The Dow Chemical Company reported First Quarter 2013 Earnings Statement.
First Quarter 2013 Highlights
-The Company reported earnings of $0.46 per share, or adjusted earnings of $0.69 per share(1). This compares with earnings of $0.35 per share in the year-ago period, or adjusted earnings of $0.61 per share.
-Sales were $14.4 billion, down 2 percent versus the same quarter last year, but were flat excluding the impact of the Company’s Feedstocks and Energy operating segment.
-Agricultural Sciences sales rose 14 percent, surpassing $2 billion, due to accelerated new product sales. Electronic and Functional Materials sales also grew (up 2 percent).
-Volume declined 3 percent, or was flat excluding Feedstocks and Energy. Volume grew in emerging geographies (up 2 percent), led by Latin America (up 6 percent). Volume remained flat in North America, and declined in Western Europe (down 12 percent).
-Strong pricing actions in the quarter delivered local price increases in most operating segments and geographic areas, resulting in a 1 percent increase in price.
-Purchased raw material costs, including hydrocarbons and energy, declined nearly $300 million.
-EBITDA(2) was $2.2 billion, versus $1.7 billion in the year-ago period. Adjusted EBITDA(3) was $2.3 billion, up nearly 10 percent versus the prior year. EBITDA rose in most operating segments, led by increases in Performance Plastics.
-Equity earnings were $230 million, versus $169 million in the same quarter last year, primarily reflecting gains in the Company’s cost-advantaged joint ventures in Kuwait.
-Cash flow from operations increased nearly $500 million versus the year-ago period.
-Dow continued to drive deleveraging actions, reducing gross debt by $901 million in the quarter. In addition, interest expense declined $33 million versus the year-ago period due to ongoing debt reduction.
Review of First Quarter Results
The Dow Chemical Company reported sales of $14.4 billion in the first quarter of 2013, down 2 percent versus the year-ago period. Sales were flat excluding the impact of the Company’s Feedstocks and Energy operating segment.
Volume declined 3 percent, or was flat excluding Feedstocks and Energy. Volume rose in emerging geographies (up 2 percent), with increases led by Latin America (up 6 percent). Volume remained flat in North America, and declined in Western Europe (down 12 percent).
The Company delivered local price increases in most operating segments and geographic areas on account of strong pricing actions in the quarter, which resulted in a 1 percent overall increase in price.
Purchased raw material costs, including hydrocarbons and energy, declined nearly $300 million.
Dow reported EBITDA of $2.2 billion, versus $1.7 billion in the year-ago period. Adjusted EBITDA was $2.3 billion, up nearly 10 percent versus the prior year. EBITDA increased in most operating segments, led by Performance Plastics. Adjusted EBITDA margin(4) expanded 170 basis points, reflecting ongoing price and volume management.
Earnings for the quarter were $0.46 per share, or adjusted earnings of $0.69 per share. This compares with earnings of $0.35 per share in the same quarter last year, or adjusted earnings of $0.61 per share.
Certain Items in the current quarter consisted of non-cash charges reflecting the adjustment of uncertain tax positions, a charge related to the early extinguishment of debt and a charge for implementation costs related to the Company’s restructuring programs. (See Supplemental Information at the end of the release for a description of Certain Items affecting results.)
Dow’s global operating rate was 82 percent, up 4 percentage points sequentially and down 1 percentage point versus the year-ago period.
Cash flow from operations increased nearly $500 million versus the year-ago period.
Research and Development (R&D) expenses were up 7 percent versus the same period last year, reflecting continued investments in Dow’s technology-driven segments, particularly Agricultural Sciences.
Selling, General and Administrative (SG&A) expenses rose 9 percent versus the year-ago period, led by increased investments in Agricultural Sciences.
Equity earnings were $230 million, versus $169 million in the same quarter last year, primarily reflecting gains in the Company’s cost-advantaged joint ventures in Kuwait.
Dow continued to drive deleveraging actions, reducing gross debt by $901 million in the quarter. In addition, interest expense declined $33 million versus the year-ago period due to ongoing debt reduction.
“Our performance this quarter demonstrates our team’s continuing determination to deliver earnings growth, despite ongoing uncertainties in the global economy,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “We are aggressively managing our businesses and driving near-term execution measures – demonstrated by this quarter’s marked improvement in both margins and profitability.
"We continue to deliver on our plan by implementing cost and cash flow actions, paying down debt, improving return on capital and taking firm decisions on our portfolio, as evidenced by our recently announced target of $1.5 billion in proceeds from divestitures in the near term. Collectively, our proactive, execution-focused actions position Dow well to navigate ongoing challenging market conditions and deliver value to our shareholders. We expect the results of these actions to accelerate throughout the year.”
