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Credit Suisse Chemical and Ag Science Conference
1. Dow’s Transformation In Action
Geoffery E. Merszei
Executive Vice President &
Chief Financial Officer
September 16, 2008
2008 Credit Suisse Chemical Conference
6. Dow’s Transformational Strategy
JOINT
JOINT
VENTURES
VENTURES Products
MARKET
Solutions
BASICS PERFORMANCE
FEEDSTOCKS
FEEDSTOCKS
FACING
JOINT Systems
JOINT
VENTURES
VENTURES
Innovation, Technology and R&D
• Grow Performance and Specialties
• Strengthen competitiveness of Basics
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2008 Credit Suisse Chemical Conference
7. Building the Dow of Tomorrow
Themes
Transportation & Consumerism
Energy
Health & Nutrition
Infrastructure
Alternative Energy Apparel &
Agriculture Construction
& Feedstocks Furnishings
Opportunity Electronics &
Energy Production
Functional Foods Transportation
Areas Communications
& Efficiency
Home & Personal
Healthcare Energy Storage Water Care
Optical Materials
Insulation Building Materials
Biotechnology
Applied Energy Printed Circuit
Advanced Materials
Key Dow Science
Efficiency Board Materials
Chemistry
Capabilities Filter/Membrane
Integrated Rapid Formulation
Elements Development
Photovoltaics
Polymer
High Throughput
Material Science Feedstock & Energy
Performance
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Formulations
Management
Modeling
8. Shareholder Remuneration
$1,600
– 71 Million Shares
Repurchased
$1,400
Share Repurchase Amount ($Millions)
– $3.0 Billion Spent
$1,200
– Largest Program
$1,000
In A Decade
$800
$600
$400
$200
$0
2005 2006 2007 2Q08 YTD
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2008 Credit Suisse Chemical Conference
9. Consistently Rewarding Shareholders
• A 96-Year History of Consistent Dividends
– Maintained or Increased Each Year
– Increased 25% Since 2006
Quarterly Dividends Paid Per Share*
2008**
1912 1928 1938 1948 1958 1968 1978 1988 1998
*ADJUSTED FOR STOCK SPLITS AND STOCK DIVIDENDS
**2008 DIVIDEND ANNUALIZED BASED ON Q2 YTD PAYOUT
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2008 Credit Suisse Chemical Conference
11. K-Dow Petrochemicals
► Creates a world-class petrochemicals giant
► Introduces a new global player with enhanced capabilities
to grow – especially in China, India and the Middle East
► Opens the door to low-cost feedstocks for future growth
► Preserves vertical integration for Performance businesses
► Estimated pre-tax cash to Dow – $9.5B
TRANSACTION VALUE - $19.1 billion (on 100% basis)
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2008 Credit Suisse Chemical Conference
12. Creating A World-Class Petrochemicals Company
► Polyethylene, Polypropylene, Polycarbonate,
Ethyleneamines and Ethanolamines
► All related technologies
► Fully dedicated hydrocarbon assets
• Fort Saskatchewan, Canada (cracker)
• Bahia Blanca, Argentina (cracker)
• Tarragona, Spain (cracker and octene manufacturing facility)
► Ethylene supply agreements from Dow’s other crackers
► Number 1 position in Polyethylene
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2008 Credit Suisse Chemical Conference
13. K-Dow Petrochemicals – Latest Developments
► Headquartered in Michigan
► James R. Fitterling named CEO
► Executive management
team named
► In-scope employees notified
► Close before year-end
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2008 Credit Suisse Chemical Conference
15. Hidden Value in Joint Ventures*
2,000
1,750
1,500
1,250
$ Millions
1,000
750
500
250
0
2003 2004 2005 2006 2007
Equity Earnings Additional EBITDA
*Data for Dow’s Principal Joint Ventures. See www.dow.com for additional information.
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2008 Credit Suisse Chemical Conference
16. Agenda
► Financial Performance
►Transformational Strategy
►Strategy in Action
– Formation of K-Dow Petrochemicals
– Acquisition of Rohm and Haas
►Summary
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2008 Credit Suisse Chemical Conference
17. About Rohm and Haas
► Premier advanced materials and specialty chemicals
company
► 2007 sales of $8.9 billion
► Leading positions in electronics and coatings
► Headquartered in Philadelphia,
located in 27 countries
► 15,700 employees
► Established in 1909
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2008 Credit Suisse Chemical Conference
18. Strategic Rationale
► 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
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2008 Credit Suisse Chemical Conference
19. A Powerful New Dow
2/3 Specialties
Feedstock-Driven Businesses Market-Driven Businesses
Asset Light Rohm and Haas
Chemicals,
Performance Health &
Joint Advanced
Petrochemicals
Products Agriculture
Ventures Materials
& Feedstocks
Electronic Specialty
Coatings
Materials Materials
Adv. Elec. Dow Coating
Materials Solutions
Designed Specialty Epoxy Polyurethane
Polymers Packaging Systems Systems
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2008 Credit Suisse Chemical Conference
20. Growth Potential
► Accelerates revenue growth and improves margins
– Increases percentage of revenues from higher margin,
higher growth specialty business
– Reduces volatility and increases growth in earnings
2007 – 2012
Industry Growth Rates
Dow 4%
Rohm and Haas 5 – 9%
Dow + Rohm and Haas 5 – 7%
SOURCE: SRI Consulting, CMAI, Company filings and presentations 20
2008 Credit Suisse Chemical Conference
21. Significant Cost Synergies
► At least $800 million in annual pre-tax synergies
► Phased in over two years
Purchasing,
including Raw Materials
Shared Services
and Governance
35% 35%
35% 35%
10%
10% 20%
20%
Corporate Business
Manufacturing / Supply Chain
Development Overlap
Work Process Improvements
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2008 Credit Suisse Chemical Conference
22. Dow Synergy Track Record
Cost synergies as a percent of target revenue
Union Carbide 18% delivered
Rohm and Haas Ag 16% delivered
Angus Chemicals 15% delivered
EniChem Polyurethanes 14% delivered
Gurit-Essex 16% delivered
Rohm and Haas 9% target
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2008 Credit Suisse Chemical Conference
23. In Summary
► Committed to, and implementing, our strategy
► K-Dow Petrochemicals “Day One” before year-end
► On-track to close Rohm and Haas in early 2009
► Committed to delivering solid results in 2008
► Dow will be a transformed company!
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2008 Credit Suisse Chemical Conference
24. 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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Bank of America 38th Annual Investment Conference