The Company reported earnings of $0.37 per share, or $0.47 per share excluding certain items.(2) This compares with earnings of $0.08 per share in the year-ago period, or $0.18 per share excluding certain items.

Sales of $13.8 billion rose 22 percent versus the same quarter last year. Sales increased double-digits in all geographic areas and in all operating segments except Coatings and Infrastructure, which rose 6 percent.
Sequentially, sales rose 7 percent with increases in all geographic areas. Volume was up 3 percent and price rose 4 percent. Volume gains were led by Asia Pacific (8 percent) and Latin America (6 percent).


At a Company level, volume increased 12 percent versus the same quarter last year, with gains across all geographic areas and led by North America and Europe.

Health and Agricultural Sciences posted record fourth quarter sales of $1.3 billion. Volume grew 20 percent with gains in every geographic area, led by 35 percent growth in Latin America.

Price was up 10 percent, more than offsetting a $685 million increase in purchased feedstock and energy costs.

Sales from emerging regions were $4.5 billion, reaching a new quarterly record for the Company. This was driven by volume growth in Thailand (33 percent), India (31 percent), Russia (30 percent), and Brazil (14 percent).

Net debt(3) to total capitalization declined to 42.6 percent, 240 basis points below the Company's year-end goal. This was primarily due to $1.8 billion of cash flow from operating activities.

Equity earnings reached an all-time quarterly record of $313 million.

EBITDA(4) was $1.9 billion, an increase of 30 percent versus the year-ago period.

At the Company level, EBITDA margin expanded more than 200 basis points, representing the seventh consecutive quarter of year-over-year margin expansion. Margin expanded in Plastics by 520 basis points. And Performance Products and Performance Systems together expanded margin by more than 230 basis points.

The Company continued to capture its growth synergies, delivering $1.1 billion in sales on a run-rate basis, more than double the Company's year-end target of $500 million.


(1) Sales, price and volume comparisons are presented excluding divestitures, unless otherwise noted.
(2) See Supplemental Information at the end of the release for a description of these items.
(3) Net debt equals total debt ("Notes payable" plus "Long-term debt due within one year" plus "Long-Term Debt") minus "Cash and Cash equivalents."
(4) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA margin is defined as EBITDA as a percentage of reported sales. EBITDA and EBITDA margin are presented excluding certain items(2) unless otherwise specified. A reconciliation of EBITDA to "Income from Continuing Operations Before Income Taxes" is provided following the Operating Segments table.

Comment
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:

“This was a strong quarter for Dow and marked another significant milestone for our Company as we continued to deliver earnings growth. Broad-based sales increases and robust volume gains across the globe reflected the strength of our transformed business portfolio and wide geographic presence. We delivered record sales for both the quarter and the year in emerging markets, while our leadership positions in North America and Europe enabled us to capitalize on the economic recovery that appears to be gaining traction in those economies.

“We are extremely pleased that we have achieved our seventh consecutive quarter of year-on-year margin expansion. This, coupled with record levels of equity earnings and $1.8 billion in cash from operations, demonstrates that Dow is firmly on its trajectory for earnings growth.”

2010 Full-Year Highlights
Dow reported full-year 2010 earnings of $1.72 per share, or $1.97 per share excluding certain items. This compared to prior-year earnings of $0.32 per share, or $0.63 per share excluding certain items and discontinued operations.

Sales were $53.7 billion, up 26 percent versus the prior year, with sequential sales gains throughout the year.

Sales in the emerging geographies were $16 billion in the year, a record for the Company.

Sales in Asia Pacific exceeded $9 billion in the year for the first time in the Company's history, and were up 25 percent. Dow continued to expand its presence in Asia Pacific during the year, with investments announced in Thailand, Korea, China and Vietnam.

Volume rose 12 percent at the Company level, with gains reported in all operating segments and across all geographic areas.

Price was up 14 percent, with notable gains in the Basics segments and in Performance Products. Price gains more than offset a $5 billion increase in purchased feedstock and energy costs.

EBITDA totaled $7.5 billion, a 36 percent increase versus 2009 EBITDA on a pro forma basis.(5) For the full year, the Company expanded EBITDA margin more than 200 basis points. All operating segments reported year-over-year margin expansion except Coatings and Infrastructure, which was impacted by continued weakness in the construction industry.

Equity earnings totaled more than $1.1 billion, matching the Company's 2007 record performance.

Dow achieved its synergy commitments related to the acquisition of Rohm and Haas and reduced structural costs a full quarter ahead of schedule, with realized savings of $2.4 billion and an annual run-rate of $2.5 billion.

The Company delivered more than $4 billion of cash from operating activities, nearly double that of 2009, and reduced Dow's net debt to total capitalization ratio 540 basis points below year-end 2009.

Plastics

Sales in Plastics were $2.9 billion, up 20 percent from the same quarter last year. Volume increased 4 percent, while price rose 16 percent. Polyethylene reported a significant sales increase, led primarily by price gains in all geographic areas resulting from tight industry supply and in response to higher feedstock costs. The Company’s focus on reliability continued in the quarter, as several manufacturing units delivered record levels of production. In addition, Dow’s joint venture, Siam Polyethylene Company Limited, successfully started up its solution polyethylene train in Thailand in the quarter. Polypropylene reported a double-digit sales gain driven by both pricing and continued strong demand in all geographic areas due to tight raw material supply and growing demand in emerging regions for automotive, consumer durable goods and packaging end-markets.

Equity earnings for the segment were $68 million, compared with a loss of $1 million in the year-ago period, which was reduced $65 million for an impairment related to Equipolymers. Full-year equity earnings were higher, largely due to the Company’s joint ventures in Kuwait, which benefited from the first full year of capacity expansions versus last year. Plastics EBITDA for the quarter was $765 million, which includes a $5 million charge related to the Styron divestiture. This compares with $548 million in the year-ago period, which included a $65 million charge related to Equipolymers.

Chemicals and Energy

Sales in the Chemicals and Energy segment were $932 million, up 13 percent from the same year-ago period. Volume decreases of 3 percent were more than offset by price gains of 16 percent. The Chlor-Alkali/Chlor-Vinyl business reported higher sales driven by solid price gains of 20 percent and higher volume in North America and EMEA. The largest price improvement was seen in caustic soda, as improving demand in alumina and pulp and paper industries, coupled with tight supply, supported pricing initiatives. Vinyl chloride monomer (VCM) sales were higher versus same period last year due to significant U.S. polyvinyl chloride (PVC) export demand that offset continued weakness in construction end-markets in the United States. The Chlorinated Organics business reported higher sales due to improved pricing in refrigerants, fluoropolymers and solvents applications. Ethylene Oxide/Ethylene Glycol (EO/EG) volumes were down from the year-ago period, mainly due to the shutdown of capacity in the United Kingdom. This was partly offset by higher pricing due to improved industry supply/demand fundamentals.

Equity earnings were $100 million for the quarter, compared with $69 million in the year-ago period, due to improved results in MEGlobal and EQUATE. EBITDA for the quarter was $173 million. This compares with EBITDA in the year-ago period of $20 million, which included $6 million of the Company’s gain on the sale of OPTIMAL.

Outlook
Commenting on the Company's outlook, Liveris said:

“Dow is well-positioned for the improving economic climate and will continue to benefit from growth in high-margin sectors, such as electronics and packaging, driven by innovative products and technologies, coupled with our expanding presence in emerging markets. We demonstrated the success of our strategy over the course of 2010, as volume grew and margins expanded in our combined Performance segments, and our Basics businesses benefited from advantaged feedstocks in a much improved demand environment.

“Looking ahead, we expect growth will continue, driven by a broad range of leading end-markets in emerging geographies such as China, India, Eastern Europe and Brazil. Signs of improvement in industrial and B2B markets in North America and Europe give us optimism that we will see continued growth in these developed markets. Overall, the world continues to recover to pre-recession levels. However, with inflation concerns in emerging geographies, lingering unemployment issues in the United States and sovereign debt issues in Europe, we remain prepared for a reversal in momentum.

“We have delivered a transformed portfolio that is increasingly targeted towards growth geographies, sectors and markets – while remaining well-balanced to mitigate against uncertainty. In addition to the Rohm and Haas acquisition, we have directly invested more than $5 billion over the last two years to address these growth opportunities and further strengthen our leadership positions. The Company’s success will continue to be driven by our transformed business portfolio, our expanding presence in emerging geographies and our investments in innovations which are aimed at the intersection of the greatest societal needs and discontinuous business opportunities.”

Dow will host a live Webcast of its fourth quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 10:00 a.m. ET on www.dow.com