During 2005, we set a record for sales and earnings, reduced debt and realized our third consecutive year of margin recovery.
In large part, these achievements were made possible by the solid foundation of financial discipline and low cost-to-serve capability that is in place across our organization.
It is a foundation that helps protect Dow against volatile energy and feedstock costs. It ensures pragmatism and sound judgment in assessing the value of global growth opportunities. It affords us the financial flexibility to respond swiftly when value-creating opportunities arise. And it delivers significant competitive advantage to Dow across the business cycle, helping position the Company for long-term success in an ever-more challenging global business environment.
This foundation embraces four distinct components:
Low-Cost Feedstocks
Thanks to long-established relationships in the Middle East and in Asia, Dow has access to low-cost feedstock and energy supplies that provide a vital platform for value growth worldwide.
In 2005, we moved forward with several opportunities that will help to strengthen that position further, projects like Olefins II, an ethylene and derivatives complex now under construction in Kuwait, and the petrochemical complex we plan to build at Sohar in Oman.
Integration
Integration is an important part of our business model. It enables us to take the by-products and the energy that are generated in the creation of one product and use them in the manufacture of other products, thereby reducing costs and eliminating waste. At the same time, it enables us to use our low-cost Basic products as raw materials for our downstream Performance products, yielding higher and more stable margins.
Productivity
Dow aims to be competitively advantaged in everything we do, and our drive for productivity improvements cuts across every part of the organization. For example, we infuse Six Sigma methodology into every business, every function, every corner of the world; we implement novel research and development approaches that help increase our speed to market; we remain committed to maintaining best-in-class information technology systems; and we’re applying our “operational excellence” mindset, born out of more than a century in manufacturing, to our commercial activities – achieving productivity improvements in everything from our supply chain to technical support.
Efficiency
Ongoing manufacturing improvements keep our plants running smoothly and efficiently – not only maximizing production but also reducing our energy intensity. For example, co-generation power plants that produce both electricity and steam are now used to meet 85 percent of our energy needs in the United States and 70 percent worldwide, consuming around 40 percent less fuel than required by conventional generators and significantly reducing both costs and emissions. And we’re applying advanced control and optimization technology to get more value from existing assets, using process automation systems that analyze all manner of variables – from feedstock costs to weather conditions – and then adjust plant operations to optimize through-put, product quality and profitability.
Next Section >>
|
