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Dow Chemical generates $1.1 bn in cash from operations
Oct '12
The Dow Chemical Company reported sales of $13.6 billion, down 10 percent, or 7 percent on an adjusted sales basis. The decline was led by Europe, which decreased 10 percent on the same basis driven by adverse currency conditions totaling more than $520 million. 

Volume declined 1 percent, or rose 2 percent on an adjusted basis. On the same basis, volume was up in all geographic areas, and increases were reported in Agricultural Sciences (up 7 percent), Performance Plastics (up 5 percent), Performance Materials (up 4 percent), and Coatings and Infrastructure Solutions (up 1 percent).

Price declined 9 percent, and purchased feedstock and energy costs decreased by $1.2 billion versus the same quarter last year. Price declined in all geographic areas, led by Europe (down 12 percent) and Greater China (down 11 percent), on an adjusted basis.
The Company reported EBITDA of $1.8 billion. On an adjusted basis, EBITDA margins were essentially flat versus the year-ago period. On the same basis, Performance Plastics and Performance Materials both increased EBITDA margins versus the prior period, up 290 basis points and 150 basis points, respectively.
Earnings for the quarter were $0.42 per share. This compares with earnings of $0.69 per share in the same quarter last year, or adjusted earnings of $0.62 per share. Certain items in the prior-year period consisted of a pretax $86 million gain related to cash collected on a previously impaired note receivable related to Equipolymers, a nonconsolidated affiliate. (See Supplemental Information at the end of the release for a description of certain items affecting results in all periods presented.)
Dow's global operating rate was 83 percent for the quarter, flat versus the year-ago period, and up 5 percentage points versus the prior quarter.
Research and Development (R&D) expenses and Selling, General and Administrative (SG&A) expenses both increased versus the same period last year, as the Company continued to invest in growth programs. Moving forward, these expenses are expected to decline as Dow begins implementing restructuring actions announced October 23, 2012.
Equity earnings were $175 million, compared with $375 million in the year-ago period, or $289 million, excluding certain items. Ongoing weakness in the polysilicon value chain for Dow Corning represented the largest driver of the decline.
The Company's debt declined by nearly $250 million in the quarter, and its net debt to total capitalization declined to 39.7 percent, in line with the Company's previously stated target of less than 40 percent.

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