Dow Chemical 2015 Annual Report Download - page 57

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PERFORMANCE MATERIALS & CHEMICALS
The Performance Materials & Chemicals segment consists of the following businesses: Chlor-Alkali and Vinyl, Industrial
Solutions and Polyurethanes. The segment also includes the results of MEGlobal and a portion of the results of EQUATE,
TKOC, Map Ta Phut Olefins Company Limited and Sadara, all joint ventures of the Company.
On January 30, 2015, the Company sold its global Sodium Borohydride business to Vertellus Specialty Materials LLC. On
February 2, 2015, the Company sold ANGUS Chemical Company to Golden Gate Capital. On October 5, 2015, the Company
completed the split-off of its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy
businesses to Olin Corporation in a tax-efficient Reverse Morris Trust transaction. These businesses were reported in the
Performance Materials & Chemicals segment through the date of divestiture. See Notes 5 and 6 to the Consolidated Financial
Statements for additional information.
On December 23, 2015, the Company sold its 50 percent ownership interest in MEGlobal to EQUATE. MEGlobal was aligned
100 percent with Performance Materials & Chemicals through the date of divestiture. Dow has retained a 42.5 percent
ownership stake in MEGlobal through its ownership in EQUATE. The Performance Materials & Chemicals segment will
continue to include a portion of the equity earnings from EQUATE, which will include the results of MEGlobal. See Notes 5
and 9 to the Consolidated Financial Statements for additional information.
Performance Materials & Chemicals
In millions 2015 2014 2013
Sales $ 11,973 $ 15,114 $ 14,824
Price change from comparative period (15)% —% 1 %
Volume change from comparative period (6)% 2% (2)%
Volume change, excluding divestitures 1 % 2% (2)%
Equity earnings $ 225 $ 322 $ 480
EBITDA $ 5,479 $ 2,193 $ 1,913
Certain items impacting EBITDA $ 3,409 $ — $ (55)
EBITDA excluding certain items $ 2,070 $ 2,193 $ 1,968
2015 Versus 2014
Performance Materials & Chemicals sales were $11,973 million in 2015, down 21 percent from $15,114 million in 2014, with
price down 15 percent, including the unfavorable impact of currency which represented more than one-third of the price
decline, and volume down 6 percent. Price declined in all geographic areas and all businesses. Lower raw material costs and the
unfavorable impact of currency drove price declines in Epoxy, Polyurethanes and Industrial Solutions. Chlor-Alkali and Vinyl
reported lower prices as a result of the decline in ethylene prices and increased availability of caustic soda. Volume was
impacted by recent divestitures, including the divestitures of ANGUS Chemical Company and the global Sodium Borohydride
business and the split-off of the chlorine value chain. Excluding these divestitures, volume increased 1 percent. Volume
increased in Polyurethanes driven by increased demand, lower raw material costs and growth in energy efficiency, consumer
and industrial market sectors in North America and EMEAI, and in Asia Pacific due to the start up of a polyols plant in
Thailand. Industrial Solutions reported volume declines across all geographic areas, except Asia Pacific, due to weakness in the
agriculture and energy market sectors and a change in a long-term supply arrangement. Epoxy volume was up in all areas,
except Asia Pacific, driven by increased demand for phenolics. Chlor-Alkali and Vinyl reported decreased volume in EMEAI
and Latin America, partially offset by increases in Asia Pacific and North America, due to unfavorable supply and demand
fundamentals and the expiration of a long-term supply agreement in EMEAI.
EBITDA for 2015 was $5,479 million, compared with $2,193 million in 2014. EBITDA was favorably impacted by a pretax
gain of $682 million on the divestiture of ANGUS Chemical Company, a pretax gain of $20 million on the divestiture of the
global Sodium Borohydride business, a pretax gain of $1,984 million on the split-off of the chlorine value chain and a pretax
gain of $723 million on the sale of the Company's interest in MEGlobal. See Notes 5 and 6 to the Consolidated Financial
Statements for additional information on these transactions. Excluding these certain items, EBITDA decreased due to the
impact of lower sales volume, lower selling prices including the impact of currency, the absence of earnings from divested
businesses, lower equity earnings from TKOC, EQUATE and MEGlobal and higher equity losses from Sadara which more than
offset lower feedstock, energy and other raw material costs, lower SG&A and R&D spending, the favorable impact of currency
on costs and higher equity earnings from Map Ta Phut Olefins Company Limited.
2014 Versus 2013
Performance Materials & Chemicals sales were $15,114 million in 2014, up 2 percent from $14,824 million in 2013, with
volume up 2 percent and price flat. Compared with 2013, volume was higher primarily due to increases in EMEAI and Latin