Dow Achieves 'Phase I' Goals; Aims to Accelerate Growth
MIDLAND, Mich., May 11, 2000 /PRNewswire via COMTEX/ -- The Dow Chemical Company's (NYSE: DOW) president and CEO, William S. Stavropoulos, said today that the company has achieved the goals of "Phase I" of its strategy and is setting higher aspirations for the next phase of its transformation, which is focused on growth.
At Dow's 103rd Annual Meeting of Stockholders held here today, Stavropoulos said, "The objective of our transformation has been focused on achieving greater consistency in earnings despite the vicissitudes of the supply-demand cycle."
Stavropoulos noted that the company's financial results demonstrate the strategy is working. "We have said we wanted to control the things we could control," he said, noting that in 1999 the company withstood the combined impact of nearly $1 billion in higher feedstock costs and lower prices. "These uncontrollable factors would have translated to earnings per share of just $3.26 for 1999. But thanks to the things we can control -- productivity improvements, growth in our performance businesses and the global reach of our company -- we were able to earn above our cost of capital and increase year-over-year earnings from $6.07 per share in 1998 to $6.23 per share in 1999," he said. "This was the first time in our history we have done so under tough conditions."
Stavropoulos reported that the company has achieved its Phase I objectives, which were to improve productivity to become the lowest cost producer in all of its businesses, restructure its portfolio to provide more resiliency and consistency of earnings, strengthen its balance sheet and position the company for growth. "Today, I can report that in 1999, we met all of these objectives, completing Phase I of our transformation ahead of schedule," he said. Since 1993, the company has reduced structural costs by a total of $2.4 billion and increased productivity by an average of 10 percent a year.
"As we move forward, our objective is to be recognized by all of our constituents as a premier, sustainable growth company," said Stavropoulos. "We are moving Dow's center of gravity from a manufacturing company to a science and solutions company -- using our science and technology to advance the essentials of life and to improve the quality of life for people everywhere."
The company is focusing its growth efforts primarily on its performance businesses, which generate more consistent earnings across the chemical industry cycle. "Since 1993, we have grown earnings in those businesses at 18 percent per year and volume at 7 percent," he said. "Last year, those businesses accounted for 63 percent of our overall earnings."
Stavropoulos said the company expects to achieve more than $30 billion in overall sales at the next peak of the industry cycle and $60 billion in sales by 2010, with average revenue growth of 8 percent per year. "These are not pie-in-sky objectives," he said. "With the things we are now putting in place, including Bahia Blanca in Latin America, BSL in Europe, our pending merger with Union Carbide Corporation, plus capacity additions and some price restoration, we are well on track to achieve these goals."
Stavropoulos noted that the company's e-business efforts are accelerating rapidly, with several ventures already announced in the procurement and product sales channel arenas. He expects additional ventures in e-business to further spur Dow's growth. He also said that Six Sigma will be a key driver in achieving Dow's goals through both cost reduction and revenue growth. "Make no mistake about it: Six Sigma is an entirely new way of running our company. And as such, we have an aggressive program of implementation, including a $150 million investment this year," he said.
Dow is a leading science and technology company that provides innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $19 billion, Dow serves customers in 162 countries and a wide range of markets that are vital to human progress, including food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its 39,000 employees seek to balance economic, environmental and social responsibilities.
Note: The full text of the speech is available on Dow's web site at www.dow.com
The forward looking statements contained in this section and in other parts of this document involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as more fully discussed elsewhere and in filings with the U.S. Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors, as well as issues related to the Euro conversion. Accordingly, there is no assurance that the company's expectations will be realized.
SOURCE The Dow Chemical Company
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CONTACT: Terri McNeill of The Dow Chemical Company, 517-636-2876 /Company News On-Call: http://www.prnewswire.com/comp/252850.html or fax, 800-758-5804, ext. 252850