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FULL YEAR: DOW'S SALES DOWN 1%, EARNINGS DOWN 6%
Source: Dow news release

To read the entire report click here.

Comment

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

"This was another strong quarter for our company, extending our streak of year-over-year earnings and volume growth - reaching 17 consecutive quarters of increases in operating EPS and 13 consecutive quarters of volume growth. We delivered record quarterly and full-year operating EBITDA and generated strong cash flow from operations of $1.9 billion in the quarter.

And this year we returned nearly $3 billion to our owners through share repurchases and the highest annual dividend in our history.

"Operationally, we showcased the power and resilience of our consumer-driven business model throughout the year, no matter what economic volatility occurred. By capitalizing on our market focus and innovation launches, we delivered full-year operating EBITDA records in multiple downstream businesses, including Automotive Systems, Building & Construction, Electronic Materials and Dow AgroSciences.

"Strategically, we advanced our growth investments. Sadara completed construction of its world-scale site, celebrated startups of its largest units and began ramping production of its 26 operating units. On the U.S. Gulf Coast, we completed capacity expansions in Louisiana and Texas. And we accelerated the integration of Dow Corning silicones, surpassing all of our value and synergy capture targets and capitalizing on the business's natural fit within Dow's portfolio.

"Simply put, the Dow team continues to deliver a consistent track record of executing against our priorities, proving time and again the resilience and agility of our focused business model, which performs under all economic conditions."

2016 Full-Year Highlights

*Dow reported full-year earnings per share of $3.52, or operating earnings per share of $3.72. This compares with earnings per share of $6.15 in the prior year, or operating earnings per share of $3.47.

*Sales were $48.2 billion, down 1 percent versus the prior year.

*Volume grew 5 percent on a reported basis and 4 percent excluding the impact of divestitures and acquisitions. This result reflected broad-based, consumer-driven demand, with gains across nearly all geographic areas - Asia Pacific (up 6 percent); Europe, Middle East, Africa and India (EMEAI) (up 4 percent); North America (up 3 percent); and Latin America (flat). Regional highlights included Greater China (up 11 percent), Europe (up 5 percent) and the United States (up 4 percent).

*EBITDA was $8 billion. Operating EBITDA was $9.8 billion, up $212 million compared with the prior year, with increases in Consumer Solutions, Infrastructure Solutions and Agricultural Sciences more than offsetting declines in Performance Plastics and Performance Materials & Chemicals.
EBITDA margin(3) was 17 percent. Operating EBITDA margin(4) expanded nearly 70 basis points to 20 percent, with increases reported in Consumer Solutions, Agricultural Sciences and Infrastructure Solutions, reflecting continued actions that further shifted the business mix toward consumer-driven end-markets, coupled with ongoing productivity savings.

*Dow delivered $5.5 billion of cash flow from operations in the year, which compares with $7.5 billion in the prior year. The year-over-year comparison was unfavorably impacted by more than $2 billion of non-operational items. Excluding these items, cash flow from operations increased more than $200 million.

*Dow's annual dividend reached a historic high of $1.84 per share, and the Company returned nearly $3 billion to shareholders through paid dividends ($2.0 billion) and share repurchases ($916 million) in 2016.

*Dow growth investments reached several milestones in the year. On the U.S. Gulf Coast, the Company completed expansions of a Louisiana ethylene plant and a Texas gas-phase polyethylene facility. Additionally, the Company's new ethylene unit in Texas surpassed 90 percent construction completion. In the Middle East, the Sadara joint venture started up its mixed feed cracker and two additional polyethylene units, and completed construction of all 26 units at the world-scale complex.

*The Company completed the ownership restructure of Dow Corning Corporation's Silicones business on June 1 and increased the total synergy target by $100 million to $500 million. The transaction was immediately accretive to earnings per share and is expected to contribute greater than $1 billion of EBITDA at full run-rate. At year-end, Dow had already reached an annual cost synergy run-rate of more than $360 million.

*Dow made significant progress on its planned merger with DuPont, receiving overwhelming shareholder support for the transaction, announcing DowDuPont's senior leadership team, finalizing plans to achieve the $3 billion in cost synergies and accelerating the timeline for the intended spins.

Agricultural Sciences

Agricultural Sciences reported fourth quarter sales of $1.7 billion, up from $1.6 billion, an increase of 7 percent versus the year-ago period. Volume rose 5 percent and price increased 2 percent.

Volume gains were achieved in both Crop Protection and Seeds. Crop Protection volume growth was driven by double-digit gains in Latin America herbicides and EMEAI insecticides. Seeds demand rose primarily driven by double-digit corn seed gains in Latin America and North America, partially offset by lower sunflower seed demand in Latin America. Pricing gains reflected a double-digit increase in Seeds, driven by local price and currency improvements, partially offset by lower Crop Protection chemical prices. The business reported robust sales of new Crop Protection products in the quarter (up 73 percent) led by Arylex™ herbicide and Isoclast™ insecticide.

EBITDA for the segment decreased to $74 million from $186 million in the year-ago period as a result of the partial impairment of Dow's investment in AgroFresh. Operating EBITDA rose to a fourth quarter record of $239 million. This compares with operating EBITDA of $220 million in the year-ago period, which benefited from the sale of several non-strategic molecules. The year-over-year increase was primarily driven by double-digit growth in both price and volume for corn seeds; favorable currency impacts; robust sales of new crop protection product technologies; and the business's continued focus on self-help productivity actions.

Equity losses for the segment were $1 million, an improvement compared to losses of $17 million in the year-ago period.


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