Dow Chemical 2014 Annual Report Download - page 71

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EBITDA for 2014 was $2,193 million, compared with $1,913 million in 2013. EBITDA increased in 2014 driven by higher
sales volume, lower other raw material costs and improved operating rates which more than offset reduced equity earnings
from MEGlobal and EQUATE and higher equity losses from Sadara. EBITDA in 2013 included $70 million of asset
impairment charges and costs related primarily to the shutdown of certain assets in the Chlor-Alkali and Vinyl, Epoxy and
Polyurethanes businesses, and a $15 million gain for the adjustment of contract cancellation fees related to the 1Q12
Restructuring program. See Notes 3 and 11 to the Consolidated Financial Statements for additional information on these
charges.
2013 Versus 2012
Performance Materials & Chemicals sales were $14,824 million in 2013, down 1 percent from $14,981 million in 2012.
Compared with 2012, volume declined 2 percent primarily due to a decrease in North America. Epoxy reported lower volume
across all geographic areas, except Latin America, due to poor supply and demand fundamentals. Chlor-Alkali and Vinyl
volume declined primarily due to lower sales of vinyl chloride monomer. In addition, caustic soda volume decreased due to a
planned maintenance turnaround and lower demand in the chlorine chain. Volume increased in Polyurethanes driven by growth
in Asia Pacific and North America, which reflected additional propylene glycol capacity in Thailand and increased demand for
energy efficient applications. Volume declined in Industrial Solutions in Asia Pacific due to the expiration of a low margin
marketing agreement. Price increased 1 percent as increases in North America and EMEAI were partially offset by decreases in
Latin America and Asia Pacific. Improved economic conditions drove price gains in Industrial Solutions in North America and
EMEAI. Polyurethanes price increases in North America and EMEAI were partially offset by declines in Latin America and
Asia Pacific. Price increases were also reported by Chlor-Alkali and Vinyl, driven by ethylene dichloride in EMEAI, which was
partially offset by lower caustic soda prices in North America and Latin America due to improved chlorine demand and new
capacity nearing start up. Price declined most notably in Chlorinated Organics, where aggressive competitors, coupled with
global industry oversupply, lowered prices.
EBITDA for 2013 was $1,913 million, compared with $1,603 million in 2012. EBITDA in 2013 was negatively impacted by
$55 million of certain items, as previously discussed. EBITDA in 2012 was negatively impacted by a goodwill impairment loss
of $220 million in the Dow Formulated Systems reporting unit (now part of the Polyurethanes business); $203 million of 1Q12
Restructuring charges related to the cancellation of a project and the shutdown/consolidation of assets in the Industrial
Solutions, Polyurethanes and Epoxy businesses; and $96 million of 4Q12 Restructuring charges related primarily to the
shutdown/consolidation of certain assets in the Industrial Solutions business. EBITDA in 2012 was also impacted by an
$8 million gain related to post-closing adjustments on the sale of a contract manufacturing business. See Notes 3, 5, 9 and 11 to
the Consolidated Financial Statements for additional information on these items. Excluding these certain items, EBITDA
decreased in 2013 as higher propylene and energy costs, decreased sales volume and increased SG&A costs partially offset
higher equity earnings, higher selling prices, decreased spending on planned maintenance turnarounds and improved operating
rates.
Performance Materials & Chemicals Outlook for 2015
Performance Materials & Chemicals volume is expected to grow at or slightly above GDP for most businesses. Price for most
of the businesses is expected to be lower due to declining feedstock prices. Modest volume growth is expected in
Polyurethanes. Volume is expected to grow in line with GDP in Industrial Solutions as most of the products produced are for
industrial applications. Volume is expected to improve in Chlor-Alkali and Vinyl due to lower maintenance turnaround activity
and higher operating rates. Increased demand in the industrial coatings, electrical laminates, infrastructure and adhesives
market sectors is expected to drive volume gains in Epoxy. Demand for most of the products in Chlorinated Organics is
expected to show slight improvement, in-line with global economic growth, while excess industry capacity is expected to lower
pricing. Equity earnings are expected to be lower due to increased start-up expenses at Sadara and declining monoethylene
glycol prices.
On January 30, 2015, the Company sold its global Sodium Borohydride business to Vertellus Specialty Materials LLC for
approximately $190 million.
On February 2, 2015, the Company sold ANGUS Chemical Company to Golden Gate Capital for $1.215 billion. The Company
expects to record a pretax gain of approximately $700 million on the transaction.
On November 12, 2014, the Company announced it will reconfigure and reduce its equity base in EQUATE , TKOC and
MEGlobal through a divestment of a portion of the Company’s interests. Dow expects such transaction(s) to be completed by
mid-2016.
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 business, Epoxy business and the Company's U.S Gulf Coast Chlor-Alkali and Vinyl
business.