Urethane Related Comments from Dow Investor’s Call
Performance materials and chemicals increased sales to $172 million with sales growth driven primarily by Epoxy and Polyurethanes, which reported double-digit growth, both businesses showing firm improvement in 2014.
Turning to slide 10, performance materials and chemical sales grew 5% and adjusted EBITDA was up $98 million to $636 million for the quarter. Significant EBITDA margin increases are result of ongoing sell out and productivity actions resulting in higher operating rates and lower more advantage costs.
In Polyurethanes these actions resulted in a completion of the $100 million productivity program we began in 2013. We have also increased production by more than 15% over the last two years.
We’re now operating more locally than before to allow more agile responses to market dynamics as well as selling into the most profitable regions. For Epoxy we have completed more than half of our productivity target and expect to complete the full program in 2015.
The quality of our business continues to improve as we implement to mitigate the impact of continued industry pressures from oversupply in Asia-Pacific. Further actions to enhanced efficiency and performance materials and chemicals should continue to provide tailwinds for this segment.
Kevin McCarthy – Bank of America
And then a second question if I may on polyurethanes, quite strong results in the quarter, can you speak to your outlook volumetrically as well as from a price perspective and comment on how you would expect pricing to differ in lets say a merchant sales of intermediate process systems, how much sticky your systems might be?
Andrew Liveris – Chairman, Chief Executive Officer
Yes so the noted value creation of polyurethanes that you pointed out really started a couple of years ago when you remember we put that [Indiscernible] together and said, do you had to be fixed as did epoxy. Glen Roth [ph] and his team have done a sensational job repositioning the value chain. It’s occurred at all parts of the value chain to have advance to your question. Its occurred at the Propylene oxide end, it’s occurred in the polyurethane components end and it’s occurred at the systems end and it’s been a repositioning plus a productivity drive. They have achieved their productivity goals, but they have also repositioned to end use growth markets like energy efficiency for example.
High end durables, high end furniture embedding. So they have got a technology driven program that’s very focused on the value add and of course the lower input cost. This should be further enhanced this year when PDH starts off. So we’re quite proud of the turnaround in polyurethanes and has been both point, productivity and repositioning.
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