Citi Chemicals Conference

Dow’s Transformation In ActionGeoffery E. MerszeiExecutive Vice President & Chief Financial Officer

December 2, 2008

19th Annual Citi Chemicals Conference

2

Agenda

►Strengthening Basics

►Preferentially Investing in Performance Businesses

►Business Portfolio Management

►Financial Discipline

►Remunerating Our Shareholders


3

Delivering On Our Commitments –K-Dow Joint Venture Formation Agreement


►A Binding, Definitive Agreement

►Expected To Begin Operations By January 1, 2009

4

► Polyethylene, Polypropylene, Polycarbonate, Ethyleneamines and Ethanolamines, Ethylene Glycol and PET

► All related technologies► Fully dedicated hydrocarbon assets

• Fort Saskatchewan, Canada (cracker)• Bahía Blanca, Argentina (cracker)• Tarragona, Spain (cracker and octene manufacturing facility)

► Ethylene supply agreements from Dow’s other crackers► Number 1 position in Polyethylene

A New, World Class Petrochemicals Company


5

K-Dow Transaction Proceeds

►Total Enterprise Value $17.4 B

►EBITDA Multiple on 2006 Basis 7.1x

►Special Cash Distribution by K-Dow $1.5 B

►Gross Proceeds $9.0 B


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DowMore than 100 years of experience and leadership

A recognized global brand and franchise

Technology and market leadership

Global reach

#1 position in PE and amines, leader in PP, PC, and technology/catalyst licensing

Innovation, application and operational expertise

KPC / PICFeedstock integration

Expertise in oil and gas

Regional leadership and global relationships

Resources and desire to grow downstream

Strong financial position and track record

Successful JV experiences

+

… all coming together in a focused, dedicated, agile company with the staying power to grow with our

customers in all regions of the world.

K-Dow Petrochemicals – Sound Partners


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KPC – A Strong Partner & Resource Owner

Source: CMAI, 2005 data

0

50

100

150

200

250

300

350

Saud

i Ara

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Iran

NO

CQ

atar

Pet

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OC

Kuw

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oyal

Dut

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hell

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vron

Con

oco

Phill

ips

BP

Eni

National oil company (NOC)

Publicly traded company

Billion barrels of oil

equivalent


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The Company

Headquarters

Employees

Products

ManufacturingLocations

• A 50:50 joint venture between Dow and Petrochemicals Industry Company of Kuwait

• The world’s largest polyolefins producer and marketer• The world’s largest amines producer and marketer• Sales of approximately $15 billion worldwide

Southeast Michigan, USA

~ 5,000 people worldwide

Polyethylene, Polypropylene, Polycarbonates and blends, Ethanolamines, Ethyleneamines, Ethylene Glycols, PET,Technology Licensing and Catalyst

16 plant sites in 9 countries


K-Dow Petrochemicals – Key Statistics

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K-Dow Sales by Product*

K-Dow Sales by Geography*

K-Dow Petrochemicals – Key Statistics

* Estimate based on 2007 sales

Polyethylene 58%Ethylene Glycol 20%

Polypropylene 11%

PET 3%Amines 4%

Licensing 1%Polycarbonate 3%

North America 35%

Latin America 14%

Europe 34%

Asia Pacific 13% IMEA 4%


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Current Production AssetsPlanned Assets

BrazilThailand

ChinaNorth Africa

Kuwait

K-Dow & EQUATE: Opportunities for Growth


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Preserving The Value of Dow’s Integration

Dow• Designed Polymers• Dow AgroSciences• Dow Automotive• Dow Building Solutions• Dow Epoxy• Dow Latex• Polyurethanes and PU

Systems• Specialty Chemicals• Specialty Plastics &

Elastomers• Technology Licensing

& Catalyst

K-Dow

• Polyethylene• Ethylene Glycol

(MEG & DEG)• Polypropylene• Polycarbonate• Ethyleneamines• Ethanolamines• PET

Building Blocks

• Benzene• Butadiene• Chlorine• Cumene• Ethylene• Ethylene

Dichloride• Ethylene Oxide• Propylene• Propylene Oxide• Styrene

►More Than 60 Service and Supply Agreements►Reliable and Secure long-term supply►Enabling Both Dow and K-Dow to Grow


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Agenda







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►Accelerates growth through strong operational and strategic fit

►Creates new leadership positions in key industry growth segments

►Well-known commitment to R&D

►Fuels Dow’s own innovation engine

►Delivers more stable earnings with higher growth


Delivering On Our Commitments –A Transformative Move

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Rohm and Haas Integration Update

►Program Management Office– 21 Functional Implementation Teams– 6 Business Implementation Teams– 7 Clean Teams


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Rohm and Haas Cost Synergy Update

0 50 100 150 200 250 300

July 10 Commitment ($800 Million)

Shared Services & Governance

Purchasing Synergies, Including Raw Materials

Business Development Overlap

Manufacturing / Supply Chain

Run Rate Estimates

Will be at $100 Million Run Rate on Day 1Rohm & Haas’ $110 Million Savings is Additive

$170

$180

$70

$65

$280

$280

$160

$80

End Year 1


End Year 2

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Synergy Opportunities


Function Project Description

Purchasing Raw Materials

Information Technology IT Infrastructure Consolidation

Corp Business Dev Overlap Business Overlap Synergies

Supply Chain Logistics and Packaging

Information Technology I/S Organizational Consolidation

Manufacturing & Engineering Specific Mfg Footprint Optimization

Marketing & Sales Marketing and Sales Synergy Project

Manufacturing & Engineering MRO/Maintenance Equipment

Shared Services Corporate Services

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Rohm and HaasAdvanced Materials Division CEO

Pierre Brondeau

Rohm and Haas Advanced Materials Division

Paper & TextilesPhilippe Raynaud de Fitte

Vice President

Dow Chairman and CEOAndrew Liveris

AsiaMark DouglasVice President

Electronic MaterialsYi Hyon PaikVice President

Building & ConstructionTorsten KraefVice President

Designed Polymers & Separation Technologies

Peter DaviesVice President

CoatingsLuis FernandezVice President

Specialty Packaging & FilmsPatrice Barthelmes

Vice President

Marketing Ruby Chandy*Vice-President

LegalKen FitzpatrickVice President

FinanceAlfonso Escudero

Vice President

Manufacturing and EH&SDon Taylor

Vice President

Human ResourcesRich Lovely

Vice President

CommunicationsBrian McPeakVice President

Shared Services Jim Varilek

Vice President

Marketing Ruby ChandyVice President

R&DA. N. SreeramVice President

This organization alignment is pending all regulatory approvals and closing of the transaction. Until that time, Rohm and Haas and Dow will remain separate entities and will operate independently.

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The New Dow – A Significant Portfolio Shift!


Dow (pre K-Dow) Pro Forma Dow (post K-Dow)

2 Non-GAAP financial measure. Excludes certain items. See www.dow.com for additional information.

2007

Rev

enue

1

49% 37%63%

Pro Forma Dow (post K-Dow) + ROH

31%69%

2007

EB

ITD

A1,

2

48%52% 41%59% 33%67%

1 Data excludes Unallocated and Other. Performance (Includes Ag)

Basic

51%

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Agenda







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Delivering On Our Commitments –Business Portfolio Management►Divest or shut down non-competitive, unproductive or

non-strategic assets (2003 – 2007)− 92 plant shutdowns− 42 site exits− 38 business divestitures

►Strategic Acquisitions− 26 since 2003− In the last two years ….

− Wolff Walsrode− Dow AgroSciences – 7 acquisitions− Epoxy Systems – 3 acquisitions− Polyurethanes – 3 acquisitions− Dow Building Solutions – Stevens Roofing Systems


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Agenda







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Delivering On Our Commitments –Sound Financial Discipline

Debt Reduction

2002 2003 2004 2005 2006 2007Capex

0.01.02.03.0

2002 2003 2004 2005 2006 2007

Depreciation

Capex

$ Billi

ons

Debt/

Capit

al 55%48%

39%34% 32%

59%


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Managing Today’s Challenging Environment

Financial Flexibility►Sufficient liquidity – Credit lines of approximately $5 billion– Retail and Institutional bond access– Diversified funding sources throughout the world

Financial Discipline / Interventions►Targeted reductions by end of year– Discretionary spending reduction of $100 - $150 million– Capital spending reductions of $100 million– Working capital reductions


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Agenda







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Delivering On Our Commitments –Remunerating Our Shareholders

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2005 2006 2007 3Q08 YTD

Sha

re R

epur

chas

e A

mou

nt ($

Mill

ions

)

– 73 Million Shares Repurchased

– $3.0 Billion Spent– Largest Program

In A Decade


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1928 1938 1948 1958 1968 1978 1988 1998

Delivering On Our Commitments –Our Consistent & Reliable Dividend

1912 2008**

• A 96-Year History of Consistent Dividends– Maintained or Increased Each Year

– Increased 25% Since 2006

Quarterly Dividends Paid Per Share*

*ADJUSTED FOR STOCK SPLITS AND STOCK DIVIDENDS**2008 DIVIDEND ANNUALIZED BASED ON Q3 YTD PAYOUT


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Key Messages

►Strengthen Franchise Basics Business via K-Dow

►Preferentially Invest in Performance Businesses via Rohm and Haas

►Portfolio Management Continues

►Preserving Financial Flexibility

►Uninterrupted Dividend for 96 Years!


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SEC Disclosure Rules

►Some of our comments today may include statements about our expectations for the future. Those expectations involve risks and uncertainties. Dow cannot guarantee the accuracy of any forecasts or estimates, and we do not plan to update any forward-looking statements if our expectations change. If you would like more information on the risks involved in forward-looking statements, please see our annual report and our SEC filings.

►In addition, some of our comments may reference non-GAAP financial measures. Where available, a reconciliation to the most directly comparable GAAP financial measures and other associated disclosures are provided on the internet at www.dow.com in the Financial Reports page of the Investor Relations section.


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Q&A


Citi Chemicals Conference

Economy & Finance

Transcript of Citi Chemicals Conference