2014 Investor Forum - storage.dow.com.edgesuite.netstorage.dow.com.edgesuite.net/dow.com/investors/...tolerance technology to advance modern agriculture Value or customers will drive

Dow.com

2014 Investor Forum

Andrew N. Liveris Chairman & Chief Executive Officer November 12, 2014

Some of our comments today 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 reference non-GAAP financial measures. Where available, presentation of and reconciliation to the most directly comparable GAAP financial measures and other associated disclosures are provided on the Internet at www.dow.com/investors.

SEC Disclosure Rules

™Trademark of The Dow Chemical Company or an affiliated company of Dow. “EBITDA” is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA excluding the impact of Certain items. “Adjusted EBITDA margin” is defined as “Adjusted EBITDA” as a percentage of reported net sales. “Adjusted EPS” is defined as earnings per share excluding the impact of Certain items. “Net Debt” equals total debt (“Notes payable” plus “Long-term debt due within one year” plus “Long-Term Debt”) minus “Cash and cash equivalents.” “Net Debt to Total Capitalization” ratio is defined as “Net Debt” divided by “Net Capital.” “Net Capital” is defined as “Total Equity” + “Redeemable Noncontrolling Interest” + “Net Debt.” “Net Debt to EBITDA” is defined as “Net Debt” divided by “Adjusted EBITDA.” “TTM” is defined as trailing twelve months. “Total Capital” is defined as total assets minus non-interest bearing liabilities. “Adjusted Return on Capital” is defined as TTM “Adjusted Net Operating Profit After Tax” divided by average “Total Capital.” “Adjusted Sales” for joint ventures is defined as sales for joint ventures less sales to Dow and/or other Dow joint ventures. “Net Debt” for joint ventures excludes debt owed to Dow and/or other Dow joint ventures. “Total Shareholder Return” is defined as stock price appreciation plus dividends paid.

Key Takeaways Increasing shareholder rewards: 14% dividend increase and $5B share buyback program

Cash engine is healthy and getting stronger — growth projects ramping up

Portfolio management raises divestiture target to $7B ‒ $8.5B through JV monetization

Driving costs out and operating rates up… newest productivity targets $1B over the next three years

Opening new layers of transparency: new segments, easier to identify value drivers

Ethylene cycle pricing power will add ~$2.5B/yr for Dow

Innovation continues to be a source of differentiation in Dow AgroSciences, Consumer Solutions and others

Focused Execution, Strong Cash Flows, Consistent Earnings Growth, and EVA Focus All Delivering Increasing Shareholder Remuneration

Our Agenda

Delivering Results Through Focused Execution

Consistent Strategy to Enhance Value, Drive Returns

Our Priorities Going Forward

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$B

10%

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14%

15%

16%

Delivering on Our Commitments

Self-Help Actions Drive 8 Consecutive Quarters of Adjusted EPS, EBITDA and Margin Growth

Adjusted EPS Growth

TTM TTM

Adjusted EBITDA Growth

TTM

Adjusted EBITDA Margin Expansion

TTM defined as Trailing Twelve Months

$/Sh

are

Maintaining a Strong Balance Sheet

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ense

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t ($B

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Net Debt Interest Expense

Maintaining Financial Flexibility

Reducing Debt L/T Maturity Due In 5 YRs Ratios Below Historic Avg.

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Net Debt : Capital Net Debt : EBITDA

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2015 2016 2017 2018 2019

$B

5 Year

3 Year

1 Year

Dow S&P 500 S&P Chemicals

Execution of Strategy is Delivering

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0.45

1Q10

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4Q

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2Q

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4Q

14

Divi

dend

s Dec

lare

d - $

/sh

Increasing Annual Dividend to $1.68/Share

Total Shareholder Return

14% Dividend Increase Announced Today

Source: Bloomberg, as of November 7, 2014

Sustainable and Increasing Cash Flow

2014 2015 2016 2017 2018

NEW: Increased dividend by 14% in 4Q14

NEW: $5B repurchase program over the next three years

Maintain Strong Balance Sheet

2014 2015 2016 2017 2018

$ Bi

llion

Economic Assumptions: Base Case

Sources of Cash

Cash from Operations

Uses of Cash

Capital Expenditures Peak in 2015

Sources of Additional Upside Ethylene Cycle Productivity Portfolio Management Targeted Marketing & Innovation

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3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 2015-2018

Cum

ulat

ive

Shar

e Re

purc

hase

s - $

B

Completed by 3Q14 To be Completed in 4Q14 New Program

Committed to Rewarding Our Shareholders

Will complete previously announced $4.5B share buyback program by YE NEW: $5B repurchase program; $2B expected in 2015

4Q14 includes the planned repurchase of $1.1B

$9.5B Cumulative Target for Share Repurchases

Our Agenda

Delivering Results through Focused Execution



Core Strengths Support the Entire Franchise

INTEGRATION

Alignment to Key Value Chains: Ethylene and Propylene

Leverage Technical Expertise Across Attractive Markets:

Cross-Business Synergies; Narrower and Deeper

Innovation

Global Franchise: Capture Emerging Market Growth and Balance Risk

Ensure Advantaged Costs: Maximize Value

and Returns

Example: Envelope profitability

scorecards

Example: Sadara Growth in emerging regions Feedstock alliance in Latin America

Example: ENLIST™ Duo Epoxy to BETAMATE™ R&D centers in Shanghai,

São Paolo and Jeddah

Example: U.S. Gulf Coast investments Sell-out strategy LPG in Europe Leverage shared services

$1.5‒2.5 Billion per year in Synergies

Maximize Value Through Market Participation and Targeted Innovation

Running an Integrated Enterprise… Sell Out, Sell Up SPECIALTY

DIVEST

RETAIN FOR INTEGRATION / RUN FOR CASH

CREATE STRUCTURAL ADVANTAGES — Low Cost, Technology, Targeted Marketing

APPLY ‘BEST OWNER’ MINDSET

COM

MO

DITY

Selling and R&D CapEx

Agricultural Sciences

Consumer Solutions

Infrastructure Solutions

Performance Materials & Chemicals

Performance Plastics

INNOVATE BACK TO SPECIALTY

As World Economies Slow, Dow Pivots to EVA and ROC

2012 2013 2014

Announced Plans to Restructure Costs and Shut Down Assets

Chlorine Carve-Out

Exceeded $500MM Cost Savings Divestiture

Actions Begin

Expanded Divestiture Target to $4.5B―$6B

Strategic Alliances and Investments

Portfolio Management and Productivity Actions

Established Key Alliances in Latin America

Revamped Alberta Advantage

European LPG

Sadara

$450MM Rail Car Sale

Sale of PPL&C

USGC Investments

Strategic Innovation (Enlist™, BETAMATE™, etc.)

Portfolio Management and Productivity Actions

DAS Innovation Poised to Deliver Significant Value

Untreated Wheat

New Chemistry Will Revolutionize Herbicide Technologies

Untreated Herbicide program with the Enlist™ Weed Control System

Enlist Duo™ versus Untreated*

Treated with Arylex™ Active

System builds on success of herbicide tolerance technology to advance modern agriculture

Value for customers will drive competitive advantage

$1B of sales from new products by 2018 *Dow AgroSciences’ field trials data

2014 2015 2016 2017 2018

Investing for Growth Ti

mel

ine

COMPLETED

2012 2017 2013/2014 2015

St. Charles Ethylene Restart

Freeport PDH Start-up

TX Ethylene Cracker Ground Breaking

Sadara Olefins/PE Start-up

LA Ethane Flexibility TX Ethylene Cracker &

Derivatives Start-up

Run-Rate EBITDA: $250MM $450MM $250MM $500MM $1.5B

Sadara Financial

Close

2016

Sadara Phase 2 & 3 Start-up

SADARA FREEPORT PDH TX ETHYLENE CRACKER & DERIVATIVES

U.S. Gulf Coast and Sadara Generate $3B of Incremental EBITDA U.S. Gulf Coast Investments Deliver $2.5B, >$250MM Already Running

Sadara Delivers Additional $500MM


Our Agenda

Delivering Results Through Focused Execution



Dow Vision 2020 Optimize long-term value per share

Strategy

Vision

Integrated manufacturing positions in chemicals, plastics, key materials and agriculture

Low cost in all product and asset positions, leveraging integrated sites Presence in all growing geographic markets Growing downstream specialties for value add to low cost positions Will be in some commodities to achieve low cost for our integration, and

will run these for maximum cash to re-invest in:

1) Specialty positions (integrated Plastics) 2) Value-add specialties (Electronics & Agriculture) 3) Reward our shareholders via share buybacks and dividend increases

Combination of Low-Cost and Value-Add Products Enables Superior Value Creation Throughout the Cycle


Maintain strong focus on rewarding shareholders

Fully capitalize on growth levers

Make further strategic choices: Go deeper and narrower to drive the next level of long-term growth

Announcing New Segments Aligned to Dow’s Strategy

Foundation of Core Strengths Support the Entire Franchise Cost Advantaged Feedstocks in Every Region Scale & Operational Excellence Molecular and Physical Integration

Global Reach ― Marketing, Business & Operations Expertise in Science & Technology Strong Brand Value

Performance Materials & Chemicals Performance Plastics Agricultural Sciences Consumer Solutions Infrastructure Solutions

Revenue: $14.9B Adj. EBITDA: $2.1B



3Q14 Trailing Twelve Months Revenue and Adj. EBITDA data

Chlor Alkali and Vinyl Chlorinated Organics Epoxy Industrial Solutions Polyurethanes

Dow Elastomers Dow Electrical and

Telecommunications Dow Packaging and

Specialty Plastics Energy Hydrocarbons

Crop Protection Seeds

Consumer Care Dow Automotive

Systems Dow Electronic

Materials

Dow Building & Construction

Dow Coating Materials Energy & Water

Solutions Performance Monomers



Advantaged Positions Across the Globe

USGC Investments

US shale Low cost Access to Asia

Alberta advantage

Sadara

European LPG

Revamped Alberta

Advantage

Established Key Alliances

in Latin America

Extending US shale advantage Abundant LPG

for Europe

Growing ethane Next large shale

development

Jan

Feb

Mar

Ap

r M

ay

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Volu

me

2012 2013

2014

U.S. Shale Gas Production

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30

60

90

120

150

180

0

5

10

15

20

25

30

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Natural Gas Brent Oil

Peak Pricing Power versus Feedstock Advantage Cracker Margins Expanded by $200/MT–$300/MT in Last Three Peaks

Dow Produces ~10MM tons/year

US

Nat

ural

Gas

($/

MM

BTU

)

CRUDE : GAS Price Arbitrage

Bren

t Cru

de O

il ($

/bbl

)

Source: Bloomberg

Cycle Peaks

Global Ethylene Operating Rates Entering the Peak

Source: Dow, IHS, Global Insight (8/14)

Operating rates continue recovery from the 2008 lows Expect peak scenarios in 2016‒2018, with pricing power improving through 2014 into 2015

92

84 85 85 86 87 88 89 91

93 94 94

80 82 84 86 88 90 92 94 96 98

0 20 40 60 80

100 120 140 160 180 200

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ope

ratin

g Ra

te, %

Ethy

lene

, Mill

ions

of T

ons

Ethylene Production=Demand Nameplate Capacity Industry Op Rate

Global Insight GDP 4.1% 1.7% -1.9% 4.3% 3.0% 2.5% 2.6% 2.8% 3.4% 3.7% 3.8% 3.7%

Low Case 2.8% 2.9% 3.0% 3.0% 3.0%

Cycle Pricing Power will Add ~$2.5B/yr for Dow





50%

25%

20%

5% Manufacturing & Engineering

Supply Chain

Business Services

Enterprise Level Activities

Improve S&OP process Optimize order to cash

Eliminate stranded costs from portfolio actions Optimize structural costs

Leverage new ERP system Procurement optimization

Current Activities Manufacturing & Engineering

Supply Chain

Enterprise Level Activities

Business Services

$1B

Increase maintenance and raw material efficiency Improve asset utilization, yield and reliability

Nex

t Pro

duct

ivity

Tra

nche

$1

B b

y 20

17

Shutdown 27 assets

Reduced CapEx in 2013 from 2011 by ~$400MM

Exceeded 2013 cost target of $500MM

2012

Pro

gram

$1

.75B

Headcount reduction of ~3,000 to offset hiring for growth projects (Agriculture, U.S. Gulf Coast, Sadara)

Reduced fixed costs by 3 percent per year since 2012, when compared to the impact of inflation

Constant Productivity Focus

Joint Venture Portfolio Actions

World leader in the manufacture and marketing of ethylene glycol

Consistent track record of performance

Has opportunities for new investments to retain global market share

Attractive, pure play advantaged gas / MEG value chain

~$4.2B Revenue in 2012

JVs Will Continue to Invest for Growth as Dow Monetizes Some of Its Investment to Redirect to Dow Shareholders

>$2.7B Revenue in 2012

Greater Transparency and Additional Owners Unleash Value

Producer of ethylene, PE, ethylene glycol and styrene

Long term operational success

Access to advantaged feedstock

Exposure to emerging markets

Ongoing, Proactive Portfolio Management

YE 2015 Target Expanded Target

~$850MM in 2013 (PPL&C, others)

Chlorine Carve-Out

~$450MM Asset Sales (Railcars, Land, etc.)

AgroFresh

~$500MM (est.) Additional Corp. Actions $4.5B‒$6B

Pre-

Tax

Proc

eeds

($B)

Co

mpl

eted

In

Pro

gres

s

Additional Portfolio Actions

>$7B‒$8.5B

Additional Actions Bring Target to $7B―$8.5B Mid-2016 Implementation

Sodium Borohydride

ANGUS

(Signed definitive agreement)





2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

NEW: Increased dividend by 14% in 4Q14

NEW: $5B repurchase program over the next three years

Maintain Strong Balance Sheet

$ Bi

llion

Economic Assumptions: Base Case

Sources of Cash

Cash from Operations

Uses of Cash


Sources of Additional Upside Ethylene Cycle Productivity Portfolio Management Targeted Marketing & Innovation

Sustainable and Increasing Cash Flow

We Are an Integrated Chemical Company that Is Delivering Value Cash and growth engines are simultaneously ramping

New projects are gearing up (USGC, Sadara, ENLIST™ launch)

The ethylene cycle is upon us — pricing power will add ~$2.5B/yr

Extending our continuing dedication to Productivity ― $1B

JV optimization driving divestiture targets even higher

Fulfilling our commitments to shareholders ― 14% dividend increase and $5B share buyback program

Driving to Higher Cash Flows, More Consistent Earnings, Increased Shareholder Remuneration

2014 Investor Forum - storage.dow.com.edgesuite.netstorage.dow.com.edgesuite.net/dow.com/investors/...tolerance technology to advance modern agriculture Value or customers will drive

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