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Dow Hosts Investor Forum 2012

At its 2012 Investor Forum, The Dow Chemical Company (NYSE: DOW) today reinforced the Company’s commitment to its long-term strategy, and shared with investors strategic interventions and key catalysts that will enable Dow to achieve near-term targets and drive sustainable earnings growth.

Dow’s Chairman and Chief Executive Officer, Andrew N. Liveris, in his keynote address to investors, outlined specific actions the Company is taking to drive down costs, improve cash flow and extract maximum value from its assets. “We are taking swift and decisive actions to protect our growth path and drive near-term value,” said Liveris. “And we have built a more simplified organization – concentrating only on those things that increase cash flow, improve return on capital and drive earnings growth.”

Drivers to Near-Term Targets

During the event, Liveris presented several key drivers that will fuel Dow’s near-term earnings growth:
  • Accelerating interventions to generate cash and reduce costs. Dow has deployed $2.5 billion of aggressive measures in 2012. These actions are expected to deliver $1 billion in cost and cash interventions in 2013, of which $500 million will impact EBITDA (1). With nearly 40 project cancellation and plant shutdowns announced this year, the Company is taking swift steps to improve asset utilization, drive down structural costs – particularly in Europe – and enhance return on capital.
  • Further bolstering Dow’s significant feedstock advantage and driving sustainable margin expansion for downstream, derivative businesses. The Company remains on schedule to restart its St. Charles Operations (Louisiana) ethylene cracker, which is expected to deliver a $150 million increase in EBITDA in 2013. Taken on the whole, Dow’s U.S. Gulf Coast investments in ethylene and propylene integration, coupled with favorable shale gas dynamics, are expected to deliver $2 billion in additional EBITDA in 2017. The Company also reaffirmed that its Sadara joint venture remains firmly on track, with an anticipated construction workforce peak of about 60,000 people next year, and operations slated for start-up in 2015. Once operational, this joint venture is expected to deliver EBITDA margins of approximately 40 percent.
  • Prioritizing innovation to hone in on markets and technologies with clear, near-term earnings delivery and in high-return businesses, such as Dow AgroSciences, Electronic Materials and Performance Packaging. Over the last several years, Dow has successfully rebalanced its innovation pipeline toward commercialization. Today, programs in the implementation stage of Dow’s R&D pipeline represent a net present value of $7 billion – an approximate $200 million increase versus 2011. Importantly, the Company has also reduced exploration programs – reprioritizing resources to focus on near-term commercialization opportunities. In addition, Dow has announced it is halting growth projects where significant market shifts and government policies have triggered fundamental changes, such as alternative energy.

“Dow’s key growth catalysts are embedded in our portfolio. These catalysts, such as our innovation portfolio, the ethylene cycle and our investments on the U.S. Gulf Coast and Sadara, will drive sustainable growth and margin expansion,” Liveris said. “And with our new, streamlined operating structure, we have the agility and flexibility to move quickly in executing ongoing, disciplined portfolio management. This is exactly what you are seeing and can expect from us.”

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