MIDLAND — Dow Chemical Co. (NYSE: DOW) Thursday reported record annual revenue of $60 billion in 2011, with a 19 percent increase in earnings per share.

In the fourth quarter, revenue was $14.1 billion, up 2 percent over the same quarter a year earlier. However, the company reported a loss of 2 cents a share in the quarter, the result of one-time items totaling 27 cents a share, including he recognition of a valuation allowance in Brazil that increased income taxes by $264 million, equivalent to 23 cents a share, resulting in a 76.6 percent effective tax rate.

In the quarter, sales excluding the impact of divestitures increased 5 percent versus the year-ago period, with increases in all geographic areas and in all operating segments except Electronic and Functional Materials, which was flat.

The company said that in the quarter, sales in what it calls “emerging geographies” were $5 billion, reaching a new quarterly record and representing 35 percent of Dow’s global sales. Sales excluding divestitures rose 10 percent in these regions, with growth across all operating segments.

Sales volume declined 3 percent, but was flat excluding the impact of divestitures. On the same basis, volume in emerging geographies grew 7 percent led by China, which was up 12 percent. This increase fully offset declines in Western Europe (down 5 percent) and the United States (down 2 percent).

Selling price was up 5 percent, more than offsetting a $476 million increase in purchased feedstock and energy costs. Price was up in all operating segments and in all geographic areas.

The company’s operating rate was 72 percent for the quarter, down 9 percentage points year-over-year, reflecting weak demand and customer destocking, particularly in Western Europe.

“Dow saw deterioration in the macro environment mid-quarter and, in line with our stated commitments, we purposefully intervened,” said Dow chairman and CEO Andrew N. Liveris. “In the midst of uncertainty and significant destocking across customer supply chains, we maintained our focus on financial discipline and operating efficiency — evidenced by our tight management of working capital, focus on improving operating rates and significant cash flow generation.

“We derived strong benefit from our geographic footprint – delivering broad-based top-line gains and achieving record sales for both the quarter and the year in emerging regions, balancing considerable weakness in Western Europe. In addition, our significant U.S. market and feedstock advantage positioned us for success in the quarter and will continue to provide substantial value moving forward.

“Times like these demand a focused approach and strong resolve, and Dow’s firm operating discipline, cost control and productivity will continue throughout 2012. This, together with our broad geographic footprint, balanced and integrated portfolio of businesses, technology-rich innovation engine and world-class feedstock advantage, will enable us to continue to deliver shareholder value.”

For the full year, Dow reported full-year 2011 earnings of $2.05 per share, up 19 percent versus prior-year earnings of $1.72 per share. Excluding certain items, Dow’s full-year 2011 earnings were $2.54 per share, up 29 percent versus the prior-year result on a comparable basis of $1.97 per share.

Sales reached $60 billion, up 12 percent versus the prior year and a record for the company. Excluding the impact of divestitures, sales were up 18 percent versus the prior year, with double-digit gains in every geographic area and every operating segment except Electronic and Functional Materials, which was up 9 percent.

For the year, sales in emerging geographies surpassed $19 billion for the year, achieving a new record for the company. Sales in Asia Pacific exceeded $10 billion for the first time in the company’s history. Excluding the impact of divestitures, sales in this region were up 16 percent.

Sales volume was down 1 percent. Excluding the impact of divestitures, volume was up 4 percent, with increases in all geographic areas, led by Latin America (up 9 percent) and Asia Pacific (up 6 percent).

Selling price was up 13 percent, or 14 percent excluding the impact of divestitures. Double-digit gains were reported in all operating segments except Electronic and Functional Materials (up 6 percent) and Agricultural Sciences (up 5 percent).

Price gains more than offset a $4.3 billion increase in purchased feedstock and energy costs.


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