Credit Suisse Chemical and Ag Science Conference

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

September 16, 2008

2008 Credit Suisse Chemical Conference

Agenda

►Financial Performance
►Transformational Strategy
►Strategy in Action

– Formation of K-Dow Petrochemicals
– Acquisition of Rohm and Haas
►Summary

2

First Half 2008 Financial Performance
6 months ended 6 months ended
Change
June 30, 2008 June 30, 2007
Sales $31,204 $25,697 21%
Price 18%
Volume 3%

Purchased feedstock & energy cost 42%
Equity earnings $525 $532 (1%)
EBIT* $2,535 $2,876 (12%)
Earnings per share $1.80 $2.07 (13%)
Dollars in millions (except per share amounts)
*See www.dow.com for Reconciliation of Non-GAAP Financial Measure

3

Financial Goals
Financial Metrics
Earnings per Share*
Return on Equity*
Return on Capital*

1997
1998
1999
2000

2002
2003
2004
2005
2006
2007
2001
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2007
1998
1999
2000
2001
2002
2003
2004
2005
2006

2007: $3.76
2007: 14% 2007: 19%
10-year average growth: 4%
10-year average: 12% 10-year average: 18%
1995 – 2005 growth: 5%
1995 – 2005 average: 12% 1995 – 2005 average: 19%

* Non-GAAP data; excludes certain items; excludes Union Carbide prior to 2001. See www.dow.com for more information.

4

Agenda



►Summary

5

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
6

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
7
Formulations
Management
Modeling

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

8

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

9

Agenda



►Summary

10

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)

11

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

12

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

13

Exceptional Returns From JVs

Equity Earnings ($ millions) Cash Distributions ($ millions) Return on Investment*
$1,122

$964 $959
$837
$923

40% 39% 39%
38%
$622
$536
$430
19%
$322
$205
2003

2004

2005

2006

2007

2003

2006

2007
2004

2006

2007

2005
2003

2005

2004
*Equity earnings/average investment
in nonconsolidated affiliates

14

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.

15

Agenda

► Financial Performance


►Summary

16

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
17

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

18

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

19

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

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

21

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

22

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!

23

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.

24
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25

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