3RD QUARTER: DOW AGROSCIENCES' SALES HIT RECORD LEVEL
Oct. 24, 2013
Source: Dow Chemical news release
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•Dow reported earnings of $0.49 per share or $0.50 per share on an adjusted basis.
. This compares with earnings of $0.42 per share in the same quarter last year. This represents the fourth consecutive quarter of year-over-year adjusted earnings growth.
•The Company generated more than $1.4 billion in cash flow from operations in the quarter, representing a nearly $300 million, or 27 percent, increase versus the year-ago period. Year to date, Dow has generated $5.6 billion in cash flow from operations, representing an improvement of nearly $3.1 billion compared with the prior year.
•Sales were $13.7 billion, up 1 percent, or up 2 percent on an adjusted basis, with increases led by Agricultural Sciences (up 8 percent), and Coatings and Infrastructure Solutions and Performance Plastics (each up 6 percent). Sales also increased in most geographic areas, with emerging geographies delivering sales growth of 5 percent, led by Latin America.
•Volume declined 2 percent, or 1 percent excluding the impact of divestitures. Gains were reported in Electronic and Functional Materials (up 6 percent), as well as Coatings and Infrastructure Solutions and Agricultural Sciences (each up 5 percent). This was offset by lower volume in hydrocarbon-sensitive operating segments, led by Feedstocks and Energy.
•Price increased 3 percent with gains achieved in most operating segments, led by Performance Plastics (up 9 percent) and Agricultural Sciences (up 3 percent).
•EBITDA was $1.8 billion, led by Performance Plastics (up 32 percent). Increases were also reported in Coatings and Infrastructure Solutions and Electronic and Functional Materials, up 15 percent and 5 percent, respectively.
•Equity earnings were $322 million, versus $175 million in the year-ago period, led by the Company's joint ventures in Kuwait.
•Dow reduced gross debt by $200 million in the quarter and $2.4 billion year to date, resulting in a nearly $120 million decline in interest expense year to date. Since 2010, Dow has reduced its debt by $5.2 billion, and its interest expense by more than $300 million. The Company's net debt to total capitalization now stands at 34.7 percent.
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:
"Dow continued to demonstrate positive momentum with our drive to execute self-help measures in a slow-growth world, achieving strong cash flow, as well as year-over-year earnings growth for the fourth consecutive quarter. Through our integrated value chains and the diversity of our targeted end markets, we continue to demonstrate strong performance - particularly in emerging geographies, in our equity earnings, and in key downstream businesses such as Electronics, Coatings and Infrastructure, and Packaging. We continue to prioritize our resources to focus on these and other high-growth markets.
"Over the last 12 months, using return on capital as our lens, we have pruned non-strategic businesses such as the recently announced divestiture of our Polypropylene Licensing and Catalysts business, and deemphasized low-growth, commoditizing businesses, such as the announcements we have made on the chlorine value chain. We have identified targets and are moving forward with defined divestiture plans - actions valued at a minimum of $3 - $4 billion. The proceeds of these divestitures will create further capacity for the Company to generate returns to shareholders.
"Our cash priorities remain intact: rewarding our shareholders, reducing interest payments from our debt structure and funding organic growth."
Agricultural Sciences reported record third quarter sales of $1.4 billion, up 8 percent versus the year-ago period. Volume increased 5 percent and price rose 3 percent. Volume gains were driven by double-digit growth in Latin America.
Third quarter Crop Protection sales rose 10 percent, driven by higher sales of herbicides in North America and Latin America, and higher sales of insecticides in Latin America. Year to date, sales of new Crop Protection products are up 12 percent led by pyroxsulam herbicide.
Seeds, Traits and Oils (ST&O) sales were down 4 percent in the quarter versus the year-ago period with higher return activity in North America driven by a late, wet planting season more than offsetting double-digit gains in Latin America. Year to date, ST&O sales are up 18 percent driven by strong farmer demand for SmartStax corn hybrids and growth in most major crops.
EBITDA for the segment was $18 million, down from $63 million in the same quarter last year. Third quarter EBITDA margins reflect the impact of higher seed return activity in North America and increased spending on growth investments in the seasonally lowest sales quarter.