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The Dow Company released its fourth quarter 2020 financial report on January 30, and the summary is as follows:
Summary
Summary● Earnings per share on a GAAP basis of $1.
65; operating earnings per share of $0.
81, excluding earnings from significant items of $0.
84 per share in the quarter, primarily related to the sale of a portion of the U.
S.
Mexico Proceeds from marine and terminal operations and assets in the Gulf Coast, and related to legal matters
.
● Net sales were US$10.
7 billion, up 5% from the same period last year, mainly due to rising local prices, currency exchange rate changes, and increased sales
.
●
● Local prices rose 2% year-on-year, mainly due to higher prices in polyethylene and polyurethane applications
.
●
● Sales increased by 1% year-on-year, and all business segments reached pre-pandemic sales levels
.
●
● Equity income was US$106 million, a year-on-year increase of US$127 million, mainly due to the continuous improvement in the financial performance of the joint venture company Sadara
.
●
● GAAP net income was $1.
3 billion
.
●
● Cash from operating activities (ie, continuing operations) was $1.
7 billion and free cash flow was $1.
4 billion
.
●
● The shareholder dividend return for the quarter was $519 million
.
●
● Total cash and available committed liquidity exceeded $14.
6 billion at the end of the quarter, an increase of $3.
9 billion year over year
.
● Net debt decreased by $837 million in the quarter, and more than $2.
6 billion in net debt improvement in 2020
.
The company won't have significant long-term debt maturing until the second half of 2024
.
● Dow completed the sale of some marine and terminal businesses and assets located in the US Gulf Coast region, and received a cash income of $620 million this quarter
.
● Sadara reached an overarching agreement on key terms to undertake debt adjustments with all remaining lenders in January 2021, thereby supporting the JV to become cash flow self-sufficient
.
CEO Commentary
CEO CommentaryMr.
Jim Fitterling, CEO of Dow
Jim Fitterling
Jim Fitterling, chairman and CEO of Dow, had this to say about the quarter's results:
“In the fourth quarter, as the economy continued to recover, the Dow team achieved both sales and profit growth, with the vast majority of business segments reaching pre-pandemic levels
.
Our consumer-focused product portfolio, and continued focus on Due to our efforts to capture customer demand, sales in each regional market and each business segment have increased year-on-year, and prices and profit margins of each product line have also increased month-on-month
.
"
“In 2020, our free cash flow was $5 billion, and our cash flow conversion ratio improved by a further 30%
.
By focusing on generating cash flow and executing key strategic cash levers, such as the sale of some U.
S.
Gulf Coast marine and terminal assets, Additional deleveraging was achieved during the quarter and net debt was reduced by more than $2.
6 billion for the full year
.
Sadara also achieved a milestone success by reaching an overarching agreement with lenders on a debt adjustment
.
The Dow team defeated macroeconomic and other external The major challenges posed by factors have ended the year with great results
.
I have full confidence in the road ahead in 2021 and beyond
.
”
Outlook
Outlook"Dow enters 2021 with good year-over-year growth and is well-positioned to sustain profitable growth through the economic recovery and industry development cycle," said Fitterling.
"
We will continue to focus rigorously on our capital allocation priorities, and we will continue to benefit from it.
" Due to the improving cost structure, financial flexibility, and low-cost operating model
.
As the market recovers further, we expect margins to improve as differentiated solutions in our product portfolio have seen increased demand
.
In the longer term, we look forward to continuing to create extraordinary value by further distinguishing ourselves from the industry by enhancing innovation capabilities, operational efficiency, and leading environmental, social and governance (ESG) capabilities
.
"
