Dow Chemical 2009 Annual Report Download - page 76

Table of Contents
impact of currency on costs. Results for 2007 were negatively impacted by restructuring charges of $155 million related to the fourth quarter of 2007
announced closure or impairment of a number of manufacturing facilities. See Note C to the Consolidated Financial Statements for information on
restructuring charges.
Performance Systems Outlook for 2010
Performance Systems sales are expected to increase as recovery from the global economic downturn continues. A number of the businesses within the
Performance Systems segment stand to benefit from increased spending on infrastructure projects. In addition to increased sales volume in 2010, feedstock
and other raw material costs are expected to be higher, creating upward pressure on selling prices.
Automotive Systems expects sales to grow slightly during the year as competitive pressure remains. Prices are expected to be flat with 2009.
Dow Elastomers expects sales volume to increase in 2010 as the recovery continues around the globe, particularly in the automotive and construction
industries. Prices are projected to be higher due to increasing feedstock and energy and other raw material costs. Dow Elastomers anticipates growth due to new
products and technologies such as photovoltaic films. Competitive activity will continue to put pressure on volume as increased capacity within the industry
is expected in 2010.
Formulated Systems expects volume to show moderate growth in 2010 due to the continued recovery of wind turbine construction and infrastructure
projects. Prices are expected to increase driven by higher feedstock and other raw material costs.
Dow Wire and Cable expects sales volume to increase as strong growth continues in China and India. Expected government stimulus plans will help
accelerate spending on infrastructure projects in North America and Latin America, which is expected to fuel growth in the business. Prices are expected to
increase, driven by higher feedstock and other raw material costs.
PERFORMANCE PRODUCTS
2009 Versus 2008 (Pro Forma Comparison)
Performance Products sales were $9,123 million in 2009, down from $13,127 million in 2008. Sales declined 31 percent with prices declining 19 percent and
volume declining 12 percent. The sharp drop in prices was largely driven by a decline in feedstock and energy and other raw material costs. Volume was down
in all businesses as a result of the reduction in global demand. From a geographic standpoint, North America and Europe experienced double-digit volume
declines as a result of the global economic downturn. Asia Pacific and IMEA each reported a slight volume increase.
EBITDA for 2009 was $1,099 million, up from $1,064 million in 2008. Compared with last year, the benefits of lower raw material and freight costs
and lower SG&A and R&D expenses were more than offset by the declines in prices and volume. EBITDA for 2009 was positively impacted by a gain of
$145 million on the sale of the Company’s ownership interest in OPTIMAL, partially offset by restructuring charges of $73 million and an increase in cost of
sales of $22 million related to the fair valuation of Rohm and Haas inventories. EBITDA for 2008 was negatively impacted by costs of
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