Dow Chemical 2011 Annual Report Download - page 82

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Performance Plastics Outlook for 2012
In North America, increasingly favorable feedstock dynamics from shale gas are expected to help U.S. Gulf Coast polyethylene
production maintain a competitive position globally. Improving global economic conditions in the second half of 2012 are
expected to increase demand for polyethylene and, with limited new industry capacity expected to come on-line, operating rates
and margins are expected to improve. Dow Elastomers is expected to experience steady growth in most market segments. Dow
Packaging and Converting volumes are expected to increase as the business restarts a manufacturing facility to produce
SARAN™ barrier resins that was down for refurbishment and starts up new photovoltaic encapsulant film capacity in 2012.
The outlook for Dow Electrical and Telecommunications is mixed, with continued demand growth expected in the emerging
economies; however, the slowdown in the renewable energy sector in the United States is expected to have a negative impact
on volume. Equity earnings from the Company's joint ventures in Kuwait are expected to improve. Construction will also
continue on the new biopolymers manufacturing facility at the site in Santa Vitória, Minas Gerais, Brazil. This project, which is
a consolidated joint venture with Mitsui & Co. Ltd, was announced during the fourth quarter of 2011 and once completed, is
expected to be the largest biopolymers manufacturing facility in the world. The joint venture is expected to begin operations in
2015.
FEEDSTOCKS AND ENERGY
The Feedstocks and Energy segment includes the following businesses: Chlor-Alkali/Chlor-Vinyl; Energy; Ethylene Oxide/
Ethylene Glycol; and Hydrocarbons. The Chlor-Alkali/Chlor-Vinyl business focuses on the production of chlorine for
consumption by downstream Dow derivatives, as well as production, marketing and supply of ethylene dichloride, vinyl
chloride monomer and caustic soda. These products are used for applications such as alumina production, pulp and paper
manufacturing, soaps and detergents, and building and construction. The Energy business supplies power, steam and other
utilities, principally for use in Dow’s global operations. The Ethylene Oxide/Ethylene Glycol business is the world’s largest
producer of purified ethylene oxide, principally used in Dow’s downstream performance derivatives. Dow is also a key supplier
of ethylene glycol to MEGlobal, a 50:50 joint venture and world leader in the manufacture and marketing of merchant
monoethylene glycol and diethylene glycol. Ethylene glycol is used in polyester fiber, polyethylene terephthalate (PET) for
food and beverage container applications, polyester film, and aircraft and runway deicers. The Hydrocarbons business
encompasses the procurement of natural gas liquids and crude oil-based raw materials, as well as the supply of monomers,
principally for use in Dow's global operations. The business regularly sells its by-products and buys and sells products in order
to balance regional production capabilities and derivative requirements. The business also sells products to certain Dow joint
ventures. Also included in the Feedstocks and Energy segment are the results of Compañia Mega S.A. and MEGlobal, and a
portion of the results of EQUATE Petrochemical Company K.S.C., The Kuwait Olefins Company K.S.C., and the SGC-Dow
Group, all joint ventures of the Company.
On June 17, 2010, Dow sold Styron to an affiliate of Bain Capital Partners. Businesses and products sold within the
Feedstocks and Energy segment included certain styrene monomer assets, which were reported in the Feedstocks and Energy
segment through the date of the divestiture. On September 30, 2009, the Company completed the sale of its ownership interest
in the OPTIMAL Group of Companies, nonconsolidated affiliates, to Petroliam Nasional Berhad; a portion of the results were
reported in the Feedstocks and Energy segment through the date of the divestiture. See Note E to the Consolidated Financial
Statements for additional information on these divestitures.
For the Feedstocks and Energy segment, there was no difference between actual and pro forma sales and EBITDA for
2009.
Feedstocks and Energy
Actual Results
In millions
Sales
Price change from comparative period
Volume change from comparative period
Volume change, excluding divestitures
Equity earnings
EBITDA
Certain items impacting EBITDA
2011
$ 11,302
27%
7%
7%
$ 561
$ 940
$ —
2010
$ 8,457
28%
5%
23%
$ 407
$ 471
$ —
2009
$ 6,346
(28)%
(22)%
N/A
$ 195
$ 477
$ 510