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Dow's Coatings & Infrastructure Solutions Reported Sales of Nearly USD 2 Billion

Published on 2014-07-31. Author : SpecialChem

The Company reported earnings of $0.73 per share, or $0.74 per share on an adjusted basis. This compares with earnings of $1.87 per share versus the year-ago period, or adjusted earnings of $0.64 per share – representing an increase of 16 percent year over year. Results in the same quarter last year reflect the receipt of the K-Dow arbitration resolution.

Sales were $14.9 billion, up 2 percent versus the year-ago period, or 3 percent on an adjusted basis Gains were reported in all operating segments, led by Performance Plastics (up 4 percent) and Electronic and Functional Materials (up 5 percent). Agricultural Sciences also increased sales, rising 3 percent in the quarter and achieving a first-half sales record of $4 billion.

The Company reported adjusted sales gains in most geographic areas, with increases reported both in developed regions (up 3 percent) and in emerging regions (up 2 percent). Gains were led by Western Europe (up 6 percent) and the United States (up 5 percent).

EBITDA was $2.2 billion, up 5 percent on an adjusted basis versus the year-ago period. EBITDA rose in most operating segments, led by Performance Materials (up 36 percent), as a result of ongoing productivity actions, as well as improved pricing and demand. Performance Plastics and Electronic and Functional Materials also drove EBITDA gains, up 6 percent and 19 percent respectively.

Adjusted EBITDA margin expanded more than 40 basis points to 15 percent year over year, as productivity and growth actions more than offset the impact of a greater than $350 million increase in purchased feedstock and energy costs, coupled with a $100 million impact from unplanned outages at Dow's ethylene facilities in Plaquemine, Louisiana. Cash flow from operations was $1.4 billion for the quarter. Year-to-date, Dow has returned $3 billion to shareholders through declared dividends and share repurchases.

Comment

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

"Our results reflect excellent progress against Dow's near-term priorities, and clearly illustrate our ongoing drive to execute self-help actions that are delivering growth on both the top and bottom line. Our performance highlights the Company- and segment-specific actions we are executing to grow profitability through an intense focus on EVA momentum, and this constant drumbeat has already delivered a more than 150 basis point improvement in return on capital(6) year over year on an adjusted basis. As we drive these ongoing improvements to return on capital, we will further accelerate shareholder value creation and increasingly reward our shareholders – evidenced by the $3 billion we have returned year to date."

Review of Second Quarter Results

The Dow Chemical Company reported sales of $14.9 billion, up 2 percent versus the year-ago period, or 3 percent on an adjusted basis. Gains were reported in all operating segments, led by Performance Plastics (up 4 percent) and Electronic and Functional Materials (up 5 percent).

Agricultural Sciences also increased sales, rising 3 percent in the quarter and achieving a first-half sales record of $4 billion.

The Company reported adjusted sales gains in most geographic areas, with increases reported both in developed regions (up 3 percent) and in emerging regions (up 2 percent). Gains were led by Western Europe (up 6 percent) and the United States (up 5 percent).

EBITDA was $2.2 billion, up 5 percent on an adjusted basis versus the year-ago period. EBITDA rose in most operating segments, led by Performance Materials (up 36 percent), as a result of ongoing productivity actions, as well as improved pricing and demand. Performance Plastics and Electronic and Functional Materials also drove EBITDA gains, up 6 percent and 19 percent respectively.

Earnings for the quarter were $0.73 per share, or $0.74 per share on an adjusted basis. This compares with earnings of $1.87 per share versus the year-ago period, or adjusted earnings of $0.64 per share – representing an increase of 16 percent year over year. Results in the same quarter last year reflect the receipt of the K-Dow arbitration resolution.

Certain Items in the current quarter included pretax charges of $18 million for nonrecurring transaction costs associated with the planned separation of a significant portion of the Company's chlorine value chain. Research and Development (R&D) expenses were flat versus the same period last year, reflecting the Company's execution against its strategy to prioritize R&D resources on high-return market sectors.

Selling, General and Administrative (SG&A) expenses increased 5 percent as compared with the year-ago period, driven primarily by growth initiatives – including commercial activities in Agricultural Sciences.

Cash flow from operations was $1.4 billion for the quarter. Year-to-date, Dow has returned $3 billion to shareholders through declared dividends and share repurchases.

Coatings and Infrastructure Solutions–

Coatings and Infrastructure Solutions reported sales of nearly $2 billion, up 3 percent versus the year-ago period, representing the fourth consecutive quarter of year-over-year sales growth. Gains were reported in Europe, Middle East and Africa (EMEA), Asia Pacific and North America.

Healthy demand within the architectural and industrial coatings market sectors drove another quarter of sales growth in Dow Coating Materials. Performance Monomers increased sales in EMEA and delivered double-digit sales gains in Asia Pacific and Latin America. Dow Water and Process Solutions also delivered higher sales on increased demand for ion exchange and reverse osmosis technologies.

Equity earnings for the segment were $43 million. This compares with $25 million in the year-ago period. The segment reported EBITDA of $257 million, up $7 million versus the same quarter last year, as stronger demand, productivity efforts and increased equity earnings offset higher maintenance spending.

Outlook

Commenting on the Company's outlook, Liveris said:

"Our operating priorities are delivering strong results despite ongoing slow growth and volatility in the global marketplace. We remain focused on these priorities as we continue to execute against our business-by-business plans – maximizing value through a balanced mix of differentiated technology and integrated, advantaged value chains.

"Strategically, our key high-return growth projects – such as the launch of Enlist™, the Sadara joint venture and our investments on the U.S. Gulf Coast – all remain on schedule and on budget, with 2015 serving as a major start-up year for all three.

"Simultaneously, we are focused on driving portfolio improvements – monetizing non-strategic businesses and releasing additional value from our assets and joint ventures. We are working on multiple fronts with multiple teams, with these efforts underlining our focus on creating value, and increasingly and consistently rewarding our shareholders."

About Dow

Dow combines the power of science and technology to passionately innovate what is essential to human progress. The Company is driving innovations that extract value from the intersection of chemical, physical and biological sciences to help address many of the world's most challenging problems such as the need for clean water, clean energy generation and conservation, and increasing agricultural productivity. Dow's integrated, market-driven, industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high growth sectors such as packaging, electronics, water, coatings and agriculture.

Source: Dow


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