Citi Chemicals Conference

Dow’s Transformation In Action
Geoffery E. Merszei
Executive Vice President &
Chief Financial Officer

December 2, 2008

19th Annual Citi Chemicals Conference

Agenda

►Strengthening Basics
►Preferentially Investing in Performance Businesses
►Business Portfolio Management
►Financial Discipline
►Remunerating Our Shareholders

2

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

►A Binding, Definitive Agreement

►Expected To Begin Operations By January 1, 2009

3

A New, World Class Petrochemicals Company

► 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

4

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

5

K-Dow Petrochemicals – Sound Partners

Dow KPC / PIC
+ Feedstock integration
More than 100 years of experience and
leadership
Expertise in oil and gas
A recognized global brand and franchise
Technology and market leadership Regional leadership and global relationships
Global reach
Resources and desire to grow downstream
#1 position in PE and amines, leader in
PP, PC, and technology/catalyst licensing Strong financial position and track record
Innovation, application and operational
Successful JV experiences
expertise

… all coming together in a focused, dedicated, agile
company with the staying power to grow with our
customers in all regions of the world.
6

KPC – A Strong Partner & Resource Owner
350
National oil company (NOC)
300
Publicly traded company
250
Billion 200
barrels of oil
equivalent 150
100
50
0
NOC

NOC

C
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NOC
eum

eria)
mco

C

ips
bil

BP
hell
ron

Eni
a NO
i NO
roleu

n Mo

Phill
ria N

Chev
ch S
i Ara

etrol

(Alg
Iran

Iraq

zuela
Dhab

Liby
r Pet

Exxo
Nige

l Dut

oco
ait P
Saud

trach
Vene
Abu
Qata

Con
Roya
Kuw

Sona

7
19th Annual Citi Chemicals Conference Source: CMAI, 2005 data

K-Dow Petrochemicals – Key Statistics
• A 50:50 joint venture between Dow and Petrochemicals
The Company
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

Headquarters Southeast Michigan, USA

Employees ~ 5,000 people worldwide

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

Manufacturing 16 plant sites in 9 countries
Locations

8

K-Dow Petrochemicals – Key Statistics
K-Dow Sales by Product*
Ethylene Glycol 20%
Polyethylene 58%
PET 3%
Amines 4%

Licensing 1%
Polycarbonate 3%
Polypropylene 11%

K-Dow Sales by Geography*
IMEA 4%
Asia Pacific 13%
North America 35%

Latin America 14%

* Estimate based on 2007 sales
Europe 34% 9

K-Dow & EQUATE: Opportunities for Growth

Kuwait
China
North
Africa
Thailand
Brazil

Current Production Assets
Planned Assets
10

Preserving The Value of Dow’s Integration
K-Dow Building Blocks Dow
• Designed Polymers
• Benzene • Dow AgroSciences
• Polyethylene
• Butadiene • Dow Automotive
• Ethylene Glycol
• Chlorine • Dow Building Solutions
(MEG & DEG)
• Cumene • Dow Epoxy
• Polypropylene
• Ethylene • Dow Latex
• Polycarbonate • Ethylene • Polyurethanes and PU
• Ethyleneamines Dichloride Systems
• Ethanolamines • Ethylene Oxide • Specialty Chemicals
• Propylene • Specialty Plastics &
• PET
• Propylene Oxide Elastomers
• Styrene • Technology Licensing
& Catalyst

►More Than 60 Service and Supply Agreements
►Reliable and Secure long-term supply
►Enabling Both Dow and K-Dow to Grow
11

Agenda


12

A Transformative Move

► 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

13

Rohm and Haas Integration Update

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

14

Rohm and Haas Cost Synergy Update
Run Rate Estimates
End Year 1 End Year 2
Shared Services &
$280
$170
Governance

Purchasing Synergies,
$180 $280
Including Raw Materials

Manufacturing / Supply
$160
$70
Chain

Business Development
$65 $80
Overlap

0 50 100 150 200 250 300

July 10 Commitment ($800 Million)

Will be at $100 Million Run Rate on Day 1
Rohm & Haas’ $110 Million Savings is Additive 15

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

16

Rohm and Haas Advanced Materials Division
Dow Chairman and CEO
Andrew Liveris

Rohm and Haas
Advanced Materials Division CEO
Pierre Brondeau

Marketing Human Resources
Coatings Specialty Packaging & Films Ruby Chandy*
Ruby Chandy Rich Lovely
Luis Fernandez Patrice Barthelmes Vice-President
Vice President Vice President

Communications
R&D
Designed Polymers & Brian McPeak
Building & Construction A. N. Sreeram
Separation Technologies Vice President
Torsten Kraef Vice President
Peter Davies
Vice President
Vice President
Shared Services
Legal
Paper & Textiles Jim Varilek
Electronic Materials Ken Fitzpatrick
Philippe Raynaud de Fitte Vice President
Yi Hyon Paik Vice President

Asia Finance
Manufacturing and EH&S
Mark Douglas Alfonso Escudero
Don Taylor
Vice President

This organization alignment is pending all regulatory approvals and closing of the transaction. 17
Until that time, Rohm and Haas and Dow will remain separate entities and will operate independently.

The New Dow – A Significant Portfolio Shift!
Pro Forma Dow
Pro Forma Dow
Dow (pre K-Dow)
(post K-Dow) + ROH
(post K-Dow)
2007 Revenue1

51% 49% 63% 37% 69% 31%
2007 EBITDA1,2

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

Performance (Includes Ag)
1 Dataexcludes Unallocated and Other.
2 Non-GAAP financial measure. Excludes certain items. See www.dow.com for additional information.
Basic
18

Agenda


19

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
20

Agenda


21

Sound Financial Discipline
Debt Reduction
59%
55%
Debt/Capital

48%
39%
34% 32%

2002 2003 2004 2005 2006 2007
Capex
3.0
2.0
$ Billions

Depreciation
1.0
Capex
0.0
2002 2003 2004 2005 2006 2007
22

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
23

Agenda


24

Remunerating Our Shareholders
$1,600
– 73 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 3Q08 YTD

25

Our Consistent & Reliable Dividend

• 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 Q3 YTD PAYOUT

26

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!

27

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.

28

Q&A

29

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