MOSCOW (MRC) -- The Dow Chemical Company has announced that it is realigning its external reporting segments to better reflect Dow’s strategy to be low-cost and fully integrated across key value chains, while adding value through shared technology and end-market orientation, as per the company's statement.
The company also announced it is changing the allocation with certain expenses previously reported in its Corporate segment, to drive further visibility into operating performance at the segment level.
"Our new reporting segments are designed to align businesses within their key, integrated chemical envelopes, more effectively allocate resources by targeted end-markets, and provide increased visibility regarding their value drivers," said Howard Ungerleider, Dow’s executive vice president and chief financial officer. "As a result, we expect this new structure will improve modeling and peer comparison capabilities."
The new operating segment structure maximizes Dow’s integration benefits - either through molecular and value chain alignment, such as the company’s acrylic, chlorine, ethylene and propylene envelopes, or through the benefits derived from an enhanced, innovation-driven market focus.
The operating segments will include the following:
Agricultural Sciences – Will continue to operate under the same structure comprised of Crop Protection and Seeds;
Consumer Solutions – Previously part of Electronic and Functional materials, and includes Consumer Care, Dow Automotive Systems, and Dow Electronic Materials;
Infrastructure Solutions – Formerly named Coatings and Infrastructure Solutions, and is comprised of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions and Performance Monomers;
Performance Materials & Chemicals – Includes Chlor-Alkali and Vinyl, Chlorinated Organics, Epoxy, and Industrial Solutions and Polyurethanes;
Performance Plastics – Comprised of the Company’s previous Performance Plastics business groups, however now also includes key raw material inputs via the energy and hydrocarbons business groups that were formerly included in the Feedstocks and Energy segment.
In addition to segment and business changes, Dow is also changing the allocation of certain expenses previously reported within its Corporate segment, which will better reflect operating performance and profitability at the segment level. All leveraged functional costs, such as information systems, finance, human resources, legal and supply chain, will now be fully allocated to the segments. In addition, long term performance based compensation expense will now be allocated to the segments based primarily on employee alignment.
"These changes to Dow’s Corporate segment will improve clarity and accountability at the business level, and reinforces our overall focus on increasing transparency of our operations," Ungerleider added.
As MRC reported earlier, Dow Chemical has recently announced an increased divestiture target aligned to further enhance the value of its portfolio and support the company’s market-driven, integrated strategy. On track to complete its goal of realizing USD4.5 billion to USD6 billion in proceeds by year-end 2015, and with additional portfolio management actions underway, Dow is now increasing its divestiture target to USD7 billion to USD8.5 billion to be complete by mid-2016. Since 2013, the company has generated USD2.5 billion in proceeds, reallocating this capital to remunerate shareholders, fund growth and reduce debt.
The Dow Chemical Company is an American multinational chemical corporation. As of 2007, it is the second-largest chemical manufacturer in the world by revenue (after BASF) and as of February 2009, the third-largest chemical company in the world by market capitalization (after BASF and DuPont). Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
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