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FULL YEAR: DOW SALES DOWN 1%, NET INCOME FALLS 24%
Source: Dow AgroSciences news release

To read the entire report, click here

Fourth Quarter 2012 Highlights

Dow reported a loss of $0.61 per share, or earnings of $0.33 per share on an adjusted basis(1). This compares with a loss of $0.02 per share in the same quarter last year, or adjusted earnings of $0.25 per share. Certain items in the quarter totaled a loss of $0.94 per share, driven primarily by previously announced restructuring actions, coupled with a goodwill impairment charge in the Company's Formulated Systems business.

Sales for the quarter were $13.9 billion, down 1 percent versus the year-ago period. Agricultural Sciences achieved a new sales record, with sales growing 17 percent. Increases were also reported in Electronic and Functional Materials (up 3 percent), Performance Plastics (up 1 percent) and Coatings and Infrastructure Solutions (up 1 percent). These increases were more than offset by declines in Feedstocks and Energy (down 9 percent) and Performance Materials (down 5 percent).

Volume was flat for the quarter, as a 5 percent decline in Western Europe offset volume growth in Asia Pacific (up 5 percent) and North America and Latin America (each up 1 percent). Excluding Dow's Feedstocks and Energy operating segment, volume in North America increased 7 percent, reflecting improving demand.

Price decreased $91 million, or 1 percent, while purchased feedstock and energy costs declined $413 million versus the year-ago period. On a sequential basis, price was up $333 million, or 2 percent, outpacing increases of $218 million in purchased feedstock and energy costs. Sequentially, price increases were led by Performance Plastics and Feedstocks and Energy, each up 4 percent.

Equity earnings were $44 million, or $206 million excluding the impact of certain items. This compares with $259 million in the year-ago period. Dow Corning represented the largest driver of the decline.

EBITDA(2) was $125 million, or $1.6 billion on an adjusted basis(3). Agricultural Sciences achieved a new fourth quarter EBITDA record.
The Company leveraged the benefit of positive U.S. shale gas dynamics, driving a 430 basis point increase in Performance Plastics adjusted EBITDA margin year over year(4). To further leverage this advantage, Dow also achieved the first major milestone in its U.S. Gulf Coast integration investments, as its previously idled St. Charles Operations ethylene cracker restarted in December, in line with Dow's year-end target.

Cash flow from operations was $1.6 billion for the quarter, bringing full-year cash flow from operations to $4.1 billion.

The Company demonstrated its ongoing commitment to shareholder remuneration, evidenced by the acceleration of its fourth quarter dividend payment.

(1) "Adjusted earnings per share" is defined as earnings per share excluding the impact of "Certain Items." See Supplemental Information at the end of the release for a description of these items, as well as a reconciliation of adjusted earnings per share to "Earnings per common share - diluted."
(2) EBITDA is defined as earnings (i.e., "Net Income") before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to "Net Income (Loss) Available for The Dow Chemical Company Common Stockholders" is provided following the Operating Segments table.
(3) Adjusted EBITDA is defined as EBITDA excluding the impact of "Certain Items."

(4) Adjusted EBITDA margin is defined as EBITDA excluding the impact of Certain Items as a percentage of reported sales.

Comment
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:

"The second half of 2012 saw significant deterioration in the markets we serve, particularly in China. In response, Dow identified and took aggressive action to mitigate the effects of a slow-to-no-growth global environment - by deploying cost and cash flow levers and by continuing to prudently manage our portfolio and prioritize growth investments.

"Our Agricultural Sciences business continues to outperform, driven by its technology pipeline. Performance Plastics also posted strong results in the quarter, bolstered by feedstock advantages in North America and the Middle East, coupled with improving pricing momentum. In addition, our Kuwait joint ventures posted exceptional results in the quarter.

"We delivered on our cash flow target for the year, and our focus on rewarding shareholders remained resolute, as evidenced by a 34 percent increase in declared dividends for 2012."

2012 Full-Year Highlights
Dow reported full-year 2012 earnings of $0.70 per share, or $1.90 per share on an adjusted basis. This compares with prior-year earnings of $2.05 per share, or $2.54 per share on an adjusted basis.

Dow took action throughout the year to navigate volatile economic conditions, including reducing structural costs, prioritizing growth investments and announcing the shutdown of down nearly 30 facilities. In total, the Company has set in motion $2.5 billion in cost reductions and cash flow improvements, with $1 billion expected in 2013.

Sales were $56.8 billion, down 5 percent, or 3 percent on an adjusted basis(5). Sales decreased in all operating segments excluding Agricultural Sciences (up 13 percent) and in all geographic areas year over year, led by Western Europe.

Agricultural Sciences achieved record-level sales and EBITDA, posting $6.4 billion and $977 million, respectively.

Volume decreased 2 percent, or increased 1 percent on an adjusted basis(6). Asia Pacific and Europe reported volume growth during the year (up 3 percent and 1 percent respectively). Volume in North America remained flat, primarily due to the impact of shutdowns in Feedstocks and Energy.

Price declined 3 percent. On an adjusted basis(7), price was down 4 percent, or $2.1 billion. Currency accounted for $1.3 billion - nearly two-thirds of the decline. Purchased feedstock and energy costs decreased $2.5 billion, or 11 percent year over year.

Equity earnings were $536 million, or $698 million excluding certain items. This compares with 2011 equity earnings of $1.2 billion, or $1.1 billion excluding certain items. The decline was due primarily to Dow Corning.
For the full year, Dow reported EBITDA of $5.6 billion, or $7.5 billion on an adjusted basis.

The Company's effective tax rate for the year was 34 percent, versus an effective tax rate of 23 percent in 2011, driven in part by a change in the geographic mix of earnings, as well as lower equity earnings.
Dow maintained its focus on lowering debt, reporting a $613 million reduction in gross debt in 2012. In addition, year-over-year interest expense declined $72 million.

Dow continued to demonstrate its priorities for uses of cash, rewarding shareholders with a 34 percent increase in dividends declared per share in 2012 versus 2011.


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