One chemical giant that lived up to its size in 2011 by churning out solid performance and bagging megadeals was Dow Chemical (NYSE: DOW). Unfortunately, its stock price failed to do justice, ending the year down nearly 16%.

A tepid stock performance, however, does not take away the sheen from all that Dow accomplished last year. Let's rewind 2011 in detail for the company.

Pricey gains
The year was marked by an amusing cat-and-mouse game in the chemical industry. On one end were companies happily passing the buck, while on the other were those dealing with the high-price blow. Dow belonged to the first category, enjoying an awesome ride on the price-increase bus right from the beginning of the year till the end.

After posting year-over-year top-line growth of 20% in its first quarter, Dow's revenue climbed 18% in the second quarter. And its last quarter saw sales rising by 17%. The point to note is that it wasn't volumes but higher prices that drove up revenue in all the quarters. This wasn't unique to Dow, though. Every chemical player from DuPont (NYSE: DD) to Huntsman (NYSE: HUN) resorted to frequent price increases last year, which proved to be the biggest driver for their top lines. Volumes for both of these companies slipped in their last quarters, but that didn't prevent either of them from posting solid double-digit revenue growths. Huntsman's third-quarter volumes fell a good 8%, but its revenue went up by 24% from last year.

Growing bigger and bigger
From acquisitions to joint ventures, Dow did it all last year. But the deal that bagged the spotlight was Dow's tie-in with a Saudi Arabian oil company, Saudi Aramco, to build one of the world's largest petrochemical facilities. Dow's intentions of gaining a deeper foothold in Saudi Arabia became evident from this deal as well as from Dow's plans to invest in water technology plants in Saudi Arabia. The Dow-Aramco venture will target developing markets such as China and Africa -- two areas that already feature high on Dow's expansion plan list.

Dow kept its focus intact on emerging markets last year. It announced plans to open new offices in Africa and teamed up with a China-based company, Befar Group, to produce a key chemical product. Dow's Thailand propylene oxide plant also got ramped up to run at full capacity. Its joint venture with Mitsui in Brazil to produce new, biomass-based feedstock also got completed last year.

These moves made sense, given how these markets are driving the top lines of most industry players. DuPont is banking big on the emerging markets that now account for nearly one-third of its total sales. In fact, I'd like to mention a particular trend that was spotted last year in the chemical industry: Higher sales in markets like Latin America and the Asia-Pacific region were offsetting weakening volumes in the U.S. and Europe.

DuPont and Eastman Chemical (NYSE: EMN) experienced this, and so did Dow. Revenue from emerging markets touched record highs in Dow's second and third quarters, while almost 53% of Eastman's last-quarter earnings came from Asia, Europe, and Latin America combined. Eastman's capacity upgrades and lapping up of companies based in India and Brazil should not come as a surprise, then, nor should Dow's expansions in these markets.

The eye-catchers
I particularly find interesting two of Dow's deals, which revolve around technologies and are gaining momentum. One was Dow teaming up with Quantum Fuel Systems to convert Ford's F-150 trucks into plug-in hybrids using Dow's lithium-ion batteries. The other was the company's joint venture with Japan's chemical company Ube Industries to make electrolytes for lithium-ion battery manufacturers. Lithium-ion batteries are getting popular because of their wide usage in not just gadgets but also fancy electric cars and hybrid vehicles. Both of these tie-ins highlight Dow's smart attempts at capitalizing alternative-energy trends that are fast gaining ground.

Dow grabbed bigger headlines when it launched its revolutionary solar roofing shingles last year in partnership with one of the leading homebuilders, D.R. Horton (NYSE: DHI). Horton will be the first homebuilder to offer Dow's shingles in its new homes. Dow also entered the LED technologies business last year. That was one heck of a deal for Dow.

The Foolish bottom line
What works (and should work) brilliantly in Dow's favor is its amazing business diversification. The icing on the cake comes from all the megadeals and capacity expansions.

And did I mention Dow's impressive and significant initiative of reducing its debt burden last year? In the first half of 2011 itself, the company retired around $4 billion of debt. Hats off to Dow for such a brilliant all-round performance! The company has indeed set foot into 2012 with high expectations. Dow certainly looks poised to grow as much this year as it did in 2011. Keep tracking this growing company by adding it to your free Fool watchlist.

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