for new agricultural chemicals products also increased as pyroxsulam cereal herbicide sales more than
tripled and penoxsulam rice herbicide and spinetoram
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