Dow Investor Presentation

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Dow Chemical Investor Day Presentation by CEO Andrew Liveris

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Dow Investor Presentation

  1. 1. The Earnings Power of The New Dow Investor Day 2009 Andrew N. Liveris Chairman & Chief Executive Officer November 2009
  2. 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.
  3. 3. The Right Elements are in Place to … • >10% revenue growth with new portfolio Drive GROWTH • EBITDA margins moving from 12% to 20% • Enabled by science-based innovation Accelerate • ~$2.5 billion in cost savings by 2011 Enhanced Earnings • Earnings power of >$10 per share Reward • Substantial cash flow to reinvest and Shareholders reward shareholders
  4. 4. 2009 Accomplishments OPERATIONAL FINANCIAL STRATEGIC Structural and cost Financial discipline The right portfolio, synergies are ahead has been our the right strategy, of schedule hallmark the right people
  5. 5. 2009 Accomplishments OPERATIONAL OPERATIONAL • Achieved >$1 B structural cost savings YTD • Integrated Rohm and Haas and exceeded annual acquisition synergy run rate target • Right-sized Basics footprint Structural and cost synergies are ahead of schedule
  6. 6. 2009 Accomplishments OPERATIONAL FINANCIAL • Delivered consistently positive operating earnings and YTD cash flow • Eliminated high cost preferred shares at par • Paid off bridge ahead of schedule Structural and cost synergies are ahead • Reduced capex 50% to $1.4 B of schedule
  7. 7. 2009 Accomplishments OPERATIONAL STRATEGIC • Successfully integrated Rohm and Haas • Divested >$3 B of non-core assets • Completed enterprise-wide strategic review Structural and cost • Record R&D spend > capex synergies are ahead of schedule
  8. 8. 2009 Accomplishments OPERATIONAL FINANCIAL STRATEGIC • Achieved >$1 B structural • Delivered consistently • Successfully integrated cost savings YTD positive operating Rohm and Haas earnings and YTD • Integrated Rohm and Haas cash flow • Divested >$3 B of and exceeded annual non-core assets acquisition synergy • Eliminated high cost preferred shares at par • Completed enterprise-wide run rate target strategic review • Paid off bridge ahead • Right-sized Basics of schedule • Record R&D spend footprint > capex • Reduced capex 50% to $1.4 B
  9. 9. Agenda • Enhanced Earnings Power • Strengthened Financial Profile • CEO Priorities
  10. 10. The Old Dow Focus Business Results(1) 30% Capital Intensive • • Operational excellence Operational excellence • • Product integration Product integration • • Focused execution Focused execution EBITDA as a % of Sales Ag Sciences 20% Performance Chemicals Average 12% Basic Plastics Basics 10% Basic Chem Performance Plastics 0% 0% 20% 40% 60% 80% 100% Sales (1) Based on 2008 heritage Dow results, excluding Hydrocarbons & Energy and Corporate.
  11. 11. Dow’s Business Model – Three Integrated Parts Highly Differentiated Health & Agricultural Sciences Market Driven Electronic & Specialty Materials Technology Differentiation Coatings & Infrastructure Performance Systems Performance Performance Products Basic Plastics Basics Basic Chemicals Hydrocarbons & Energy Customer Intimacy
  12. 12. The New Dow – Improvement in Normalized Earnings >$10 Growth Synergies/Innovation Restructuring and Cost Synergies Equity Earnings Growth $ / Share $4.00 - $4.50 Basics Health and Agricultural Sciences Performance Products and Performance Systems ~$1.25 $0.44 Dow Advanced Materials Divestitures 3Q 2009 Run ~2012 Earnings YTD Rate(1) Power (1) Run rate estimate based on third quarter 2009 operating earnings and synergy run rate achieved by end of quarter.
  13. 13. Earnings Power: Dow Advanced Materials Portfolio Advanced Materials Electronic and Specialty Materials 2008 Sales(1): $5.7B | Growth: GDP x 2 Leading Industry Positions Electronics (66% in Asia) #1 CMP Pads #2 CMP Slurries #1 Display Technologies #1 Metallization #2 Photolithography Materials Specialty Materials #1 RO membranes & Ion Exchange Resins #1 Specialty cellulosics & biocides #1-2 Ingredients supplier to home & personal care EBITDA MARGIN(2): 27% NORMALIZED EBITDA MARGIN: ~30% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  14. 14. Earnings Power: Dow Advanced Materials Portfolio Advanced Materials Key Drivers of Profitability Electronic Materials Interconnect Semiconductor Display Technologies Technologies Technologies • Growth driven by trends toward miniaturization, faster processing, multi- functional devices • Production base continues to shift to Asia • >30% sales CAGR from 2008-2013 in smartphones and mini notebooks Specialty Materials Water & Process Solutions • Addressable industry growing from $5 billion today to >$10 billion by 2020 • Technologies to reduce the cost of desalination and reuse 35% by 2012 • Innovation pipeline features breakthrough ultrafiltration technologies (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  15. 15. Earnings Power: Dow Advanced Materials Portfolio Advanced Materials Coatings and Infrastructure 2008 Sales(1): $6.2B | Growth: GDP x 1.5 Leading Industry Positions #1 Architectural Binders #1 Architectural Additives #1 Acrylic & Styrene Acrylic Emulsions #1 Epoxy Resins, Additives and Solvents Infrastructure #1 XPS Foam Insulation and cellulose based products EBITDA MARGIN(2): 14% NORMALIZED EBITDA MARGIN: ~18-22% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  16. 16. Earnings Power: Dow Advanced Materials Portfolio Advanced Materials Key Drivers of Profitability Dow Coating Materials • Largest portfolio of coatings raw Broadest Technology Portfolio Available materials and broadest range of chemistries Waterborne Emulsions Epoxy Resins 50% 22% Additives 12% • Robust innovation pipeline Glycol Ethers 4% Solvents 3% aligned to consumer preferences Dispersants 3% for low- and zero-VOC coatings Paraloids Other 3% 3% • Customer-centric model, expanding in emerging geographies Dow Building & Construction Industry • Significant growth drivers tied to regulatory 25% Buildings requirements and consumer preferences for 48% energy efficiency & lower environmental impact • Integrated systems approach Transportation 27% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  17. 17. Earnings Power: Health and Agricultural Sciences Health and Agricultural Sciences Health and Agricultural Sciences 2008 Sales(1): $4.6B | Growth: GDP x 1.5 Leading Industry Positions #1 Green Chemistry/Insecticides • Sentricon • Spinosad • Spinetoram #1 Silage Corn and Omega-9 naturally stable oils EBITDA MARGIN(2): 18% NORMALIZED EBITDA MARGIN: 25% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  18. 18. Earnings Power: Health and Agricultural Sciences Health and Agricultural Sciences Key Drivers of Profitability • $1 billion corn business and >10% share in U.S. corn • Shift from 90/10 to Dow AgroSciences Herbicide 50/50 portfolio of Ag Tolerant Trait (DHT) Technology Chemicals / Seeds, 60% Targets for Share of U.S. Acres Soybeans Traits & Oils 40% Corn • Ag Chem pipeline full with high-value 20% Cotton solutions for the next 10 years and 0% proprietary formulations 50% SmartStax™ and HERCULEX® Traits Share of U.S. Corn Acres HERCULEX® • Seeds, Traits & Oils 40% + >20% sales CAGR SmartStax™ 30% 2008 to 2016 HERCULEX® 20% + • SmartStax + DHT SmartStax™ 10% launch contribute >50% HERCULEX® EBITDA margin 0% 2007 2010E 2012E (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  19. 19. Earnings Power: Performance Systems Performance Systems Performance Systems 2008 Sales(1): $8.2B | Growth: GDP x 1.3 Leading Industry Positions #1 Automotive glass bonding #1 Specialty high performance sealants #1 Wire & Cable compounds #2 Polyurethane systems EBITDA MARGIN(2): 11% NORMALIZED EBITDA MARGIN: ~15-18% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  20. 20. Earnings Power: Performance Systems Performance Systems Key Drivers of Profitability • Tailor-made formulations and flexible delivery systems • Strong growth drivers tied to infrastructure investments, energy conservation, and automotive safety and light-weighting • Bolt-on acquisitions continue to add value Differentiated Solutions Diesel Particulate Filter Drive Higher Margins Gross Margin % Spread (Systems vs. Demand Growth t en em ov pr m ti Components) in po ge ta en rc pe 10 1Q 2007 1Q 2008 1Q 2009 2009 2014 2019 (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  21. 21. Earnings Power: Performance Products Performance Products Performance Products 2008 Sales(1): $13.1B | Growth: GDP x 1.1 Leading Industry Positions #1 Polyols #1 LER and Epichlorohydrin #1 E- and P-Series Glycol Ethers #1 Ethylene Amines and Ethylene Oxide Amines #2 Performance Fluids EBITDA MARGIN(2): 12% NORMALIZED EBITDA MARGIN: ~15% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  22. 22. Earnings Power: Performance Products Performance Products Key Drivers of Profitability • Leading industry positions • Strong supply network and R&D capabilities • Building blocks maintain low-cost position and retain flexibility to fuel growth in downstream Performance derivatives • Highly diverse portfolio of product lines, marketed to a broad collection of end-uses • Targeted application development to further differentiate product offerings • Electronic & Specialty Materials Target Market • Coatings & Infrastructure Segments • Performance Systems Sell into Differentiated, Higher Margin Market Segments Component Sales into Fuel growth in Downstream Core Markets Performance Businesses (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  23. 23. Performance Innovation-Based Businesses Yield Advanced Health and Agricultural Products and Materials Performance Higher Margins and Higher Growth Sciences Systems Revenue Growth Normalized SEGMENT (2009-2012 CAGR) EBITDA Margin Electronic and Specialty Materials 10 – 15% ~ 30% Coatings and Infrastructure 5 – 8% ~ 18 - 22% Health and Agricultural Sciences 7 – 10% ~ 25% Performance Systems 13 – 17% ~ 15 - 18% Performance Products 10 – 15% ~ 15%
  24. 24. Earnings Power: Basics Basics Basic Plastics 2008 Sales(1): $14.2B | Growth: GDP x 1.3 Leading Industry Positions #1 Polyethylene • Dow is a producer of every major PE resin • PE makes up one-third of total world polymer demand • Most commonly used plastic in the world EBITDA MARGIN(2): 14-20% NORMALIZED EBITDA MARGIN: ~15% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  25. 25. Earnings Power: Basics Basics Key Drivers of Profitability Basic Plastics Top Polyethylene Producers: 2008 In thousands of metric tons 8,000 • Competitive cost position 7,000 6,000 5,000 • Differentiated product slate 4,000 3,000 • Leading process technology 2,000 1,000 0 Dow Exxon-Mobil Lyondell SABIC Chevron Sinopec Ineos Basell Phillips • PE demand grows at >GDP rates across the cycle Comparison of GDP and Polyethylene Growth - Global 8% 3.0 Annual Change (%) PE/GDP Multiple 6% 2.0 4% 1.0 2% 0% 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Global PE Demand (CMAI) Average PE/GDP Multiple Global GDP (Global Insight) Annual PE/GDP Multiple (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  26. 26. Earnings Power: Dow Ethylene Advantaged Versus the Industry Basics More than $200/MT leverage to ethylene peak yields upside to EPS of > $1.40 More than $200/MT leverage to ethylene peak yields upside to EPS of > $1.40 U.S. Natural Gas is highly discounted Dow versus Industry Feedstock to crude on an energy basis Flexibility - 2009 Crude Oil to Natural Gas Price Ratio (bbl/MMBTU) 20 100% Source: Dow 18 16 75% Percentage of total feedslate 14 12 10 50% 8 6 25% 4 2 0 0% 1990 1995 2000 2005 2010 North Latin Europe Forecast America Canada United America Latin Industry Europe Industry States Industry America Light Feed Flexibility Heavy Feed Source: Dow
  27. 27. Earnings Power: Basics Basics Basic Chemicals 2008 Sales(1): $4.3B | Growth: GDP Leading Industry Positions #1 Chlor-Alkali World leader in purified EO Successful asset light partnership (MEGlobal) EBITDA MARGIN(2): 10% NORMALIZED EBITDA MARGIN: ~12-15% (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  28. 28. Earnings Power: Basics Basics Key Drivers of Profitability Basic Chemicals • Right-sizing footprint to match downstream derivative demand • Chlorine integration provides competitive advantage • Purified EO a key feedstock for downstream Performance businesses Chlorine Production Ethylene Dichloride Vinyl and EDC Sales and Vinyl Chloride Chlor-Alkali HCI Polyure- thanes, Epoxy Resins, By-Product Chlorinated Recovery CL/NaOH Organics, and and Re-Use Agricultural Chemicals Major Consuming Environmental Caustic Sales Businesses Operations (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  29. 29. Earnings Power: Basics Basics Hydrocarbons and Energy 2008 Sales(1): $9.0B Top Global Ethylene Producers (2008) Capacity to produce, thousands of metric tons Source: CMAI 10,000 7,500 5,000 2,500 0 Dow SABIC Exxon- LyondellBasell Shell Sinopec Mobil Top Global Propylene Consumers in Non-Polypropylene Applications (2008) Capacity to produce, thousands of metric tons Source: CMAI 4,000 Non-polypropylene applications: - are specialty in nature 3,000 - are higher value-add - feature higher growth rates 2,000 Leading Industry Positions 1,000 0 #1 Ethylene Dow incl. ROH BASF Sinopec LyondellBasell INEOS Shell (1) 2008 sales reflect pro forma data of Dow and Rohm and Haas combined. (2) EBITDA margin shown represents the range or the average margin for 2007, 2008 and the 9 months ended September 30, 2009.
  30. 30. Performance Margin Expansion: Advanced Health and Agricultural Products and Basics Materials Performance The Horsepower of the New Portfolio Sciences Systems Heritage Portfolio(1) Portfolio Earnings Power Potential 40% 40% Electronic and Specialty Materials 30% 30% Health and Ag Sciences EBITDA as a % of Sales EBITDA as a % of Sales Coatings and Infrastructure Average 20% Performance Systems Ag Sciences 20% 20% Performance Performance Products Chemicals Basic Plastics Average 12% Basic Plastics Basic Chem Basic Performance 10% Chem Plastics 10% 0% 0% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Sales Sales (1) Represents 2008 data for heritage Dow
  31. 31. Performance Advanced Health and Products and The Power of Geographies in Dow Materials Agricultural Sciences Performance Basics Systems
  32. 32. Performance Advanced Health and Products and The Power of Geographies in Dow Materials Agricultural Sciences Performance Basics Systems % of 2008 pro forma sales Europe North America 36% of sales 38% of sales Asia Pacific IMEA 13% of sales 3% of sales Latin America The Dow Chemical Company 10% of sales Emerging Market Sales 20 * GR 16 Sales ($ billions) Emerging CA Emerging % 12 (35%) 11 (28%) 8 Developed 4 2012 2008 2004* 2008 Estimate *Heritage Dow
  33. 33. Earnings Power: Equity Earnings Potential >$1 B Annually Equity Earnings Growth Quarterly Average Proportionate EBITDA Equity Earnings of Nonconsolidated Affiliates of Principal Joint Ventures ($ millions) ($ millions) $300 $1,800 $250 $1,500 $200 $1,200 $150 $900 $100 $600 $50 $300 $0 $0 2001 2002 2003 2004 2005 2006 2007 2008 1Q09 2Q09 3Q09 2003 2004 2005 2006 2007 2008 Equity Earnings EBITDA in excess of equity earnings
  34. 34. Earnings Power: Cost Control and Acquisition Cost Synergies Restructuring and Cost Synergies Total Achieved Savings Run Rate 3Q09: $1.4 B 2-Year Target Rohm and Haas Acquisition $876 $1,300 Synergies Dow Restructuring $404 $750 Programs Other Actions $100 $450 $ millions TOTAL: ~$2.5 B ~$650 million higher net EBITDA impact in 2010 vs. 2009 ~$650 million higher net EBITDA impact in 2010 vs. 2009
  35. 35. Earnings Power: Acquisition Growth Synergies: Already Moving the Needle Growth Synergies/ Innovation $2 billion revenue run rate >$230 million run rate at 3Q09 target by 2012 Asia Pacific North America Latin Europe America IMEA Captured Growth Synergies (Annualized through 3Q09)
  36. 36. Earnings Power: Innovation: Addressing Mega Trends – Growth Opportunities Growth Synergies/ Innovation HEALTH & TRANSPORTATION & ENERGY CONSUMERISM NUTRITION INFRASTRUCTURE SmartStax™ / Battery Value CMP Diesel Particulate DHT Chain Technologies Filters Ag Chem Building Wall Home Water Pipeline System Care Filtration Traits / Healthier Alternative Low VOC Energy Electronics Architectural Diets (Omegas) Coatings
  37. 37. Earnings Power: Dow Innovation: Solving World’s Most Pressing Problems Growth Synergies/ Innovation • Dow’s innovation pipeline holds Dow’s Pipeline NPV: $28 B significant market potential Infrastructure & • Innovation pipeline is aligned Transportation with global megatrends • Portfolio management ensures that innovations are supported Consumerism by solid business cases Health & Nutrition Energy
  38. 38. The New Dow – Improvement in Normalized Earnings >$10 Growth Synergies/Innovation Restructuring and Cost Synergies Equity Earnings Growth $ / Share $4.00 - $4.50 Basics Health and Agricultural Sciences Performance Products and Performance Systems ~$1.25 $0.44 Dow Advanced Materials Divestitures 3Q 2009 Run ~2012 Earnings YTD Rate(1) Power (1) Run rate estimate based on third quarter 2009 operating earnings and synergy run rate achieved by end of quarter.
  39. 39. The New Dow – Improvement in Normalized Earnings 10 8 $ / share 6 Average: $3.50 - $5.50 (2009 - 2015) 4 Average: $1.86 Average: $2.20 (1993 - 1997) (2002 - 2005) 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 EPS (History) EPS (Forecast) Normalized EPS
  40. 40. Agenda • Enhanced Earnings Power • Strengthened Financial Profile • CEO Priorities
  41. 41. Returning to Lower Debt Levels 60% 6.0x 5.0x 50% 4.0x 40% 3.0x 2.0x 30% 1.0x 20% 0.0x 2001 2002 2003 2004 2005 2006 2007 2008 1996 1997 1998 1999 2000 3Q09 Current Net Debt / Total Capital Net Debt / EBITDA
  42. 42. 2010 Divestment Plan: $2 B Target, $12 B of Options Target of $5-6 B in divestitures 2009-2010 2009 YTD = $3.4 B achieved 3 concurrent paths in 2010, with $12 B of options
  43. 43. 2010 Divestment Plan: $2 B Target, $12 B of Options Path 1 • Styron Corporation $3.5 B in Assets: • 10-15 other businesses 2009 YTD = $3.4 B achieved • Targeted Portfolio • Don't fit long term growth profile Management • Will not successfully compete • Scope and carve out internally for resources process already underway • Timing spread throughout 2010 • Non-strategic • Size of each varies between • Stand alone $100 M to $300 M
  44. 44. 2010 Divestment Plan: $2 B Target, $12 B of Options Target of $5-6 B in divestitures 2009-2010 2009 YTD = $3.4 B achieved 3 concurrent paths in 2010, with $12 B of options Path 1 • Styron Corporation Path 2 $3.5 B in Assets: • 10-15 other businesses Kuwait resolution • Targeted Portfolio • Don't fit long term growth profile Management • Will not successfully compete options • Scope and carve out internally for resources process already underway • Timing spread throughout 2010 • Non-strategic • Size of each varies between • Stand alone $100 M to $300 M
  45. 45. 2010 Divestment Plan: $2 B Target, $12 B of Options Target of $5-6 B in divestitures 2009-2010 2009 YTD = $3.4 B achieved 3 concurrent paths in 2010, with $12 B of options Path 1 • Styron Corporation Path 2 Path 3 $3.5 B in Assets: • 10-15 other businesses Kuwait New Asset resolution Light Deal(s) • Targeted Portfolio • Don't fit long term growth profile Management • Will not successfully compete options • Scope and carve out internally for resources process already underway • Timing spread throughout 2010 • Non-strategic • Size of each varies between • Stand alone $100 M to $300 M
  46. 46. Enhanced Financial Performance Average Return on Capital Average Return on Equity Earnings per Share 14% $4.50 20% 19% 12% $2.20 1995-2005 2006-2016 1995-2005 2006-2016 Average Average (2002-2005) (2009-2015)
  47. 47. Sources and Uses of Cash >$20 B in Cash From Operations and Half Returned to Shareholders >$20 B in Cash From Operations and Half Returned to Shareholders $ billions $3.0 $20.5 $(1.7) $(0.9) 2004-2008 $(9.1) $1.8 $2.8 $2.4 $(10.2) $(2.2) $(0.8) Beginning Cash From Asset Acquisitions Investments Capex Shareholder Stock Change Other Ending Period Operations Sales (Net) Remuneration Issuance in Debt Period Cash Cash 1/1/04 12/31/08
  48. 48. Early Cycle Upside & Balanced Use of Cash >$35 B in Cash From Use of Cash Operations 2010 - 2015 2010 - 2015 $12 $10 • Invest for Growth • Shareholder Remuneration EBITDA, $ billions $8 • Reduction of Financial $6 Obligations $4 $2 $0 2012 2009 1995 2004 1993 2001
  49. 49. Agenda • Enhancing Earnings Power • Strengthened Financial Profile • CEO Priorities
  50. 50. 2010 CEO Priorities OPERATIONAL FINANCIAL STRATEGIC • Fixed cost reductions / • Maintain investment • R&D spend of ~$1.6 B synergies ($2.5 B run rate) grade rating • Growth synergies • Working capital discipline • Pay down debt (Debt / Total (>$500 M run rate) ($500 M reduction) Capital of 45%) • Portfolio mgmt continued • Capex ($1.6 B) • Operating cash flow ($1.5 B) (asset sales of >$2 B) • Non-strategic divestments • The right asset light strategy >$2 B • Enhanced geographic focus
  51. 51. 2010 CEO Priorities OPERATIONAL OPERATIONAL • Fixed cost reductions / synergies ($2.5 B run rate) • Working capital discipline ($500 M reduction) • Capex ($1.6 B) Structural and cost synergies are ahead of schedule
  52. 52. 2010 CEO Priorities OPERATIONAL FINANCIAL • Maintain investment grade rating • Pay down debt (Debt / Total Capital of 45%) • Operating cash flow ($1.5 B) • Non-strategic divestments Structural and cost >$2 B synergies are ahead of schedule
  53. 53. 2010 CEO Priorities OPERATIONAL STRATEGIC • R&D spend of ~$1.6 B • Growth synergies (>$500 M run rate) • Portfolio mgmt continued (asset sales of >$2 B) • The right asset light strategy Structural and cost synergies are ahead • Enhanced geographic focus of schedule
  54. 54. The Right Elements are in Place to … • Early cycle exposure to economic recovery Drive GROWTH • Optimized cost structure provides strong leverage • Polyethylene upside Accelerate Enhanced Earnings • Greater share of higher growth, higher margin performance businesses • Renewed focus on innovation Reward Shareholders • Stronger positions in emerging geographies and markets
  55. 55. The Dow Chemical Company Investor Day 2009

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