MIDLAND, Mich. (Feb. 5, 2009)—Dow Chemical Co. is going on the offensive, in spite of facing a number of challenges and just wrapping up a year in which overall company profit fell 80 percent.
“We've never shied away from the truth in good times and bad, and we're not going to start now,” Dow chairman and chief executive officer Andrew Liveris said Feb. 3 during a conference call with stock analysts.
Liveris addressed a number of issues that have rocked Midland-based Dow in recent months. That list included the sudden breakup of a planned commodity plastics joint venture with Petrochemical Industries Co. of Kuwait and the delay of Dow's acquisition of specialty chemicals maker Rohm and Haas Co. of Philadelphia.
Liveris, however, didn't address allegations the firm bribed Kuwaiti officials in an attempt to complete the PIC joint venture. Dow previously had denied the charges.
At Dow, 2008 ended with a fourth quarter loss of $1.5 billion. Dow's fourth quarter sales of basic plastics — including polyethylene and polypropylene—plummeted 38 percent to less than $2.2 billion compared to the same quarter in 2007. The unit had a quarterly pretax loss of $315 million after showing a pretax profit of almost $400 million the year before.
Dow's performance plastics unit—including polyurethane and epoxy—saw fourth quarter sales plunge 20 percent to $3.2 billion. The business rang up a quarterly pretax loss of $479 million after earning almost $160 million pretax in 2007.
For the year, Dow's plastics units had combined sales of almost $29 billion, representing just under half of the firm's total. Their combined 2008 pretax profit of almost $1.3 billion was 63 percent less than the 2007 total.
Companywide, Dow's 2008 sales grew almost 8 percent to $57.5 billion, but profit tumbled 80 percent to $579 million.
“Our financial results are very disappointing, but management intervention has generated strong cash flow in a difficult environment,” Liveris said. “The impact of the economic crisis was inescapable. The fourth quarter was the worst quarter in more than two decades ... we've taken aggressive steps to match production with demand.”
Those steps have included the permanent closings of 20 plants and temporary idling of 180 more, along with the elimination of 5000 full-time jobs and 6000 contractor positions. Dow announced those moves in early December.