Dow Reports Fourth Quarter And Full-Year Results

“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.

		Three Months Ended
In millions, except per share amounts		Dec. 31, 2012		Dec. 31, 2011
Net Sales		$13,917		$14,097
Adjusted Sales		$13,917		$14,080
Net Income (Loss) Available for Common Stockholders		$(716)		$(20)
Net Income Available for Common Stockholders, excluding Certain Items		$389		$289
Earnings (Loss) per Common Share		$(0.61)		$(0.02)
Adjusted Earnings Per Share		$0.33		$0.25

							Twelve Months Ended
In millions, except per share amounts							Dec. 31, 2012		Dec. 31, 2011
Net Sales							$56,786		$59,985
Adjusted Sales							$56,786		$58,396
Net Income Available for Common Stockholders							$842		$2,402
Net Income Available for Common Stockholders, excluding Certain Items							$2,249		$2,959
Earnings per Common Share							$0.70		$2.05
Adjusted Earnings Per Share							$1.90		$2.54

Review of Fourth Quarter Results

The Dow Chemical Company (NYSE: DOW) reported sales of $13.9 billion, down 1 percent. Record sales gains in Agricultural Sciences (up 17 percent), together with gains in Electronic and Functional Materials (up 3 percent) and Performance Plastics and Coatings and Infrastructure Solutions (both up 1 percent), were offset by declines in the remaining segments.

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