Dow Chemical 2012 Annual Report Download - page 22
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The Dow Chemical Company
20
Op d
l Efficy
Enhancing Value Through
Our focus on operating and capital efciency gives us exibility to respond to changing
economic conditions while also enhancing our productivity and protability. In a turbulent
economic environment, we took decisive actions to protect our growth path and deliver
near-term value – accelerating targeted cost and cash ow levers and building a more
simplied organization. These actions reect our renewed commitment to operating
discipline and our relentless focus on execution.
Accelerating Cost and Cash Flow Actions
Overall, we are continuing our implementation of
$2.5 billion of cost and cash flow measures. These include:
• Achieving $750 million in Efficiency for Growth.
The first tranche of our actions included our efficiency
program – an enterprise-wide effort built on Dow’s
tremendous track record for delivering productivity
gains. Focusing on better ways to manage cash, costs
and working capital, this program has delivered
more than $750 million of savings.
• Executing $750 million in cost reductions. In
April, we announced a cost reduction plan targeting
$250 million in annual savings by shutting down
non-core assets and streamlining our operations.
As macroeconomic headwinds persisted throughout
2012, the Company responded with an additional
restructuring program in October, targeting $500
million in annual savings.
• Decreasing capital expenditures and growth
spending by $1 billion. Although we continue to
invest in sectors and technologies with clear, near-
term earnings delivery, we reduced our capital
spending by approximately $100 million in 2012,
and we expect to decrease capital expenditures by
an additional $700 million in 2013. Our plans call for
reduced spending in sectors where market dynamics
and government policies are changing – such as
alternative energy. In turn, we are targeting to
trim growth and discretionary expenses by $200
million in 2013.
Looking ahead, we also will continue to actively manage
our portfolio. In the next two years, we are targeting to
divest up to $1 billion in non-core businesses.
$613MM
Gross debt reduced in 2012
1Q12
Restructuring Savings
$100MM
4Q12
Restructuring Savings
$200MM
Growth Spending
Reduction
$100MM
Discretionary Spending
Reduction
$100MM
Adjust CapEx Investment to
Prioritize Projects with
Align Capacity Expansions
with Global Growth
EBITDA Impact
$500MM
Capital Expenditure Savings
$500–$600MM
2013 Target Cost Savings
2013 Target Cash Savings