Dow Chemical 2012 Annual Report Download - page 5

2012 Annual Report 3
The world continued its rocky recovery in 2012, with volatility and uncertainty proving
to be the new normal. Persistent weakness in Europe was a continued drag on global
GDP growth, while dramatic declines in China, Brazil and other emerging geographies
introduced new risks to a sustained recovery.
As market conditions further deteriorated in the second half of 2012, Dow took
aggressive action – driving a full array of cost and cash ow measures, prudently
managing our portfolio and further prioritizing growth investments.
Although we course-corrected aggressively and remained
firmly on strateg y, our results in the calendar year were
clearly not where we wanted them to be. The substantial
cost and cash savings we deployed in 2012 did not make
up for a dramatic decline in price power – $1.3 billion of
lost price in the second half alone. This was coupled by an
acute drop in equity earnings, due in large part to a severe
deterioration in Dow Corning’s polysilicon business.
Notwithstanding these headwinds, the Dow team
demonstrated our ability to control the controllable:
We delivered against near-term cash flow targets. We
paid down debt. Importantly, we also maintained our
commitment of continually seeking to reward shareholders.
Among the highlights:
• Continued to harness the power of our innovation
portfolio in Agricultural Sciences, realizing record sales
of $6.4 billion and record EBITDA of $977 million;
• Generated $8 billion in cash from operations in the
two-year period ended December 31, 2012;
• Finalized the K-Dow arbitration, with a $2.16 billion award
finding issued by the International Chamber of Commerce
(not including interest and costs);
• Launched $2.5 billion of cost and cash flow actions;
• Further paid down debt, with a $613 million decrease
in gross debt;
• Increased dividends declared per share in 2012 by
34 percent versus 2011;
• Achieved significant milestones with game-changing,
enterprise growth projects such as our investments on
the U.S. Gulf Coast and our Sadara joint venture in the
Middle East; and
• Made continuous progress toward our vision of zero
accidents and injuries, evidenced by a 36 percent
improvement in our illness and injury rate versus 2011.
In summary, 2012 was a year in which Dow employees
maintained focus and discipline in the midst of significantly
volatile market conditions. Importantly, we delivered these
accomplishments while maintaining our high standards for
ethics and environment, health and safety.
Moving forward, we have a full array of actions in place to
protect our earnings growth path. Our commitment to our
growth trajectory is unwavering, and I am confident we have
the right people and the right strategy to deliver. Here’s why:
Dr Srehos,
3
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$2.5B
launched in 2012