The Dow Chemical Company Business Report FY ended Dec. 2012
|(in million USD)|
|FY ended Dec. 31, 2012||FY ended Dec. 31, 2011||Rate of change
-Net sales for 2012 were USD 56,786 million, down 5.3 percent from USD 59,985 million in 2011. Sales decreased in all operating segments, excluding Agricultural Sciences (up 13 percent), and in all geographic areas.
-In 2012, 36 percent of the Company's sales were to customers in North America; 34 percent were in Europe, Middle East and Africa ("EMEA"); while the remaining 30 percent were to customers in Asia Pacific and Latin America.
2) Performance Materials segment
-Performance Materials sales were USD 13,608 million in 2012, down 7.1 percent from USD 14,647 million in 2011. Compared with 2011, price declined 6 percent with approximately 40 percent of the decline due to the unfavorable impact of currency.
-Dow Global Technologies LLC (DGTL), a subsidiary of the Company, announced a third and final license agreement for its Polymeric Flame Retardant (Polymeric FR) technology with Albemarle Corporation, headquartered in Louisiana, USA. Albemarle will use the Polymeric FR in the production of extruded polystyrene (XPS) and expanded polystyrene (EPS) foams. Albemarle develops and manufactures specialty chemicals, including flame retardants, for various industries such as consumer electronics, packaging, construction, automotive/transportation, pharmaceuticals and others. In March 2011, DGTL announced the development of the Polymeric FR. (From a press release on April 13, 2012)
Joint Ventures-The Company and Aksa Akrilik Kimya Sanayii A.S., a leading acrylic fiber company, announced that they have established a joint-venture company to manufacture and commercialize carbon fiber composite materials. The new company, DowAksa Advanced Composites Holdings BV, will offer a wide variety of products and technical services to the global market, as demand for carbon fiber composite materials is rising. It will place a particular focus on developing cost-cutting solutions, targeting a broad range of industries, including automotive and other transportation-related industries, and energy and infrastructure markets. The joint venture company will use Aksa's existing carbon fiber production facility in Yalova, Turkey, while working on its expansion project to increase capacity. (From an article in the Nikkan Jidosha Shimbun on July 7, 2012)
Business Partnership-Dow Electrical & Telecommunications, a business unit of the Company, and Teknor Apex Company announced a joint market development agreement for flexible vinyl in several application areas. Teknor Apex, based in the United States, manufactures vinyl, thermoplastic elastomer, nylon, bioplastics and specialty compounding. Under a joint collaboration agreement, Teknor Apex was granted exclusive marketing rights in North America for flexible vinyl compounds containing DOW ECOLIBRIUM Bio-Based Plasticizers in certain applications such as consumer and industrial products, medical devices, automotive components, and wire and cable products. Teknor Apex plans to commercialize BioVinyl (flexible vinyl compounds incorporating DOW ECOLIBRIUM). (From a press release on April 2, 2012)
Recent Developments Outside USA
-Dow Chemical Japan's president Peter Jennings held a press meeting in Tokyo on July 19, 2012 to announce the Company's business strategy. He said the Company will continue to invest heavily in research and development activities, while strengthening its joint-venture businesses with Japanese companies, which is integral to the Company's stable growth in the Asia-Pacific market. The Japanese unit of the Company will become the group's key player in establishing a stronger foothold in Asia Pacific, as the Company is aiming to increase its sales in the region to USD 15 billion by 2015, a rise of 50 percent from the 2011 level. Having acquired the Rohm and Haas Company last year, the scale of business has doubled and revenues have shown a double-digit gain at Dow Chemical Japan. Mr. Jennings added, "We are seeing the rapidly developing automotive business in India as a great growth opportunity, and Dow Chemical Japan will function as a core technology center and an important production base in the international arena, especially in Asia." (From an article in the Nikkan Jidosha Shimbun on July 20, 2012)
-The Company expects to save a total of USD 1.0 billion in 2013 through cost reductions and cash improvements. Due to restructurings that occurred in the in the first and fourth quarter of 2012, the Company will save USD 100 million and USD 200 million respectively. The Company will save USD 100 million through reductions in growth spending. Another USD 100 million will be saved through reductions in discretionary spending. Finally, the Company plans to save USD 500-600 million by reducing their capital expenditures. The Company will accomplish this by implementing the following procedures:
- Adjusting capital expenditure investment to reflect the near-term market
- Prioritizing projects with shorter paybacks
- Alighning capacity expansions with global growth
|(in million USD)|
|FY ended Dec. 31, 2012||FY ended Dec. 31, 2011||FY ended Dec. 31, 2010|
-As of December 31, 2012, the Company employed approximately 6,800 people in various research and development activities.
R&D Facilities-Dow Automotive Systems, a subsidiary of the Company, expanded its capabilities in composite processing technology with the opening of two development facilities to service its global customer base - one in Freienbach, Switzerland and the other in Midland, Michigan, USA. In Freienbach, the Composite Technology Center offers a comprehensive state-of-the-art infrastructure to develop composite applications paired with the appropriate joining technology. In Midland, the Company created a center to accommodate technologies associated with direct long-fiber processing, prepreg, preforming, compression molding and laminating. The Freienbach facility opened in April 2012, while the Midland facility opened in June 2012.
-Dow Formulated Systems, a business unit of the Company, has expanded its innovation capabilities at its Birch Vale facility in the United Kingdom, with a new technical center to enable growth in engineering elastomers and other specialty polyurethane systems markets. In November 2011, the business inaugurated a new polyurethanes R&D center at its systems house in Correggio, Italy. The facility serves as a global R&D center for polyurethane foams and composites for the Company's formulated systems, polyurethanes, and automotive businesses. (From a press release on April 12, 2012)
-Dow Automotive Systems, a subsidiary of the Company, and Ford announced that they have signed a joint development agreement focusing on carbon fiber composites for use in automotive applications. Cutting the weight of new cars and trucks by up to 750 pounds (approximately 340 kilograms) by the end of the decade is a key component of Ford's strategy. If the joint development effort is successful, carbon fiber components may begin appearing on new Ford vehicles in the latter part of this decade. The joint development effort will also leverage work that the Company has already begun through partnerships with Turkish carbon fiber manufacturer AKSA and the U.S. Department of Energy Oak Ridge National Laboratory. (From a press release on April 12, 2012)
-Dow Automotive Systems, a subsidiary of the Comapny, and GRACO made a joint technical presentation of the "BETAFOAM" solution to reduce noise, vibration and harshness of vehicles. This solution will be applied in vehicle acoustical cavities for reducing air and road noise and will be adopted by GAC-Fiat in their new line of passenger cars. (From an article in the Nikkan Jidosha Shimbun on April 6, 2012)
-The Company announced that it has entered into an agreement with W. R. Grace & Co., a US-based chemicals and materials company, to develop new catalysts for polypropylene production. The catalysts will be sold by Grace under the HYamPP brand. HYamPP catalysts enable producers to make resins that improve the performance of plastics. Customers can use the resins in a broad range of applications such as films, high-performance pipe, automobile parts, household appliances. Grace expects to begin commercial production of the new catalysts in 2012. (From a press release on March 29, 2012)
|(in million USD)|
|FY ended Dec. 31, 2012||FY ended Dec. 31, 2011||FY ended Dec. 31, 2010|
-In 2012, approximately 43 percent of the Company's capital expenditures were directed toward additional capacity for new and existing products, compared with 36 percent in 2011. Approximately 20 percent was committed to projects related to environmental protection, safety, loss prevention and industrial hygiene in 2012 compared with 15 percent in 2011. The remaining capital was utilized to maintain the Company's existing asset base, including projects related to productivity improvements, energy conservation and facilities support.
Investment Outside USA<Saudi Arabia>
-The Company announced plans to build a new manufacturing facility for coating materials in the Kingdom of Saudi Arabia. In July 2011, the Company and Saudi Aramco, a state-owned oil company in Saudi Arabia, announced establishment of a joint venture, Sadara Chemical Company, to build and operate a world-scale petrochemical complex in Jubail Industrial City in the country. The new plant will manufacture a wide range of coating materials for industrial coating makers not only in a growing market of Saudi Arabia, but also in overseas countries. (From an article in the Nikkan Jidosha Shimbun on March 31, 2012)
-The Company announced the opening of its new production complex in Asia Industrial Estate (AIE), Ban Chang, Rayong province, Thailand. A portion of an investment totaling more than USD 3 billion, the new production complex is a joint venture project between the Company, SCG and Solvay S.A. under the project named "Thai Growth Project." The project, which was announced in 2006, has involved the building of production facilities including a naphtha cracker plant operated by Map Ta Phut Olefins Co., Ltd. (JV between the Company and SCG Chemicals), and downstream facilities to produce polyethylene (SPEII), specialty elastomers, propylene oxide and hydrogen peroxide, operated by Solvay. (From a press release on March 27, 2012)
Investment in USA
-The Company announced that it plans to build a new plant for the production of metallocene ethylene propylene diene monomer (EPDM), sold under the trademark of NORDEL IP Hydrocarbon Rubber. The new facility, which will be located on the U.S. Gulf Coast, is expected to be operational in 2016. End-use applications for NORDEL IP include automotive weather-stripping, automotive hoses and belts, roofing membranes, footwear and general rubber products. (From a press release on October 24, 2012)
-The Dow Oxygenated Solvents business announced an expansion plan to increase capacity of Butyl Glycol Ethers at its Seadrift, Texas facility in the U.S. This plan is part of a two-phase debottleneck project that will increase capacity of Butyl CELLOSOLVE Solvent and Butyl CARBITOL Solvent by 15%. Phase 1 will be completed later in March 2012; followed by Phase 2, which will be finished during a planned turnaround this fall. The Company's Butyl Glycol Ethers are used primarily in the production of coatings, household and industrial cleaners, brake fluids, inks and oil and gas. (From a press release on March 12, 2012)