Dow Chemical 2013 Annual Report Download - page 67

45
expiration of a low margin marketing agreement in late 2013. Equity earnings are expected to be down due to increased start-up
costs for the Sadara joint venture.
On December 2, 2013, the Company announced the planned carve-out of a portion of its chlorine chain, including the
Company’s global Chlorinated Organics and Epoxy businesses, in preparation for transactions involving select chlorine and
derivative businesses over the next 12-24 months.
PERFORMANCE PLASTICS
The Performance Plastics segment is a solutions-oriented portfolio comprised of Dow Elastomers; Dow Electrical and
Telecommunications; and Dow Packaging and Specialty Plastics. The Performance Plastics segment also includes the results of
Equipolymers (through the July 1, 2011 merger with MEGlobal; see Note 8 to the Consolidated Financial Statements) and
Univation Technologies, LLC, as well as a portion of the results of EQUATE Petrochemical Company K.S.C., The Kuwait
Olefins Company K.S.C., The SCG-Dow Group and Sadara Chemical Company, all joint ventures of the Company.
On December 2, 2013, the Company sold its global Polypropylene Licensing and Catalysts business to W. R. Grace & Co. On
September 30, 2011, the Company sold its global Polypropylene business to Braskem SA. These businesses were reported in
the Performance Plastics segment through the date of divestiture. See Note 5 to the Consolidated Financial Statements for
additional information on these divestitures.
Performance Plastics
In millions 2013 2012 2011
Sales $ 14,645 $ 14,479 $ 16,257
Price change from comparative period 4 % (4)% 12 %
Volume change from comparative period (3)% (7)% (5)%
Volume change, excluding divestitures (1)% 1 % 4 %
Equity earnings $ 359 $ 134 $ 303
EBITDA $ 4,549 $ 3,018 $ 3,440
Certain items impacting EBITDA $ 457 $ (26) $ 86
2013 Versus 2012
Performance Plastics sales for 2013 were $14,645 million, up 1 percent from $14,479 million in 2012 with price up 4 percent
and volume down 3 percent. Dow Packaging and Specialty Plastics prices were significantly higher in all geographic areas due
to low industry inventories and the Company’s focus on higher margin products and customers. Dow Elastomers prices were
lower in all geographic areas due to increased competitive pressure from additional industry capacity. Dow Electrical and
Telecommunications price increases in North America were more than offset by price declines in all other geographic areas,
most notably Asia Pacific which included the unfavorable impact of currency. Volume declined by 3 percent, primarily due to
the divestiture of the Company’s 50 percent interest in Nippon Unicar Company Limited. Excluding the impact of this
divestiture, volume was down 1 percent. Increased demand drove Dow Packaging and Specialty Plastics volume growth in all
geographic areas, except EMEA, which was impacted by the Company's shutdown of a high-density polyethylene production
facility at Tessenderlo, Belgium. Dow Elastomers volume was higher in all geographic areas, except Latin America, due to
increased demand in the transportation, adhesive and infrastructure industries. Dow Electrical and Telecommunications volume
declined in all geographic areas except Latin America, reflecting weaker demand in the telecommunications and power
industries. Volume was also significantly lower in Asia Pacific, reflecting reduced supply related to the Company's divestiture
of its ownership interest in Nippon Unicar Company Limited.
EBITDA for 2013 was $4,549 million, up significantly from $3,018 million in 2012. EBITDA improved as the impact of higher
selling prices, lower feedstock costs, lower other raw material cost and improved equity earnings more than offset the decline
in sales volume. Equity earnings were $359 million in 2013, up from $134 million in 2012, as a result of significantly improved
earnings from EQUATE, The Kuwait Styrene Company K.S.C. and Univation Technologies, LLC and lower equity losses from
The SCG-Dow Group. EBITDA in 2013 was also positively impacted by a pretax gain of $451 million on the sale of the global
Polypropylene Licensing and Catalysts business and a $6 million gain for adjustments to contract cancellation fees related to
the 4Q12 Restructuring plan. EBITDA in 2012 was negatively impacted by $26 million of restructuring charges consisting of
asset write-offs of $10 million and costs associated with exit or disposal activities of $7 million related to the shutdown of the
Company's polyethylene manufacturing facility in Tessenderlo, Belgium, and a $9 million charge related to the impairment of
the Company's investment in Nippon Unicar Company Limited. See Notes 3 and 5 to the Consolidated Financial Statements for
additional information on these charges.