NINE MONTHS: DOW'S SALES DOWN 7%, PROFIT DOWN 36%
Oct. 24, 2012
Source: Dow news release
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•Dow reported earnings of $0.42 per share. This compares with earnings of $0.69 per share in the same quarter last year, or adjusted earnings of $0.62 per share.
•Sales were $13.6 billion, down 10 percent, or 7 percent on an adjusted sales(2) basis. The decline was led by Europe, which decreased 10 percent on the same basis driven by adverse currency conditions totaling more than $520 million.
•Volume declined 1 percent, or rose 2 percent on an adjusted basis. Volume was up in all geographic areas on the same basis, and increases were reported in Agricultural Sciences (up 7 percent), Performance Plastics (up 5 percent), Performance Materials (up 4 percent), and Coatings and Infrastructure Solutions (up 1 percent).
•Price declined 9 percent, with double-digit decreases in most businesses. Price was down in all geographic areas, led by Europe and Greater China, which declined 12 percent and 11 percent, respectively on an adjusted basis. Purchased feedstock and energy costs decreased by $1.2 billion versus the same quarter last year.
•The Company's operating rate was 83 percent for the quarter, flat versus the year-ago period and up 5 percentage points versus the prior quarter.
•Equity earnings were $175 million, compared with $375 million in the year-ago period, or $289 million in the year-ago period excluding certain items. Dow Corning represented the largest driver of the decline, due to ongoing weakness in the polysilicon value chain.
•EBITDA was $1.8 billion. Adjusted EBITDA margin was essentially flat versus the year-ago period. Performance Plastics and Performance Materials both increased adjusted EBITDA margins versus the prior year, up 290 basis points and 150 basis points, respectively.
•Dow delivered $1.1 billion in cash flow from operations in the quarter. Year-to-date, Dow has increased cash flow from operations more than $650 million versus the year-ago period. In addition, the Company began to accelerate cost and cash interventions announced previously in the year, demonstrated by a $200 million sequential decline in operational expenses.
•The Company's debt declined by nearly $250 million in the quarter, and its net debt to total capitalization declined to 39.7 percent, in line with the Company's previously stated target of less than 40 percent.
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:
"Dow's results this quarter demonstrate the acceleration and delivery of our cost reduction actions. We focused on execution and intervened to protect our prioritized growth path.
"Our low-cost feedstock advantage enabled us to deliver volume growth - despite weakening demand. And we have delivered improvements in operating cash flow through our disciplined approach.
"The purposeful actions we announced earlier this year are gaining momentum, and will be bolstered by our new, streamlined operating model. Further, with today's restructuring announcement, we now have a full array of aggressive cash generation measures in place, with tight controls on working capital, and reductions in costs and capital expenditures - particularly in Europe - and by strict and firm prioritization of our growth projects.
"Moving forward, Dow is squarely focused on driving cost efficiencies, generating cash and earnings growth."
Agricultural Sciences reported record third quarter sales of $1.3 billion, up 8 percent versus the same period last year. Volume increased 7 percent and price rose 1 percent.
Double-digit sales and volume gains were reported in both North America and Latin America.
The segment continues to benefit from solid industry fundamentals, with elevated farm income levels providing strong incentive for farmers to maximize yields.
Crop Protection reported sales growth of 6 percent, driven by significant volume and sales gains in Latin America, as well as continued adoption of new products. Seeds, Traits and Oils reported a 21 percent sales increase as a result of the introduction and ramp-up of new technologies.
Year to date, new Crop Protection molecules are up 21 percent, led by spinetoram insecticide, aminopyralid herbicide and pyroxsulam herbicide. Seeds, Traits and Oils has achieved strong growth through the third quarter in key crops, including corn, soybeans, healthy oils, and cotton. Strong customer and channel support fueled gains for SmartStax® corn hybrids.
EBITDA for the segment was $63 million, compared with $75 million in the year-ago period, due to continued investments in growth.