Now, we have been saying here for a while Dow was going to report much stronger than expected results but I did not expect them to be this strong.
Will have more commentary after the call today….
Dow Reports Fourth Quarter and Full-Year Results
Higher Quarterly Sales and Operating Earnings Driven by Double-Digit Volume Growth in Emerging Geographies and by Joint Venture Performance versus the Same Quarter Last Year
Fourth Quarter 2009 Highlights
· The Company reported earnings of $0.08 per share, equivalent to $0.18 per share excluding certain items. This compares with a reported loss of $1.68 per share in the fourth quarter of 2008, equivalent to a loss of $0.63 per share excluding certain items and discontinued operations.
· Reported sales in the quarter increased 15 percent, to $12.5 billion compared to reported sales in the same period last year. On a pro forma basis excluding completed divestitures, sales increased 4 percent, driven by a 10 percent increase in volume and a 6 percent decrease in price. Sequentially, and on the same pro forma basis, sales increased 8 percent, driven by a 3 percent increase in volume and a 5 percent increase in price, which largely offset a greater than $525 million increase in purchased feedstock and energy costs.
· Quarterly volume on a pro forma basis increased 33 percent in emerging geographies versus the same period last year. On a pro forma basis and excluding divestitures, volume increased sequentially in all geographic areas except North America, which declined 1 percent.
· EBITDA on a pro forma basis excluding certain items increased $809 million versus the same quarter last year, with the combined performance segments up more than 85 percent. EBITDA from all operating segments was higher except Health and Agricultural Sciences, which was down $36 million year-over-year largely due to increased research and development (R&D) investments in Dow AgroSciences.
· Structural cost reductions were more than $215 million in the quarter and more than $1.2 billion for the year, ahead of Company goals. Dow has now achieved 140 percent of the 12-month cost synergy and restructuring run-rate goal for the integration of Rohm and Haas Company.
· Equity earnings were $219 million in the quarter, or $284 million excluding certain items, led by performance at Dow Corning, EQUATE and MEGlobal. This represents a return to the level of equity earnings reported prior to the economic downturn in the fourth quarter of 2008.
· As of the end of the year, the Company reduced its net debt to total capitalization to 48 percent, reflecting the full repayment of the bridge loan related to the acquisition of Rohm and Haas as well as the full repayment of the outstanding balance of the Company’s revolving credit facility.
Comment
Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:
“Dow delivered significantly better year-over-year revenue and earnings in the fourth quarter driven largely by volume gains across virtually all operating segments and improved equity earnings. Emerging geographies were a major factor in our results for the quarter, with volume up an impressive 33 percent, truly reflecting the strength of our broad geographic footprint. Quarterly equity earnings returned to a level not seen since before the economic downturn, further demonstrating the strategic importance of our joint ventures. We achieved all of this while furthering our growth strategy and by maintaining our focus on financial discipline. This allowed us to grow revenues, volume, and earnings while increasing our R&D investments yet still achieving reductions in structural costs.”
2009 Full-Year Highlights
· Dow reported full-year earnings of $0.32 per share, or $0.63 per share excluding certain items and discontinued operations. Reported earnings for 2008 were $0.62 per share, or $1.79 per share excluding certain items and discontinued operations.
· The Company reported sequential sales improvements throughout the year. These increases, however, were not enough to offset the full-year pro forma sales decline of 30 percent. Volume declined 13 percent, with Asia Pacific, Latin America and IMEA performing markedly better than North America and Europe.
· Feedstock and energy costs fell $10.2 billion, or 40 percent, which led to price declines of 17 percent versus 2008. Price declines were reported in all operating segments and in all geographic areas.
· Equity earnings were $630 million for the year. Excluding Dow’s share of a restructuring charge recognized by Dow Corning and a charge related to the Company’s Equipolymers joint venture, equity earnings were $724 million, 8 percent lower than the $787 million in 2008. The largest contributors were Dow Corning and EQUATE.
· Dow completed the year ahead of its cost reduction and synergy goals, with an end-of-year run-rate of more than $1.7 billion, over 115 percent of the Company’s goal.
· Despite one of the worst economic environments in decades, cash provided by operating activities was $2.1 billion in 2009, and the Company ended the year with a cash balance of $2.8 billion.
· Since the completion of the acquisition of Rohm and Haas on April 1, 2009, Dow divested four non-core businesses ahead of schedule and to strategic buyers, and retired all Series B and C perpetual preferred shares from its capital structure at par. In addition, the Company reduced long-term debt with maturities through 2011 by 80 percent, and reduced total indebtedness by more than $2.5 billion. These actions lowered the net debt to total capitalization ratio to 48 percent, ahead of the Company’s target, and reduced the Company’s financing costs by $500 million per year.
Here is a Morgan Stanley Report in Dow’s Results:
Here is a Citi Report: