Dow Chemical 2015 Annual Report Download - page 41

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2015 OVERVIEW
In 2015, Dow had another strong year of earnings growth in a challenging and volatile macroeconomic environment that
included significant declines in crude oil and feedstock prices and currency headwinds from a strengthening U.S. dollar. In this
economic environment, the Company demonstrated financial discipline and executed against its priorities - divesting of non-
strategic businesses, completing the split-off of the chlorine value chain and initiating the restructure of the Company's joint
ventures.
Net sales for 2015 were $48.8 billion, down 16 percent from $58.2 billion in 2014, with volume up 1 percent and price down
17 percent. Sales decreased in all operating segments and geographic areas.
Volume increased 1 percent in 2015 compared with 2014, as increases in Performance Plastics (up 5 percent), Infrastructure
Solutions (up 2 percent) and Consumer Solutions (up 1 percent) more than offset volume declines in Performance Materials &
Chemicals (down 6 percent) and Agricultural Sciences (down 4 percent). Volume increased in Asia Pacific (up 3 percent) and
remained flat in EMEAI, North America and Latin America. Excluding the impact of recent acquisitions and divestitures(1),
Performance Materials & Chemicals volume was up 1 percent and Agricultural Sciences volume was down 3 percent. Volume
increased in all geographic areas led by Asia Pacific (up 4 percent).
Price was down 17 percent in 2015 compared with 2014, driven primarily by a decline in crude oil prices and the unfavorable
impact of currency, which represented nearly 30 percent of the price decline. Double-digit price declines were reported in all
geographic areas and all operating segments, except Agricultural Sciences (down 8 percent) and Consumer Solutions (down
7 percent).
Dow's Board of Directors approved actions to further streamline the organization and optimize the Company’s footprint as a
result of the split-off of the chlorine value chain. These actions, which will further accelerate Dow’s value growth and
productivity targets, will result in a reduction of approximately 2,250 positions across a number of businesses and functions and
adjustments to the Company's asset footprint to enhance competitiveness. As a result of these actions, the Company recorded
pretax restructuring charges of $415 million in 2015. These actions are expected to be completed primarily by March 31,
2017.
Dow's earnings from nonconsolidated affiliates totaled $674 million in 2015, down from $835 million in 2014. In 2015, equity
earnings decreased as higher earnings at The SCG-Dow Group and Map Ta Phut Olefins Company Limited were more than
offset by increased equity losses from Sadara Chemical Company ("Sadara"), lower equity earnings from Univation
Technologies, LLC ("Univation") resulting from the May 5, 2015, step acquisition and lower earnings from EQUATE
Petrochemicals Company K.S.C. ("EQUATE"), The Kuwait Olefins Company K.S.C. ("TKOC") and MEGlobal.
Sundry income (expense) - net was net sundry income of $4,592 million in 2015, up from net sundry expense of $27 million in
2014, primarily due to a gain on the split-off of the chlorine value chain, a gain on the sale of the Company's interest in
MEGlobal, a gain on the Univation step acquisition and gains from the divestitures of AgroFresh and ANGUS Chemical
Company.
The Company delivered $7.5 billion of cash flows from operating activities in 2015 and ended the year with $8.6 billion of
cash and cash equivalents.
The Company reduced gross debt in 2015 by $2.5 billion, primarily due to the split-off of the chlorine value chain which
resulted in a $1.7 billion reduction in debt, and the early redemption of $724 million in InterNotes with various interest rates
and maturities between 2016 and 2024.
On October 22, 2015, the Company announced the Board of Directors declared a 10 percent increase in the Company's
quarterly dividend, from $0.42 per share to $0.46 per share.
During 2015, the Company executed $2.7 billion in share repurchases which included $1.5 billion of shares redeemed as part of
the Company's split-off of the chlorine value chain. At December 31, 2015, the Company had $2.3 billion of common stock
(1) Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance
Materials & Chemicals and Performance Plastics), the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences), ANGUS
Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals), the global Sodium Borohydride business,
divested on January 30, 2015 (Performance Materials & Chemicals). Also excludes current period sales of recent acquisitions including
Univation Technologies, LLC, acquired on May 5, 2015 (Performance Plastics) and Cooperativa Central de Pesquisa Agrícola, acquired
on February 1, 2015 (Agricultural Sciences).