Dow Chemical 2010 Annual Report Download - page 7

2010 Annual Report 5
1 EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.
EBITDA margin is defined as EBITDA as a percentage of sales. EBITDA and EBITDA margin
are presented excluding certain items.
2 See Supplemental Information at www.dow.com/financial for a description of these items.
Andrew N. Liveris
President, Chief Executive Officer
and Chairman of the Board
February 25, 2011
Strategically, we are committed to continue expanding our portfolio
of specialty chemicals, agrosciences and advanced materials, and
accelerate the transformation of our Plastics franchise.
We are focused on maintaining the momentum of our growth
portfolio and will continue to invest in and monetize our innovation
pipeline. We will also continue accelerating toward our 2012 goal of
$2 billion in growth synergies.
We will further strengthen our presence in emerging geographic
areas – with a goal of reaching 35 percent of revenue from these
regions in 2012. Our progress will accelerate as we continue
implementing projects in Thailand, Saudi Arabia, Brazil and China
that will bolster our downstream businesses and increase our
asset footprint in the emerging world.
From an operational perspective, we will maintain our vigilant
approach to reliable operations, productivity and cost reductions,
while prudently investing in growth.
Financially, we remain committed to driving our net debt to total
capital ratio down to less than 40 percent by the end of 2012.
And finally, we will continue advocating globally for policies that
help manufacturing thrive in a 21st-century economy.
We will pursue all of this while upholding our unwavering focus
on safe operations in the communities where we live and work.
In fact, Dow’s commitment to sustainability and our focus on
addressing great global challenges will increase as Dow steps
into its role as the official “Chemistry Company” of the Olympic
Movement – a premier partnership we initiated in 2010.
These are, without question, remarkable times for The Dow Chemical
Company. As we fix our eyes on a new frontier, we are building
upon a rich legacy of innovation that is woven into the fabric of our
Company. After all, it was the potential of chemistry that brought
Herbert H. Dow to Midland, Michigan, 114 years ago. He believed
deeply in the power of chemistry to create, to build and to improve.
More than a century later, the men and women of The Dow
Chemical Company continue to be driven by that set of beliefs –
by Herbert H. Dow’s spirit of exploration and his ethic of hard
work. We are disciplined. We are passionate. We are purposeful,
and we stand behind our mission.
Thank you for believing in our mission. Thank you for supporting
our work. And thank you for investing in the future of our Company.
•฀฀Our strong investment in growth remained steadfast. Our 2010
R&D spending increased to $1.7 billion, and we drew on our
$30 billion net present value innovation pipeline to launch
new products that will set us apart for years to come. In fact,
more than one-third of our revenue this year was generated
by products launched within the last five years.
•฀฀We delivered more than $1 billion in revenue from growth
synergies on a run-rate basis from our transformational
acquisition of Rohm and Haas, and we surpassed $2 billion
in cost synergies, well ahead of schedule.
•฀฀We put our disciplined portfolio management approach into
action – divesting $5 billion in non-strategic assets in less
than two years.
•฀฀We pursued strategic joint ventures that bolster our integration
strength, while simultaneously liberating capital for investment
in our businesses that are technology- and customer-driven.
•฀฀We reduced our net debt to capital ratio to 42.6 percent, and
delivered more than $4 billion in cash from operating activities.
We are now entering a period of increasing financial flexibility
after successfully integrating the largest acquisition in our history
in the midst of what has become known as the world’s worst
financial crisis since the Great Depression.
And in terms of earnings growth, we delivered results more than
triple that of the year-ago period.
We accomplished all of this while maintaining our high standards
for environment, health and safety performance. Our efforts were
recognized by the National Safety Council, which named Dow the
recipient of the prestigious Robert W. Campbell Award. Dow is
the first chemical company to be so honored.
Our commitment to helping people around the world remained
equally strong. Thousands of employees volunteered this year, as
they always do, working in local communities where we operate and
beyond. In particular, Dow provided support in Pakistan, Haiti and
Chile in the wake of disasters that struck these regions in 2010.
As we stand steadfast behind our values of integrity, respect for
people and protection of our planet, we also recognize that this
Company has never been about staying in one place. We are always
advancing. We are always growing. We are always innovating.
Progress is a Dow tradition. It is an element of our DNA.
That is why, even as we celebrate a tremendous year, we are looking
to the future. We welcome the fact that the global economy is
showing positive trends. However, we won’t depend on external
factors to fuel our growth. Our portfolio is well-balanced to mitigate
uncertainty, and our drive to deliver sustained earnings growth
remains resolute.