Dow Chemical 2012 Annual Report Download - page 67

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rising raw material costs. Volume improved slightly as higher demand for construction materials in Latin America and Asia
Pacific was offset by continued weak demand in the North American housing and construction industries. Dow Coating
Materials sales increased due to higher prices which more than offset a decrease in volume due to lower demand for
architectural and industrial coatings driven by weak residential construction conditions, and lower home improvement spending
in North America and Europe. Dow Water and Process Solutions sales were higher across all geographic areas, especially in
EMEA and Asia Pacific (most notably in Greater China), driven by increased demand for ion exchange resins and reverse
osmosis membranes used in industrial water purification projects. Performance Monomers sales increased due to higher prices,
with double-digit increases across all geographic areas and products. Volume decreased in all geographic areas except Asia
Pacific, as the business shed low margin contracts to free up capacity for internal supply.
EBITDA for 2011 was $1,167 million, down from $1,230 million in 2010. EBITDA was negatively impacted in 2011 by a
$60 million charge for a warranty accrual adjustment related to an exited business. Results in 2010 were negatively impacted
by $15 million in adjustments to the 2009 restructuring plan and $5 million in restructuring charges related to the divestiture of
the specialty latex assets. Compared with 2010, higher selling prices were offset by higher feedstock and other raw material
costs, lower volume, increased investment in DOW POWERHOUSE™ solar shingle, slightly lower equity earnings from Dow
Corning, and the absence of earnings from divested businesses.
Coatings and Infrastructure Solutions Outlook for 2013
Coatings and Infrastructure Solutions sales are expected to grow modestly in 2013. Volume growth is expected in Dow Coating
Materials, driven by higher demand for architectural coatings due to a modestly improved housing industry in the United States
and China, and by accelerating technology innovation projects mainly in improved hiding capabilities and lower odor in paint.
Demand is also expected to increase for industrial coatings driven by global economic conditions. Dow Building and
Construction sales are expected to grow driven by higher demand in insulation products in North America due to continued
recovery of residential construction and in Asia Pacific, most notably Japan, where higher energy efficiency standards are being
implemented, partially offset by declines in EMEA which continues to be impacted by macroeconomic concerns. Dow Water
and Process Solutions sales are expected to increase due to higher demand for ion exchange resins used in ultrapure water
applications and reverse osmosis membranes used in industrial water desalination projects. Performance Monomers sales are
also expected to increase driven by improved end-market conditions, especially in coatings and adhesives. Equity earnings
from Dow Corning are expected to be lower in 2013, as challenges in the polysilicon industry continue to compress margins.
AGRICULTURAL SCIENCES
The Agricultural Sciences segment is a global leader in providing crop protection and plant biotechnology products, urban pest
management solutions and healthy oils. The business invents, develops, manufactures and markets products for use in
agriculture, industrial and commercial pest management, and food service. Agricultural Sciences consists of two businesses -
Crop Protection and Seeds, Traits and Oils.
Agricultural Sciences
In millions 2012 2011 2010
Sales $ 6,382 $ 5,655 $ 4,869
Price change from comparative period 3% 5% (4)%
Volume change from comparative period 10% 11% 11 %
Equity earnings $ 1$ 4$ 2
EBITDA $ 977 $ 913 $ 640
Certain items impacting EBITDA $ —$ —$ —
2012 Versus 2011
Agricultural Sciences sales were a record $6,382 million in 2012, up 13 percent from $5,655 million in 2011. Compared with
2011, volume increased 10 percent and price was up 3 percent. Regionally, North America reported 27 percent sales growth
while Latin America and Asia Pacific also reported strong increases. Seeds, Traits and Oils and Crop Protection set new annual
sales records as new product launches and continued ramp up of new technologies fueled growth. Sales of Seeds, Traits and
Oils increased 27 percent compared with 2011 driven by strong growth in the corn, soybean and healthy oils portfolios.
SmartStax® technology sales more than doubled from 2011 performance, driven by the 2012 introduction of POWERCORE™
Insect Trait Technology in Latin America and REFUGE ADVANCED™ in North America. Crop Protection sales increased 10
percent, with volume up 8 percent and price up 2 percent. New Crop Protection product sales were up 19 percent compared
with the year ago period with spinetoram insecticide up 50 percent and double-digit growth in aminopyralid herbicide and
pyroxsulam herbicide.