Dow Chemical 2015 Annual Report Download - page 58

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America, which were partially offset by a decrease in Asia Pacific. Improved economic conditions and favorable supply and
demand fundamentals for polyols and propylene oxide/propylene glycol ("PO/PG") drove volume increases in Polyurethanes
across all geographic areas. Industrial Solutions reported lower volume, primarily due to the expiration of a low margin
marketing agreement in Asia Pacific in 2013. Chlor-Alkali and Vinyl volume increased in all geographic areas, except North
America, driven by higher downstream demand in the chlorine chain. Epoxy reported volume increases across all geographic
areas, except Latin America. Chlorinated Organics reported lower volume primarily driven by the shutdown of a
chloromethanes plant in North America at the end of 2013. Price was flat as increases in North America and Asia Pacific were
offset by decreases in EMEAI and Latin America. Polyurethanes reported higher prices in Asia Pacific, North America and
EMEAI due to tight supply as a result of planned and unplanned events across the industry. Favorable supply and demand
balances drove price gains in Industrial Solutions in North America and Latin America. Price decreases were reported by Chlor-
Alkali and Vinyl due to lower caustic soda prices. Excess industry capacity and lower raw material costs drove price down in
Epoxy across all geographic areas.
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 12 to the Consolidated Financial Statements for additional information on these
charges.
Performance Materials & Chemicals Outlook for 2016
Performance Materials & Chemicals sales are expected to be slightly lower in 2016, reflecting the impact of the October 5,
2015, split-off of the chlorine value chain which includes the Global Chlorinated Organics and Epoxy businesses and the U.S.
Gulf Coast Chlor-Alkali and Vinyl business. Price is expected to remain flat across most businesses as feedstock and energy
costs are expected to be consistent with 2015 levels. The Chlor-Alkali and Vinyl business expects sales to be slightly lower due
to sales volume divested in the U.S. which will be partially offset by increased volume in Europe resulting from new supply
agreements with Olin and increased demand for caustic soda. The Industrial Solutions business expects volume growth to
follow GDP. Polyurethanes volume is expected to grow at slightly above GDP driven by increased demand for polyols and
polyurethane systems products used in specialty applications. Equity earnings are expected to decline in 2016, primarily due to
lower earnings from EQUATE as a result of a reduced indirect equity interest in MEGlobal and the impact of the fair value
step-up of MEGlobal's assets and increased financing costs.
PERFORMANCE PLASTICS
The Performance Plastics segment is a market-oriented portfolio comprised of Dow Elastomers, Dow Electrical and
Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons. The segment also includes the results
of TKSC and The SCG-Dow Group as well as a portion of the results of EQUATE, TKOC, Map Ta Phut Olefins Company
Limited and Sadara, all joint ventures of the Company.
On December 23, 2015, the Company sold its 50 percent ownership interest in MEGlobal to EQUATE. MEGlobal was aligned
100 percent with the Performance Materials & Chemicals segment through the date of divestiture. Dow has retained a
42.5 percent ownership stake in MEGlobal through its ownership in EQUATE. See Note 5 to the Consolidated Financial
Statements for additional information.
On May 5, 2015, Univation, previously a 50:50 joint venture between Dow and ExxonMobil, became a wholly owned
subsidiary of Dow. Prior to this transaction, the Company's share of Univation's results of operations was reported as "Equity in
earnings of nonconsolidated affiliates" in the consolidated statements of income. Beginning in May 2015, Univation's results of
operations are fully consolidated in the Company's consolidated statements of income. See Note 4 to the Consolidated
Financial Statements for additional information on this step acquisition.
On December 2, 2013, the Company sold its global Polypropylene Licensing and Catalysts business to W. R. Grace & Co. This
business was 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.
Sales for the Energy business are primarily opportunistic merchant sales driven by market conditions and sales to customers
located on Dow manufacturing sites. Sales for the Hydrocarbons business are comprised primarily of monomers and ethylene
by-products that are not required for internal use. Hydrocarbons sales can fluctuate significantly based on ethylene production
facility feedslates and operating rates, derivative demand and market prices for monomers and by-products. The Hydrocarbons