A Summary of the Year
2007 was a significant year for Dow. It was a year of record sales and solid financial results. It was a year in which we scaled new heights in environmental stewardship and corporate citizenship, setting new benchmarks for the entire chemical industry. And it was a year in which we took further steps toward redefining what it means to be THE world-class chemical company—a company that surpasses its peers across every dimension of financial, social and environmental performance.
Financially, sales exceeded $50 billion for the first time in Dow’s history, climbing to $53.5 billion, 9 percent higher than in 2006. Net income was $2.9 billion, which included the impact of certain items with a net unfavorable impact of $735 million, while earnings were $2.99 per share. Excluding certain items for both periods, earnings per share for the year were $3.76, compared with $4.25 in 2006.
We achieved record equity earnings of $1.1 billion, marking the fourth consecutive year in which this contribution has topped $900 million and the first year in which it has exceeded $1 billion.
And we ended the year with our balance sheet as strong as it has ever been, with a debt to capital ratio of 32 percent, with our funded pension plans fully funded and with our priorities sharply focused on investing for growth and remunerating stockholders. Through 2007, that agenda gathered momentum. We invested more than $1 billion in strategic acquisitions, we increased capital spending by 17 percent to support organic growth, we bought back more than 32 million shares as part of our repurchase program, and we raised our quarterly dividend for the second time in 18 months. For 95 years, Dow’s quarterly dividend has consistently either been maintained or raised.
In 2007, Dow experienced yet another sharp rise in feedstock and energy costs, which increased more than 10 percent compared with 2006 to top $24 billion for the year—three times what we paid in 2002.
Faced with this seemingly relentless climb, our commitment to energy efficiency remains as strong as ever. In 2007, we achieved a further reduction in energy intensity—the amount of energy used for every pound of product we produce—which is now down 4 percent from our 2004 baseline against our goal to achieve a 25 percent reduction by 2015.
Our commitment to employee health and safety also produced tremendous results in 2007, as we cut the Company’s injury and illness rate by more than 25 percent year over year. But this solid progress was sadly overshadowed by the loss of one of our colleagues, who died in a tragic aircraft accident while traveling on Dow business. We continue to do everything possible to infuse an employee mindset, a leadership attitude and a corporate culture that will ensure all employees and contractors return safely to their homes at the end of each work day.
And finally, throughout the year, we focused significant resources on maintaining our leadership position in corporate citizenship, a role that we believe should drive positive change beyond our fence lines, into our communities and across the globe. One of our most notable actions was to support the Blue Planet Run, an around-the-world relay that raised awareness and funds to address the issue of 1.2 billion people who are living without access to safe drinking water. In total, the Company’s charitable contributions during 2007 totaled more than $53 million, providing support to a broad range of events and organizations worldwide.
