Dow Chemical 2009 Annual Report Download - page 74

Table of Contents
insecticide had continued strong growth. AgroFresh posted record sales volume growth as the SMARTFRESH™ technology for maintaining the just-harvested
quality and freshness of fruits and vegetables continued to receive excellent channel support in all geographic areas.
EBITDA for 2009 was $577 million, compared with $892 million in 2008. EBITDA was negatively impacted by higher costs associated with the
valuation of inventory based on reduced raw material prices, unfavorable currency exchange rates, glyphosate price declines, and increased R&D and SG&A
expenses to support growth initiatives. Results for 2009 were favorably impacted by a $15 million reduction in the 2007 restructuring reserve, originally
related to pre-acquisition contract termination fees between the Company and Rohm and Haas. EBITDA for 2008 was negatively impacted by charges of
$44 million for IPR&D related to seed acquisitions, $3 million in restructuring charges and $2 million related to the 2008 hurricanes. See Note C to the
Consolidated Financial Statements for information on restructuring charges.
2008 Versus 2007 (Actual Comparison)
Health and Agricultural Sciences sales were $4,535 million in 2008, up from $3,779 million in 2007. Compared with 2007, sales increased 20 percent with
prices increasing 12 percent and volume increasing 8 percent. Prices increased in response to strong demand, escalating raw material costs and tight global
supply of certain products. Volume increased as both the seeds, traits and oils and agricultural chemicals portfolios benefited from strong farm economics and
excellent growing conditions across the northern hemisphere. New cereal herbicide pyroxsulam had a strong and successful launch, and together with
spinetoram insecticide received excellent customer support in their first full year. Six new acquisitions were completed in 2008, as Dow AgroSciences continued
to increase its scale and reach in the seeds industry.
EBITDA for 2008 was $872 million, compared with $576 million in 2007. EBITDA for 2008 improved significantly due to the increase in sales, the
result of the buoyant agricultural market and new product launches. As previously discussed, EBITDA in 2008 was negatively impacted by $44 million of
IPR&D write-offs, $3 million in restructuring charges and $2 million related to the 2008 hurricanes. EBITDA in 2007 was negatively impacted by
$77 million of restructuring charges primarily related to the impairment of the Company’s manufacturing site in Lauterbourg, France, and by $50 million of
IPR&D charges related to acquisitions.
Health and Agricultural Sciences Outlook for 2010
Health and Agricultural Sciences sales for 2010 are expected to grow above 2009 levels. Volume is anticipated to increase in key regions as the agricultural
industry is expected to return to the less volatile long-term growth trend that existed before the 2008 and 2009 growing seasons. In 2010, the milestone launch of
SmartStax™ combined insect-resistant and herbicide-tolerant technology is planned, which is expected to be considered the industry-leading corn stacked trait.
New products sales of pyroxsulam, spinetoram, penoxsulam and aminopyralid are expected to continue to record strong growth. Investments in technology,
scale and reach in the seeds, traits and oils business remain a priority.
PERFORMANCE SYSTEMS
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