Sanford Bernstein Strategic Decisions Conference

Sanford Bernstein Strategic Decisions

Conference

Andrew LiverisChairman and CEO

May 30, 2008

Agenda

Who We Are

Dow’s Unmatched Strengths

Dow of Tomorrow

Financial Outlook

Sanford Bernstein Strategic Decisions ConferenceANL 05/30/08 2

A Global Science and Technology Company

Focused on Growth ♦ Emerging Markets♦ Global Megatrends

♦ Financial Discipline/Low Cost to Serve

♦ Asset Management

Operationally Excellent

♦ Plastics♦ Chemicals♦ AgroSciences♦ Material Sciences

Integrated in Chemistry

3Sanford Bernstein Strategic Decisions ConferenceANL 05/30/08

Strong Financial Results

2007 Sales by Segment

Performance Plastics

Performance Chemicals

Agricultural Sciences

Basic Plastics

Basic Chemicals

Hydrocarbons &

Energy

$54 B

2007 Sales by Geography

India, Middle East and Africa

North America

Europe

Asia Pacific

Latin America

$54 B


1Q07Sales (billions) $12.4Equity Earnings (millions) $274Earnings Per Share $1.00

1Q08$14.8$274

$0.99




2003 2004 2005 2006 2007

Debt/Capital55%

48%39%

34% 32%

Joint Venture Earnings Growth

0

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007

$Millions

Dow EBIT History*

012345678

'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Performance Basics

*Non-GAAP data, excludes certain items and unallocated. Excludes Union Carbide prior to 2001.

$Billions

0

10

20

30

40

50

60

2003 2004 2005 2006 2007

$Billions Revenues

6

OAO Gazprom

PetroChina

Chevron Phillips

Reliance Industries

BASF

Total SA

Formosa Plastics Grp

INEOS Group

Exxon Mobil

Royal Dutch Shell

Dow Chemical

Sinopec

SABIC

LyondellBasell

Strong Basics Franchise

2007 Sales* - $29B8,800 Dow people6,000 global customers35 Dow sites; 6 JV sitesRenowned product brandsOperational/safety excellenceTechnology leadership

*Includes Dow’s proportionate share of joint venture revenues. 7Source: Public Company Reports Sanford Bernstein Strategic Decisions ConferenceANL 05/30/08

Cytec

Celanese

Lubrizol

Eastman

Rohm & Haas

Royal DSM NV

PPG

Bayer

Evonik Industries AG

Hexion (inc. Huntsman)

Akzo Nobel

DuPont

Dow Chemical

BASF

Market-Driven Performance Businesses

2007 Sales – $23.5B

17,800 employees

12,500 global customers

158 countries

41 R&D sites

68 Manufacturing sites

8Source: Public Company Reports Sanford Bernstein Strategic Decisions ConferenceANL 05/30/08

2nd Largest Chemical Company

2nd Largest Chemical Company

0%

5%

10%

15%

20%

SyngentaTotal

MonsantoTotal

BASF AgProducts

DAS Total BayerCropScience

DuPont Ag &Nutrition

YE 2006 YE 2007

Dow AgroSciences

2007 Sales – $3.8B

5,000 Employees

Customers in 131 countries

>1,000 R&D employees

R&D sites in 15 countries

26 Manufacturing locations worldwide

*Monsanto’s Fiscal Year = September 1 to August 31; includes Animal Ag; Non-GAAP data, excludes certain items.Source: Public Company Reports

9

EBIT as % of Sales*

Sanford Bernstein Strategic Decisions ConferenceANL 05/30/08

Dow Corning

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007

0

1

2

3

4

5

2003 2004 2005 2006 2007

$Billions

$Millions Net Income

Sales 2007 Sales – $4.9B10,000 Employees∼25,000 Customers7,500 Products and servicesR&D investment –5% of salesR&D labs in more than 10 countries∼25 Manufacturing sites>4,000 Active patents


Who We Are


Dow of Tomorrow

Financial Outlook

Agenda

Integration

Operational Excellence

Feedstock Flexibility

Global Reach


Strength: Vertical Integration Across Diverse Portfolio

Performance• 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

Basics• Butanol• Caustic Soda• Ethylene Glycol • Polyethylene• Polypropylene• Polystyrene• Vinyl Acetate• Vinyl Chloride

Building Blocks• Benzene• Butadiene• Cell Effluent• Chlorine• Ethylene• Ethylene Dichloride• Ethylene Oxide• Propylene• Propylene Oxide• Styrene


Strength: Operational Excellence through Scale and Integration

Market Leadership Position

Man

ufac

turin

g Po

sitio

n

High High

High

High

Chlorine Epoxy Resin

Source: CMAI

Ethylene LLDPE


Strength: Feedstock Flexibility


Feedstock Flexibility (Global)Naphtha/condensate 25 - 60%Ethane 30 - 50%Disconnected ethane ~ 10%Propane 5 - 40%

India, Middle East, Africa3% ($1.5 billion) of Dow’s global sales8% ($0.5 billion) of Dow’s share of JV sales

Strength: Global Reach

15

Europe37% ($19.6 billion) of Dow’s global sales19% ($1.3 billion) of Dow’s share of JV sales

Emerging region sites with 25-100 employeesManufacturingR&D (may include manufacturing)Business / sales centers

All Dow sites with more than 100 employeesManufacturingR&D (may include manufacturing)Business / sales centers

Asia Pacific11% ($6.2 billion) of Dow’s global sales39% ($2.6 billion) of Dow’s share of JV sales

Latin America11% ($5.7 billion) of Dow’s global sales8% ($0.5 billion) of Dow’s share of JV sales

North America38% ($20.5 billion) of Dow’s global sales26% ($1.7 billion) of Dow’s share of JV sales


Who We Are


Dow of Tomorrow

Financial Outlook

Agenda

Asset-Light

Performance / Market Focused Business Model

R&D / Innovation


Building the Dow of TomorrowFE

EDST

OCK

S

Products

Solutions

Systems

PERFORMANCEBASICS

JOINT VENTURES

MARKET FACING

JOINT VENTURES

Technology and R&DTechnology and R&DStrengthening Competitiveness of BasicsGrow Performance and Market Facing BusinessesR&D Pipeline


2007 Revenue (Dow share) - $2.6B2007 Equity Earnings (Dow share) - $0.7B

Asset-LightPetrochemical

ProjectsSiam Cement Group (Thailand)

Saudi Aramco (Saudi Arabia)

Shenhua Group (China)

National Oil Company (Libya)

Crystalsev (Brazil)

Gazprom / SIBUR (Russia)

Existing Joint Ventures*Compañía MEGAEQUATEEquipolymersMEGlobalThe OPTIMAL GroupThe SCG-Dow Group

New Asset-Light JVsCPChem (Americas)PIC (Kuwait)*Principal joint ventures


#1 industry leader

Advantaged feedstocks for growth

Global franchise

Unparalleled technology, R&D

TRANSACTION VALUE - $19.1B (on 100% basis)

History of operational excellence

Strong financial position

Desire – and capability – to grow

>$11 billion in 2007 revenue

A New Polyolefins Powerhouse

[A subsidiary of Kuwait Petroleum Company]

®


Performance and Market Facing Businesses

Traditional PerformanceDesigned PolymersDow EpoxyDow LatexPolyurethanes and Polyurethane SystemsSpecialty ChemicalsSpecialty Plastics & ElastomersTechnology Licensing & Catalyst

Market FacingDow AgroSciencesDow AutomotiveDow Building SolutionsDow Coating SolutionsDow Fabric & Surface CareDow Fiber SolutionsDow Footwear SolutionsDow Oil & Gas SolutionsDow Water SolutionsDow Wire & Cable


Investing in Performance Businesses

POLY-CARB Inc.

Duo Maize

Wuhan Essex

Agromen Tecnologia -Corn seed business

Exelixis Plant Sciences assets

UPPC AG

GNS Technologies

Edulan A/S

Pacific Plastics (Thailand) Limited

Celanese Acrylates Business

Engage®, Nordel® and Tyrin® businesses -DuPont Dow Elastomers

DE-NOCIL Crop Protection Private Limited

Pacific Epoxy Co.

AgroPartners

Zhejiang Omex Environmental Engineering

Wolff Walsrode AG

Hyperlast Limited

Maize Technologies International (Austrian affiliate)

Triumph Seed Company, Inc.


Energy

Alternative Energy& Feedstocks

Energy Production& Efficiency

Energy Storage

Building IntegratedPhotovoltaics

Insulation

Applied EnergyEfficiency

Feedstock & Energy Mgmt

Infrastructure &Transportation

Construction

Transportation

Water

Building Materials

Advanced MaterialsScience

Filter/MembraneElements

High ThroughputFormulations Capability

Consumerism

Apparel & Furnishings

Electronics & Communications

Home & Personal Care

Printed Circuit Board Materials

Optical Materials

Rapid Formulation Development

Polymer Performance Modeling

HealthThemes

OpportunityAreas

Key DowCapabilities

Agriculture

Functional Foods

Healthcare

Material Science

Biotechnology

Chemistry

Market Megatrends


™ SmartStax is a trademark of the Monsanto Company

New Surfactant Platform

FORTIFIBERTM

Cellulosics for Controlled

ReleaseOmega-9 Oils

Breakthrough FR for

STYROFOAMTM

Epoxy for Wind Energy

RENUVATM

Renewable Resource

Technology

Multi-Layer Reverse Osmosis

Chemistry

PU Automotive & Composites

Diesel Emission Platform

Dow ARYXXTM

Fibers

Building Blocks for Electrical Laminates

Manufacturing Pre‐Commercial

Trials

Dow R&D Pipeline

23

Surfactant Alcohol Process

Quat New Applications for Textiles

Solar –Thin Film

Photovoltaics

Insect Resistant

Stack

Herbicide Tolerant

CropsZinc-Finger

Protein Technology

SulfoximineSap-Feeding Insecticide

Dow Wolff Cellulosics

Food Additive Growth Macromolecular

Self-Assembled Materials

Breakthrough R Value

InsulationNext Generation Natural Oil

Polyols

Catalyzed Diesel Filters

High Efficiency

Anti-Fouling CoatingsNext

Generation Auto Impact

ModifierAdvanced

Micro-Porous Membranes

Epoxy Systems

Composites

Fast Curing Highly

Durable Auto Refinish

Polymer Matrix

Composites

Next Generation Epoxy Resin Processes

Cold Water Cleaning

Renewable Monoglyceride &

DiglycerideEthoxylates

Enhanced Oil Recovery

The Methane Challenge

Process Intensification

UnderDevelopment

Infrastructure & Transportation

Health

Energy

ConsumerismHigh

Throughput Formulations

Capability Polyolefin Dispersions

PU Footwear

Dow Wolff Cellulosics

Film Forming Portfolio

Nutritionally Enhanced

Corn

Low Energy CO2 Capture Sugarcane-to-

PolyethyleneBuilding

IntegratedPhotovoltaics

Next Generation Structural Adhesives

Biocides: Aquatic

Biosecurity

Next Generation

Ultra-Filtration

SmartStax™Eight-Way

Gene Platform

AdvancedDevelopment


Dow AgroSciences: Technology Leader

Animal Health

Ag Chem

Biotech

Advanced in 2007

* Novel Delivery System®™ Trademarks of Dow AgroSciences LLC

™ SmartStax is a trademark of the Monsanto Company 24

Healthier Oil

Trait 3

Healthier Oil

Trait 2

InsectTrait 2

NutritionTrait 2

New Venture

Healthier Oil

Trait 1

New Venture

DHTTrait 1

StressTrait 2

NutritionTrait 1

InsectTrait 1

StressTrait 1

Healthier Oil

Trait 5

DHTTrait 2

Oilseed Breeding

Enhancement

ChewingInsecticide

HerbicideHerbicideNDS*4

FungicideNDS*3

Animal Health

Vaccine 3

Animal Health

Vaccine 2

Animal Health

Vaccine 1

Discovery

NDS*1 NDS*2

Sap Feeding

Insecticide

SmartStax™

Development

ECOZOME™

Launch


2007 R&D Magazine Recognition

What Companies Have the Most Improved R&D in the Past 5 Years?

Which Company’s R&D is the Most Proactive in High-Tech Challenges?

Dow Ranked in Top 10

of the World

1 IBM2 General Electric3 DuPont4 3M5 Toyota6 Google7 Apple8 Microsoft9 Genentech10 Dow Chemical


New Product Sales %R&D as % Sales

BenchmarkTop 20% >7Next 20% 5-7Bottom 60% <5

McKinsey&Company Innovate at ScaleHeadroom, Engines, and Orthodoxies

Strong Dow R&D Metrics

Traditional Metrics* New Product Sales: Dow = 34%Patent Applications: Dow = 450+New Disclosures: Dow = 1000+

*2007 data

Dow Ratio: 14

26

34%

2.4%


Who We Are


Dow of Tomorrow

Financial Outlook

Agenda


Conservative: 3%

The New Dow

Target:EP Breakeven

(2010/2011)

2002 Next Industry Trough

Volume Growth

Cost Control

Margin Improvement

Equity Earnings

Portfolio ManagementInnovation

$3.50

$0.34

♦ Olefins II♦ MEGlobal♦ Dow Corning♦ OPTIMAL

♦ 20 Acquisitions♦ 38 Divestitures♦ 92 Plant Shutdowns

$2B EBIT by 2011

Announced $340MM cost reductions in

2006/2007

28

Higher QualityPerformanceBusinesses


Asset-Light Proceeds

AdditionalBorrowingCapacity

Cash Flow from

Operations

Sources of Cash: 2008-2015

$57B


Dividends

Capital SpendingAcquisitions

& Share

Repurchase

Uses of Cash: 2008-2015


$57B

Acquisitions&

Share Repurchase

FromFrom ToTo

Uses of Cash

Strong pre-disposition to deploy cash to change portfolio and earnings profile


Dow of Tomorrow –Earnings Potential

Target: EP

Breakeven

0

4

$/Sh

are 8

12

2002 (Trough) 2005 (Peak) Next IndustryTrough

(2010/2011)

Next Industry Peak (2015)

>$10

$3.50

32

10% EPS G

rowth


Two Mutually Inclusive Options

CriteriaReturn more long-term value than share buybackStrategic fitAccretive by end of second year $0

$400

$800

$1,200

$1,600

2006 2007 1Q08

$721

$1,416

$410

$MM

Share BuybackMergers & Acquisitions


Target: EP

Breakeven

0

4

$/Sh

are 8

12

2002 (Trough) 2005 (Peak) Next IndustryTrough

(2010/2011)

Next Industry Peak (2015)

>$10

$3.50

Dow of Tomorrow –Earnings Potential


Dynamic.Strong.

®

Innovative. Rewarding.

Acquisitions&

Share Repurchase

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.

®

Economy & Finance

Sanford Bernstein Strategic Decisions Conference