Dow Chemical 2010 Annual Report Download - page 14

The Dow Chemical Company
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Reshaped: More Technology-Rich Businesses
Dow’s new portfolio is preferentially tilted toward specialty
chemical, advanced material and agroscience businesses. These
technology-rich platforms are already delivering higher margins
and earnings growth. Since 2009, Dow’s gross margin has
improved from 13 percent to approximately 15 percent. In
addition, the Company more than doubled its annual EBITDA
run-rate performance since the first quarter of 2009 to nearly
$2 billion in the fourth quarter of 2010.
Advanced Materials and Health and Agricultural Sciences,
which serve customers in electronics, health care, agriculture,
infrastructure and other fast-growing end-markets, are leading
Dow’s growth. Growth in the Performance division is driven by
our systems-and-solutions approach to customers, an improving
economy and strong sales in fast-growing end-markets such as
wind energy applications. Together, these segments accounted
for sales of $33 billion in 2010.
Meanwhile, our Chemicals and Energy segment continues to
bolster its integration strength, fueling downstream growth in
our market-driven and performance businesses. And our Plastics
segment – prized for strong back-integration into feedstocks,
economies of scale, as well as technology and brand leadership –
represents the strongest franchise in the industry.
Reinvigorated: Delivering on Our Commitments
We have actively reshaped Dow through aggressive portfolio
management. In less than two years, we have divested more
than $5 billion in non-strategic businesses – exceeding our
2009 –2010 targets. In 2010, we:
•฀฀Surpassed฀our฀goal฀of฀divesting฀$2฀billion฀in฀non-strategic฀
assets, fueled in large part by our sale of Styron to Bain Capital
for $1.6 billion. These actions allowed us to reduce debt
while freeing capital for investment in our higher-growth,
higher-margin businesses.
•฀฀Maintained฀an฀aggressive฀focus฀to฀deliver฀against฀restructuring฀
and acquisition-related synergy targets, delivering $2.4 billion
in cost savings… ahead of schedule.
•฀฀Continued฀to฀manage฀our฀balance฀sheet,฀evidenced฀by฀the฀fact฀
that our net debt to total capital ratio reached 42.6 percent by
year-end. This was driven in part by more than $4 billion of cash
from operating activities.
THE RIGHT PORTFOLIO
Dow has reshaped and repositioned its portfolio to take on the complex realities
of today and tomorrow. We have reorganized our businesses around customers
and global market needs. We have preferentially invested in higher-growth and
technology-rich businesses, while preserving our unique integration advantage.
And we have exited businesses that no longer meet our strategic vision. As a result,
we have a diverse portfolio of leading businesses that are capable of creating
growth for our customers and long-term value for our stockholders.
Through cross-selling opportunities, new business and
new solutions, we have captured significant growth
synergies since our 2009 acquisition of Rohm and Haas.
Already, we have realized more than $1 billion revenue in
growth synergies on an annual run-rate basis, exceeding our
2010 target by more than $500 million – and we are rapidly
accelerating toward our 2012 target of $2 billion.
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