Dow Chemical 2012 Annual Report Download - page 54

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The Dow Chemical Company and Subsidiaries
PART II, Item 7. Management’s Discussion and
(Unaudited) Analysis of Financial Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Page
ABOUT DOW
Dow combines the power of science and technology to passionately innovate what is essential to human progress. The
Company connects chemistry and innovation with the principles of sustainability to help address many of the world’s most
challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing
agricultural productivity. Dow’s diversified industry-leading portfolio of specialty chemicals, advanced materials, agrosciences
and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately
160 countries and in high growth sectors such as electronics, water, energy, coatings and agriculture. In 2012, Dow had annual
sales of $56.8 billion and employed approximately 54,000 people worldwide. The Company's more than 5,000 products are
manufactured at 188 sites in 36 countries across the globe. The Company conducts its worldwide operations through global
businesses, which are reported in six operating segments: Electronic and Functional Materials, Coatings and Infrastructure
Solutions, Agricultural Sciences, Performance Materials, Performance Plastics, and Feedstocks and Energy.
In 2012, 36 percent of the Company’s sales were to customers in North America; 34 percent were in Europe, Middle East
and Africa (“EMEA”); while the remaining 30 percent were to customers in Asia Pacific and Latin America.
2012 OVERVIEW
In 2012, Dow faced a challenging and volatile operating environment where changes to regional demand, a significantly
weakened price environment and currency headwinds out of Europe caused macroeconomic conditions to deteriorate
throughout the year. Additionally, major shifts in various industries (e.g., alternative energy) and changes in government
priorities and policies around the world also presented significant headwinds.
The Company ramped up efficiencies through an intense focus on work processes and procurement activities. These efforts
gained momentum throughout the year, as Dow took focused action to reduce its structural costs.
Despite macroeconomic challenges, Dow delivered against its near-term cash flow targets, paid down debt and maintained
a strong liquidity position. Further, the Company maintained its commitment to increasingly reward shareholders by increasing
dividends.
Net sales for 2012 were $56.8 billion, down 5 percent from $60.0 billion in 2011. Sales decreased in all operating
segments, excluding Agricultural Sciences (up 13 percent), and in all geographic areas.
2012 Overview 28
Results of Operations 31
Segment Results 38
Electronic and Functional Materials 38
Coatings and Infrastructure Solutions 40
Agricultural Sciences 41
Performance Materials 42
Performance Plastics 44
Feedstocks and Energy 46
Sales Price and Volume Charts 49
Liquidity and Capital Resources 50
Other Matters 57
Critical Accounting Policies 57
Environmental Matters 61
Asbestos-Related Matters of Union Carbide Corporation 65
Matters Involving the Formation of K-Dow Petrochemicals 66