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Q1 2009 Earning Report of Dow Chem Co.
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Q1 2009 Earning Report of Dow Chem Co. Presentation Transcript

  • 1. The Dow Chemical Company 1Q 2009 Earnings Conference Call April 30, 2009 1Q09 Earnings Conference Call
  • 2. 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. 1Q09 Earnings Conference Call – Page 2
  • 3. Agenda Recent Achievements & 2009 Areas of Focus Restructuring, De-leveraging and Synergies 1Q09 Financial Performance & Business Trends Dow Advanced Materials Update Outlook & Priorities 1Q09 Earnings Conference Call – Page 3
  • 4. Recent Achievements Re-negotiated financing of Rohm and Haas acquisition Re-structured acquisition terms to preserve financial flexibility and advance strategy Announced sale of Morton salt, hours after acquisition close Increased acquisition-related cost synergy target Validated acquisition growth synergies of $3 billion Announced and implemented cost reduction actions that contributed to 1Q09 results 1Q09 Earnings Conference Call – Page 4
  • 5. 2009 Areas of Focus Strengthening our balance sheet to protect our investment grade credit rating Managing business through uncertain operating environment Successfully integrating Rohm and Haas 1Q09 Earnings Conference Call – Page 5
  • 6. De-leveraging Plan Asset sales Debt and equity issuances Debt to EBITDA well within covenants Bridge loan pay down by end-2009 Debt to total capital less than 50% by year-end 1Q09 Earnings Conference Call – Page 6
  • 7. Morton Salt Divestiture Exceeds Expectations Met communicated timeline on Signing And … Exceeded expectations on value Over delivered by $0.2B ̶ $1.7B Morton Salt versus the target of $1.5B ̶ 6.1x gross proceeds/EBITDA 1Q09 Earnings Conference Call – Page 7
  • 8. Divestment Plan Potential Value Previously Discussed $3+ billion TRN South East Asia olefins & derivatives business Morton Salt Calcium Chloride Olefins & Derivatives Envelope $4-6 billion K-Dow successor Regional plays Aromatics & Derivatives Envelope $1-2 billion SB Rubber SB Latex Stand-Alone Assets $15+ billion Dow AgroSciences Others Total $23-26 billion 1Q09 Earnings Conference Call – Page 8
  • 9. 2009 Operating Plan Deliver on 4Q08 restructuring program “Right-size” global footprint Reduce costs and defer or eliminate capital spending Deliver acquisition synergies Total run rate up to ~$2.5 billion by end-2010 1Q09 Earnings Conference Call – Page 9
  • 10. 4Q08 Restructuring Progress Delivered approximately half of targeted global workforce reduction 17% ahead of planned savings Expect to be at $500 million run rate by end- 2009 1Q09 Earnings Conference Call – Page 10
  • 11. 1Q09 Financial Highlights 1Q09 sales were $9.1 billion, down 39% vs. 1Q08 ̶ Double-digit declines in all geographies and all operating segments, except Dow AgroSciences ̶ Volume declined 19% vs. 1Q08; price down 20% vs. 1Q08 Dow AgroSciences set quarterly sales and EBIT(1) records EBIT increased sequentially, with largest percentage improvement in Performance segments, excluding Dow AgroSciences Further drop in feedstock and energy costs ̶ $3.1 billion (49%) lower than 1Q08 Accelerated cost reductions partly offset price and volume declines (1) Earnings before interest, income taxes and noncontrolling interests (“EBIT”). A reconciliation of EBIT to “Net Income Attributable to The Dow Chemical Company” is provided in the Appendix. 1Q09 Earnings Conference Call – Page 11
  • 12. 1Q09 Financial Performance Dollars in millions (except per share amounts) 1Q09 1Q08 Change Sales $9,087 $14,824 (39)% Price (20)% Volume (19)% Purchased feedstock & energy costs (49)% Equity earnings $65 $274 (76)% Equity earnings, excluding certain items1 $94 $274 (66)% Earnings per share – diluted $0.03 $0.99 (97)% Earnings per share – diluted, excluding certain items1 $0.12 $0.99 (88)% 1 See Appendix for Supplemental Information regarding certain items. 1Q09 Earnings Conference Call – Page 12
  • 13. 1Q09 Financial Performance Dollars in millions (except per share amounts) 1Q09 4Q08 Change Sales $9,087 $10,899 (17)% Price (17)% Volume (0)% Purchased feedstock & energy costs (27)% Equity earnings (losses) $65 $(4) n/a Equity earnings (losses), excluding certain items1 $94 $(4) n/a Earnings (Loss) per share – diluted $0.03 $(1.68) n/a Earnings (Loss) per share – diluted, excluding certain items1,2 $0.12 $(0.62) n/a 1 See Appendix for Supplemental Information regarding certain items. 2 In addition, the interruption of operations caused by the hurricanes resulted in an estimated pretax $15 million in the fourth quarter of 2008 in lost margin on lost sales, the equivalent of $0.01 per share, which is not included in the amounts presented in the table. 1Q09 Earnings Conference Call – Page 13
  • 14. 1Q09 Earnings Per Share Reconciliation Reported earnings per share $0.03 Restructuring charges 0.02 Acquisition-related expenses 0.04 Dow Corning restructuring 0.03 Earnings per share – diluted, excluding certain items $0.12 See Appendix for Supplemental Information regarding these items. 1Q09 Earnings Conference Call – Page 14
  • 15. Volume Up from December Lows Pace of decline has begun to moderate excluding Agricultural Sciences Volume (millions of units), Monthly improvements in demand Business conditions began to stabilize March was the strongest month of the quarter Oct- Nov- Dec- Jan- Feb- Mar- 08 08 08 09 09 09 1Q09 Earnings Conference Call – Page 15
  • 16. Dow Global Demand Impact Across Industries % of total 2008 sales in billions $ High Medium Sensitivity to downturn Net of Hydrocarbons & Energy and Unallocated Low 100% = 48.2 4.5 19.1 24.6 Construction 5 13 4 21 Transportation 7 Electronics 5 14 13 Distribution/3rd Party Sales 19 6 1 30 8 Mining 100 10 Consumer Goods 19 14 Industrial Market 11 26 2 Paper & Pulp 4 16 Health Care 2 8 4 Food 14 3 2 10 Agriculture 1 5 Source: Dow Analysis Total DOW AG BP&C PP&C* * Incl Market-Facing-Businesses 1Q09 Earnings Conference Call – Page 16
  • 17. Performance Portfolio Demand Trend Specialty businesses showed pricing resiliency excluding Agricultural Sciences Volume (millions of units), Most notable improvement experienced in March Volume rebounded significantly from Dec 2008 low Oct- Nov- Dec- Jan- Feb- Mar- 08 08 08 09 09 09 1Q09 Earnings Conference Call – Page 17
  • 18. Basics Portfolio Demand Trend Chain de-stocking began to excluding Hydrocarbons & Energy moderate in 1Q09 Volume (millions of units), Production levels bounced back as manufacturing assets ran in line with demand Dow’s polyethylene volume up 10% from 4Q08 Oct- Nov- Dec- Jan- Feb- Mar- 08 08 08 09 09 09 1Q09 Earnings Conference Call – Page 18
  • 19. Cost Control SARD down $93 million vs. 1Q08 ̶ Despite 8% increase in Dow AgroSciences Spending down $270 million vs. 1Q08 and 4Q08 Remain on track to achieve capital spending commitment 1Q09 Earnings Conference Call – Page 19
  • 20. Operating Rate Trend 80% Dow’s 1Q09 operating rate was 68% vs. 64% in 4Q08 75% 70% Clear improvement in rates from historic low reached 65% in Dec 2008 60% Continue to tightly manage 55% operations 50% Production being matched 45% to demand 40% Oct- Nov- Dec- Jan- Feb- Mar- 08 08 08 09 09 09 1Q09 Earnings Conference Call – Page 20
  • 21. Heritage ROH: 1Q09 Financial Performance Dollars in millions 1Q09 1Q08 Change Net Sales $1,772 $2,507 (29)% Price (3)% Volume (26)% (Loss) Earnings before income taxes $(58) $233 (125%) (Loss) Earnings before income taxes, excluding certain items1 $45 $245 (82%) 1 See Appendix for Supplemental Information regarding certain items. Gradual improvements in 1Q09 in almost all business units Encouraging signs of recovery in Electronic Materials businesses, led by Asia Challenging coatings market conditions partially offset by cost reductions, margin management and new product launches 1Q09 Earnings Conference Call – Page 21
  • 22. Organizational Structure The Dow Chemical Company Andrew Liveris, Chairman & CEO Dow Advanced Materials Pierre Brondeau, President & CEO Coatings Building & Construction Marketing Human Resources Luis Fernandez Luis Fernandez Torsten Kraef Torsten Kraef Ruby Chandy Ruby Chandy Jenifer Jenifer Reed Specialty Materials Research & Electronic Materials Legal Peter Davies Peter Davies Development Yi Hyon Paik Yi Hyon Paik Ken Fitzpatrick Ken Fitzpatrick A.N. Sreeram A.N. Sreeram Adhesives & Functional Asia/RDE Growth Manufacturing, Public Affairs Polymers Agenda Engineering & EHS Patrice Barthelmes Mark Douglas Brian McPeak Brian McPeak Patrice Barthelmes Mark Douglas Don Taylor Don Taylor Business Services Finance Jim Varilek Jim Varilek Alfonso Escudero Alfonso Escudero Heritage Dow leaders denoted in red. Heritage ROH leaders denoted in green. 1Q09 Earnings Conference Call – Page 22
  • 23. Creating Large High-Growth Global Businesses Coatings (~$3.5B business): Leadership in architectural and industrial coatings business. Integration of acrylics, latexes, epoxies, polyurethanes and water soluble polymer technologies. Building & Construction (~$2.3B business): Global leadership position in insulation and weather protection materials like foams and films, as well as construction chemicals based on cellulosics, emulsion polymers, rheology modifiers and dispersants for the building and construction industry. Water (~$1B business): Leading component provider servicing the ever growing demand for pure water for industrial and consumable markets. Biocides (~$0.6B business): Global leadership position in bio-safety & preservation in consumable (food, paper/pulp, wood, paints, cleaners, fuel, health & beauty aids) goods. Household & Personal Care (~$0.7B business): Leadership in conditioning polymers combined with thickeners and fixatives in personal care and environmentally friendly additives. 1Q09 Earnings Conference Call – Page 23
  • 24. Creating Large High-Growth Global Businesses Electronic Materials (~$2B business): Global leadership in lithography/CMP for semiconductor fabrication, interconnect for circuit board and packaging, flat panel display, photovoltaic metallization. Paper, Carpet & Textiles (~$2B business): Global leadership position in emulsions and other products for several markets and applications like paper, paperboard, carpet & floor covering, leather, graphic arts, etc. Adhesives (~$0.7B business): Leading provider of formulated adhesives, adhesive polymers and pressure- sensitive adhesives for packaging and other applications. Cellulosics (~$1B business): Global leadership position in cellulose based products and solutions for the food, pharma and other industries. 1Q09 Earnings Conference Call – Page 24
  • 25. Lockdown Period and Clean Team Information Goal: Create Action Plans to Deliver Growth and Cost Synergy Targets Lockdowns ̶ Transfer of knowledge and business confidential information between companies ̶ Over 1,000 Dow and ROH employees engaged ̶ Spanned 3 to 4 week period ̶ Included Functions, Businesses and Geographies Clean Team Information ̶ Accelerates integration and cost synergy capture ̶ Prepared by 3rd party consultants and retirees ̶ “Play Book” to enable tactical (<1 year) and strategic (3-5 years) growth 1Q09 Earnings Conference Call – Page 25
  • 26. Cost Synergies by Category Announced Estimated Synergies Synergies Category (MM$) % (MM$) % Purchasing Synergies including Raw Materials 280 31% 390 30% Shared Services and Governance 280 31% 380 29% Mnfg. / Supply Chain Work Process Improvements 160 17% 280 22% Corporate Business Development Overlap 80 9% 50 4% ROH Announced Restructurings 110 12% 200 15% Total 910 100% 1,300 100% 43% increase in cost synergies from $910 million to $1.3 billion 1Q09 Earnings Conference Call – Page 26
  • 27. Top Synergy Projects Function Project Description Purchasing Raw Materials Manufacturing & Engineering MRO / Equipment Information Technology IT Infrastructure Consolidation Purchasing Hydrocarbons and Energy Marketing & Sales / Commercial Marketing and Sales / Business Overlap Manufacturing & Engineering Manufacturing Footprint Optimization Supply Chain Logistics and Packaging Shared Services Corporate Services and IT Information Technology I/S Organizational Consolidation 100+ projects identified Top 12 projects represent $650 million of $1.3 billion run rate target Intend to be at 60% run rate 12 months after closing 1Q09 Earnings Conference Call – Page 27
  • 28. Examples of >$100MM Annual Sales Growth Synergies Coatings: Cross selling at key accounts – Acrylic/Latex/Epoxy/PU Building and Construction: Leverage Dow’s market channel for ROH products Personal Care: Short-term opportunity for rheology modifiers, opacifiers, preservatives Advanced Packaging/Electronics: Dow formulated epoxies – ROH growth platform Adhesives: Leverage Dow PE/PU Technology in ROH Adhesives for packaging and transportation Russia: Leverage ROH footprint/organization in Russia 1Q09 Earnings Conference Call – Page 28
  • 29. 2009 Outlook – Dow Advanced Materials Full-year sales down vs. 2008, in line with Specialty Chemical industry Electronics significantly impacted by inventory correction and reduced consumer spending ̶ High gross margin magnifies impact Demand appears to be improving ̶ Four months of sequential growth for overall ROH (excluding Salt) ̶ Asia chemical year-on-year growth in March ̶ Electronic material inventory correction over 1Q09 Earnings Conference Call – Page 29
  • 30. Path Moving Forward Top priority is to maintain EH&S performance Intense customer focus – “We will not give our customers a reason to go elsewhere” Quickly capturing the $1.3B in cost synergies Committed to growth by building the premier Advanced Materials business 1Q09 Earnings Conference Call – Page 30
  • 31. Outlook Some signs that pace of economic decline is moderating Customers continue to manage low inventory levels Dow’s vast geographic and market reach well- positioned to benefit as recovery progresses Continue to assume 2009 will be a year of global recession 1Q09 Earnings Conference Call – Page 31
  • 32. 2009 Priorities Successfully integrate Rohm and Haas to capture growth and preserve their business model Realize Rohm and Haas cost synergy targets and accelerate Dow’s own restructuring plan Execute divestment plan to support bridge loan pay down and protect our investment grade credit rating Actively manage costs and operations through the economic downturn 1Q09 Earnings Conference Call – Page 32
  • 33. Appendix 1Q09 Earnings Conference Call
  • 34. Performance Plastics Tech. Dollars in millions 1Q09 1Q08 Specialty Licensing & Plastics & Dow C atalyst Automotive Sales $2,435 $3,963 Elastomers Dow Building Solutions Price down 11%; Volume down 28% EBIT $30 $329 Sales Equity earnings included in EBIT $2 $18 Dow Epoxy Polyurethanes & PU Systems 1Q09 Trends Price and volume down in all Sales Price Volume geographic areas Dow Automotive ↓ ↓ ↓ Volumes impacted by continued Dow Building Solutions ↓ ↓ ↓ slowdown in automotive and Dow Epoxy ↓ ↓ ↓ construction activity Polyurethanes & PU Systems ↓ ↓ ↓ Specialty Plastics & Elastomers ↓ ↓ ↓ Most businesses saw gradual Technology Licensing & Catalyst ↓ - ↓ increase in volume toward latter part of 1Q09 1Q09 Earnings Conference Call – Page 34
  • 35. Performance Chemicals Dollars in millions 1Q09 1Q08 Designed Polymers Sales $1,517 $2,323 Specialty C hemicals Price down 7%; Volume down 28% EBIT $115 $271 Sales Certain items* included in EBIT $(29) $- Equity earnings included in EBIT $11 $95 Dow Latex * See Appendix for Supplemental Information regarding certain items. 1Q09 Trends Lower sales in Dow Water Sales Price Volume Solutions due to fewer large Designed Polymers ↓ ↓ ↓ desalination projects Dow Latex ↓ ↓ ↓ Specialty Chemicals reported Specialty Chemicals ↓ ↓ ↓ record sales for aircraft de-icing fluids Weak demand in industrial sectors partially offset by late- quarter improvement, particularly in China 1Q09 Earnings Conference Call – Page 35
  • 36. Agricultural Sciences Dollars in millions 1Q09 1Q08 Seeds & Sales $1,446 $1,314 Traits Price flat; Volume up 10% EBIT $338 $331 Sales Equity earnings included in EBIT $1 $1 Ag C hem 1Q09 Trends Record 1Q sales and EBIT, Sales Price Volume driven by strong performance in Agricultural Chemicals ↑ - ↑ Seeds & Traits Seeds and Traits ↑ - ↑ Results reflect organic growth and favorable impact from acquisitions Ag Chem volume increased, with new product sales nearly doubling 1Q09 Earnings Conference Call – Page 36
  • 37. Basic Plastics Dollars in millions 1Q09 1Q08 Polystyrene Sales $1,847 $3,492 Polypropylene Price down 35%; Volume down 12% EBIT $4 $427 Sales Equity earnings included in EBIT $13 $42 Polyethylene 1Q09 Trends Double-digit price and volume Sales Price Volume declines for segment vs. 1Q08 Polyethylene ↓ ↓ ↓ Demand growth vs. 4Q08 Polypropylene ↓ ↓ ↓ reflected re-stocking throughout Polystyrene ↓ ↓ ↓ value chains Polyethylene demand down 4% vs. 1Q08, but up 10% vs. 4Q08 1Q09 Earnings Conference Call – Page 37
  • 38. Basic Chemicals Dollars in millions 1Q09 1Q08 EO/EG Sales $801 $1,559 Price down 21%; Volume down 28% EBIT $(92) $159 Sales Equity earnings included in EBIT $40 $97 C ore C hemicals 1Q09 Trends Double-digit price and volume Sales Price Volume declines vs. 1Q08 Core Chemicals ↓ ↓ ↓ Caustic soda sales impacted by Ethylene Oxide/Ethylene Glycol ↓ ↓ ↓ weaker alumina and pulp and paper industry fundamentals Weak PVC demand for building and construction continued EO/EG industry fundamentals remain weak 1Q09 Earnings Conference Call – Page 38
  • 39. Reconciliation of Non-GAAP Financial Measure (Heritage Dow) Three Months Ended Dollars in millions 3/31/09 3/31/08 EBIT $159 $1,385 + Interest income 12 24 - Interest expense and amortization of debt discount 154 145 - Provision (Credit) for income taxes (18) 299 - Net income attributable to noncontrolling interests 11 24 Net Income Attributable to The Dow Chemical Company $24 $941 1Q09 Earnings Conference Call – Page 39
  • 40. Supplemental Information (Heritage Dow) Certain items affecting results Earnings in the first quarter 2009 were unfavorably impacted by three items: Net pretax adjustment to the 2008 restructuring charge of $19 million resulting from adjustments to severance, reflected in Unallocated and Other. Pretax charges totaling $48 million for legal expenses and other transaction costs related to the April 1, 2009 acquisition of Rohm and Haas Company, reflected in Unallocated and Other. Pretax charges totaling $29 million for the Company’s share of a restructuring charge recognized by Dow Corning Corporation, a 50 percent owned nonconsolidated affiliate of the Company; these charges are reflected in “Equity in earnings of nonconsolidated affiliates” and impact the Performance Chemicals segment. 1Q09 Earnings Conference Call – Page 40
  • 41. Supplemental Information (Heritage Dow) Certain items affecting results Results for the fourth quarter of 2008 were negatively impacted by the following items: Pretax costs totaling $54 million related to Hurricanes Gustav and Ike, which hit the U.S. Gulf Coast in the third quarter. These costs, which primarily included the repair of property damage and unabsorbed fixed costs, are included in “Cost of sales” in the consolidated statements of income and reflected in the operating segments as follows: $13 million in Performance Plastics, $1 million in Performance Chemicals, $3 million in Basic Plastics, $15 million in Basic Chemicals, $16 million in Hydrocarbons and Energy, and $6 million in Unallocated and Other. Pretax legal expenses and other costs of $69 million related to the K-Dow transaction that were expensed upon Petrochemical Industries Company’s refusal to close the K-Dow transaction on January 2, 2009. These costs are shown as “Cost of sales” in the consolidated statements of income and reflected in Unallocated and Other. Goodwill impairment losses of $239 million related to the Dow Automotive ($209 million against Performance Plastics) and Polypropylene ($30 million against Basic Plastics) reporting units. The losses are shown as “Goodwill impairment losses” in the consolidated statements of income. Net pretax restructuring charges of $839 million. In December 2008, the Company’s Board of Directors approved a restructuring plan as part of a series of actions to advance the Company’s strategy and respond to the recent, severe economic downturn. The restructuring plan includes the shut down of a number of facilities and a global workforce reduction. As a result, the Company recorded restructuring charges totaling $785 million, including asset write-downs and write-offs of $336 million, severance costs of $321 million and costs associated with exit or disposal activities (such as pension curtailment costs and environmental remediation) of $128 million. In addition, the Company recorded a $60 million unfavorable adjustment to restructuring charges recorded in the fourth quarter of 2007 and a $6 million favorable adjustment to restructuring charges recorded in the third quarter of 2006. The net impact of the fourth quarter charges and adjustments, which is shown as “Restructuring charges” in the consolidated statements of income, impacted all operating segments. Pretax charge of $17 million for purchased in-process research and development (“IPR&D”) related to the recent acquisition of assets of Süwestsaat GbR. The charge is shown as “Purchased in-process research and development charges (credit)” in the consolidated statements of income and reflected in Agricultural Sciences. Pretax charges totaling $31 million for legal expenses and other transaction costs related to the pending acquisition of Rohm and Haas Company. These charges are shown as “Acquisition-related expenses” in the consolidated statements of income and reflected in Unallocated and Other. 1Q09 Earnings Conference Call – Page 41
  • 42. Supplemental Information (Heritage Dow) Certain items affecting results Dollars in millions (except per share amounts) Pretax Impact on Impact Impact (1) Net Income (2) on EPS (3) Three Months Ended Three Months Ended Three Months Ended 3/31/09 3/31/08 3/31/09 3/31/08 3/31/09 3/31/08 Restructuring charges $(19) - $(17) - $(0.02) - Acquisition-related expenses (48) - (41) - (0.04) - Dow Corning restructuring (29) - (27) - (0.03) - Total $(96) - $(85) - $(0.09) - (1) Impact on “Income before Income Taxes” (2) Impact on “Net Income Attributable to The Dow Chemical Company” (3) Impact on “Earnings per common share – diluted” 1Q09 Earnings Conference Call – Page 42
  • 43. Supplemental Information (Heritage Dow) Certain items affecting results Dollars in millions (except per share amounts) Pretax Impact on Impact Impact (1) Net Income (2) on EPS (3) Three Months Ended Three Months Ended Three Months Ended 12/31/08 12/31/08 12/31/08 Goodwill impairment losses $(239) $(230) $(0.25) Restructuring charges (839) (628) (0.68) Impact of Hurricanes Gustav and Ike (4) (54) (34) (0.03) K-Dow related expenses (69) (44) (0.05) Purchased in-process research and development charges (17) (17) (0.02) Acquisition-related expenses (31) (25) (0.03) Total $(1,249) $(978) $(1.06) (1) Impact on “Income before Income Taxes” (2) Impact on “Net Income Attributable to The Dow Chemical Company” (3) Impact on “Earnings per common share – diluted” (4) In addition, the interruption of operations caused by the hurricanes resulted in an estimated pretax $15 million in lost margin on lost sales, the equivalent of $0.01 per share, which is not included in the amounts presented in the table. 1Q09 Earnings Conference Call – Page 43 4Q08
  • 44. Certain Items Affecting Results (Heritage Dow) Certain items reducing EBIT by Operating Segment Dollars in millions Three Months Ended Three Months Ended 3/31/09 3/31/08 12/31/08 Performance Plastics - - $(333) Performance Chemicals $(29) - (25) Agricultural Sciences - - (20) Basic Plastics - - (181) Basic Chemicals - - (118) Hydrocarbons and Energy - - (34) Unallocated and Other (67) - (538) Total $(96) - $(1,249) 1Q09 Earnings Conference Call – Page 44
  • 45. 4Q08 Loss Per Share Reconciliation Reported loss per share $(1.68) Goodwill impairment losses 0.25 Restructuring charges 0.68 Impact of Hurricanes Gustav and Ike 0.03 K-Dow related expenses 0.05 Purchased in-process R&D related to acquisitions 0.02 ROH acquisition-related expenses 0.03 Loss per share excluding certain items $(0.62) 1Q09 Earnings Conference Call – Page 45 4Q08
  • 46. Principal Joint Ventures (Heritage Dow) Although Dow participates in many joint ventures, the most significant joint ventures from a financial perspective are: Americas Styrenics LLC* Compañía MEGA S.A. Dow Corning Corporation EQUATE Petrochemical Company K.S.C. Equipolymers MEGlobal The OPTIMAL Group of Companies The SCG-DOW Group Univation Technologies, LLC * Formed May 2008. For more information on Dow’s joint venture activities, please see our Joint Venture White Paper on Dow’s website at http://www.dow.com/about/pdf/djv_0408.pdf. 1Q09 Earnings Conference Call – Page 46
  • 47. Preliminary Results for Principal Joint Ventures Principal Joint Ventures - Total Dow Proportionate Share Dollars in millions (unaudited) 1Q09 1Q08 Dollars in millions (unaudited) 1Q09 1Q08 Sales $2,463 $3,841 Sales $1,175 $1,802 Adjusted Sales1 $2,021 $2,896 Adjusted Sales1 $979 $1,390 EBIT2 $137 $893 EBIT2 $59 $380 Depreciation & Depreciation & Amortization $127 $120 Amortization $58 $55 Equity Earnings3 $59 $275 1 Adjusted Sales defined as Sales for these joint ventures less sales to Dow and/or to other Dow joint ventures. 2 EBIT defined as earnings before interest, income taxes and noncontrolling interests. 3 First quarter 2009 Equity Earnings from Principal Joint Ventures includes pretax charges totaling $29 million for the Company’s share of a restructuring charge recognized by Dow Corning Corporation. 1Q09 Earnings Conference Call – Page 47
  • 48. Supplemental Information (Heritage ROH) Certain items affecting results Dollars in millions Pretax Impact (1) Three Months Ended 3/31/09 3/31/08 Restructuring and asset impairments $(22) $(12) Dow transaction-related costs (79) - Hurricane-related (2) - Total $(103) $(12) (1) Impact on “(Loss) earnings before income taxes” 1Q09 Earnings Conference Call – Page 48