Dow Chemical 2011 Annual Report Download - page 81

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2011 Actual Versus 2010 Actual
Performance Plastics sales for 2011 were $16,257 million, up 7 percent from $15,260 million in 2010. Compared with 2010,
price was up 12 percent, while volume declined 5 percent. Double-digit price increases were reported in all geographic areas,
except Latin America (up 9 percent), and most businesses, largely due to a significant increase in feedstock costs. The price
improvement was especially evident in Dow Elastomers, Polyethylene, Polypropylene and Dow Electrical and
Telecommunications. The decline in volume for the segment reflected the September 30, 2011 divestiture of the Polypropylene
business to Braskem S.A. and the divestiture of the Styrenics and Polycarbonate and Compounds and Blends businesses as part
of the June 17, 2010 divestiture of Styron. Excluding the impact of these divestitures, volume improved 4 percent with gains in
all geographic areas, particularly in Asia Pacific and Latin America. Volume was higher for all businesses, except Dow
Electrical and Telecommunications, which experienced significant volume decline in Asia Pacific as the expiration of
government stimulus spending, increased interest rates and more restrictive lending resulted in slower growth in the
construction, manufacturing and public infrastructure sectors. Polyethylene reported solid volume growth of 4 percent with
increases of more than 22 percent in Asia Pacific and 8 percent in Latin America, despite limited ethylene supply during the
second quarter due to a planned maintenance turnaround at the Company's ethylene facility in Bahia Blanca, Argentina. In
North America, polyethylene volume was essentially flat, reflecting the slow pace of the economic recovery in the United
States, planned maintenance turnarounds and unplanned outages at the Company's U.S. Gulf Coast manufacturing facilities,
and limited ethane and ethylene supply at the Prentiss, Alberta, Canada manufacturing facility. Polyethylene volume was flat in
EMEA as Middle East producers aggressively sold excess material into the region. Dow Elastomers reported double-digit
volume growth with especially strong demand in Asia Pacific as a result of the continuing recovery from the March 2011
earthquakes and tsunami in Japan. Dow Packaging and Converting volume was up slightly, as growth was impacted by limited
product availability due to a major capital project at the manufacturing facility to produce SARANTM resins in Midland,
Michigan.
EBITDA for 2011 was $3,440 million, down from $3,565 million in 2010. EBITDA declined as higher selling prices,
improved margins and a small gain on the sale of the Polypropylene business in the third quarter of 2011 were more than offset
by the unfavorable impact of higher feedstock and other raw material costs, higher freight costs, and increased costs related to
turnarounds. Equity earnings were $303 million in 2011, up from $254 million in 2010 primarily due to an $86 million gain
related to cash collected on a previously impaired note receivable associated with Equipolymers. Improved earnings from The
Kuwait Olefins Company, The Kuwait Styrene Company and Univation Technologies, LLC were partially offset by lower
earnings at EQUATE and the SCG-Dow Group. EBITDA for 2010 included a $7 million net gain related to the divestiture of
Styron.
2010 Actual Versus 2009 Pro Forma
Performance Plastics sales for 2010 were $15,260 million, up 17 percent from $13,026 million in 2009, with price up
20 percent and volume down 3 percent. Global economic conditions began to improve during the second half of 2009 and this
momentum carried over into 2010. Feedstock and energy costs were significantly higher than in 2009, driving double-digit
price increases in all geographic areas. The decline in volume for the segment reflected the divestiture of the Styrenics and
Polycarbonate and Compounds and Blends businesses as part of the June 17, 2010 divestiture of Styron. Sales volume,
excluding the impact of the Styron divestiture, was up 4 percent from 2009. Sales volume during the first half of 2010 was
negatively impacted by planned maintenance turnarounds at the Company’s polyethylene and polypropylene production
facilities in North America and Europe. Production was also negatively impacted during the first half of 2010 by an unplanned
site outage at the Company’s polypropylene production facility in Schkopau, Germany, and by ethylene supply limitations at
the Company’s Bahia Blanca polyethylene facility in Argentina. With the completion of the maintenance turnarounds and
resolution of the outages, production returned to normal levels during the second half of 2010 and demand was strong.
Polypropylene volume was significantly higher in North America and EMEA as demand in the consumer goods, automotive
and packaging sectors was particularly strong. Dow Elastomers reported strong, double-digit volume increases in all
geographic areas due to tight supply/demand balances in 2010. Dow Packaging and Converting also achieved strong volume
increases in all geographic areas as the global economic recovery increased demand for adhesives and other packaging
materials.
EBITDA for 2010 was $3,565 million, up from $2,147 million in 2009. While feedstock and energy and other raw
materials costs were significantly higher than 2009, the increases were more than offset by higher prices and improved equity
earnings from the Company’s joint ventures in Kuwait. EBITDA for 2010 included a $7 million net gain on the divestiture of
Styron. EBITDA in 2009 was negatively impacted by $65 million of impairment charges related to the Company’s investment
in Equipolymers, a nonconsolidated affiliate; an increase in cost of sales of $53 million related to the fair valuation of Rohm
and Haas inventories; and $2 million of restructuring charges. See Note C to the Consolidated Financial Statements for
information on restructuring charges.