Dow's record 2005 results include higher sales for latex and elastomers

By Liz White, ERJ staff

Midland, Michigan-Dow Chemical Co.'s latex business increased sales volumes in both Europe and Asia Pacific in the fourth quarter of 2005, said Kathleen Fothergill, corporate director, investor relations with Dow. Fothergill was speaking in a conference call following Dow's 26 Jan results meeting, where the chemicals and polymers group reported record sales, both for Q4 2005, and the year as a whole.

In its Performance Plastics business, which includes Dow's elastomer products, sales for the fourth quarter were $2900 million, an increase of 12 percent compared with Q4 2004. Prices were up 10 percent while volume climbed 2 percent, bolstered in part by the successful integration of the elastomers-Engage polyolefin elastomer, Nordel EPDM and Tyrin chlorosulphonated polyethylene-gained in the dissolution of the DuPont-Dow Elastomers joint venture, said Dow.

For the 12-month period, Performance Plastics' sales were up to $11 388 million from $9 493 million in 2004.

In Performance Chemicals, a division which include Dow's latex products, the company also "turned in solid results, with higher sales in all businesses," Fothergill said. Sales in this division rose to $1900 million for Q4 2005, an increase of 7 percent over Q4 2004. This improvement was driven by an 8-percent increase in price, while "volume was down 1 percent from the robust levels of a year ago," Dow's results statement indicated.

Dow Latex saw increased volume for styrene-butadiene latex in Europe, "where the paper industry ended the year strongly, and Dow increased its position at key customers," Fothergill observed. And volumes of SBR latex sold in Asia Pacific also increased by more than 10 percent, she added, noting that this follows the mid-2005 startup of a new latex train in Zhangjiagang, China.

As a whole, Dow Chemical's Q4 2005 sales set a new company record, rising 9 percent from the same period last year to $11 900 million. Net income was $1026 million, a 6.4 percent drop over Q4 2005. For the whole year, Dow's sales climbed 15 percent compared with 2004, "setting a new record" at $46 300 million,

Despite feedstock and energy cost increases of $4000 million in 2005 compared with 2004, Dow managed net income of $2797 million, compared with $4515 million in 2004.

"This was a tremendous quarter at the end of an outstanding year for Dow," said Andrew Liveris, Dow's president, chief executive officer and chairman-elect, in the conference call.

In 2005, Dow had record sales and record earnings: "we reduced net debt by more than $2500 million; and for the third year in a row … we recovered lost margin. The fact that we did so in the face of high and volatile feedstock and energy costs bears testimony to the quality of our people and the strength and consistency of our strategy," Liveris said.

"2005 was a year with many challenges for our company … including relentlessly escalating feedstock and energy costs and two major hurricanes that caused significant disruption to Dow's operations on the US Gulf Coast and to our logistics across the region," Liveris commented.

Having split its businesses into '`Basic' and 'Performance' categories during the latter half of 2005, Dow's overall strategy is now to "preferentially invest in Performance businesses, with the goal of improving both the growth of our earnings and the consistency of our earnings from year to year," said Liveris,

"You can expect to see our Performance businesses grow organically and through bolt-on acquisitions … and through the creation of more market-facing businesses that bring the full power of Dow's products to industries like Automotive, Building and Construction and Personal Care, Liveris said.

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Press release from Dow Chemical