Dow Inc. · NYSE:DOW
Dow — The Dow Chemical Company — Q3 2008 Earnings Presentation
27 slides from Dow's earnings presentation, Oct 23, 2008
Slide 1: Third Quarter 2008 Earnings Conference Call
® The Dow Chemical Company Third Quarter 2008 Earnings Conference Call October 23, 2008
Slide 2: SEC Disclosure Rules
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 expe
Slide 3: Agenda
Agenda ® • 3Q08 Financial Performance • Operating Segment Results • Financial Flexibility & Discipline • K-Dow Petrochemicals • Rohm and Haas • Outlook October 23, 2008 3Q08 Earnings Conference Call Slide 3
Slide 4: 3Q08 Financial Highlights
3Q08 Financial Highlights ® • Record third quarter sales of $15.4 billion - Sales up 13% vs. 3Q07 - Price up 22% to recover cost increases - Volume negatively impacted by hurricanes and weakening demand • Record sales and EBIT for Agricultural Sciences • Joint ventures deliver consistently strong re
Slide 5: 3Q08 Financial Performance
3Q08 Financial Performance ® Dollars in millions (except per share amounts) 3Q08 3Q07 Change Sales $15,411 $13,589 13% Price 22% Volume (9)% Purchased feedstock & energy costs 48% Equity earnings $266 $296 (10%) EBIT1 $770 $1,205 (36%) EBIT excluding certain items2 $942 $1,264 (25%) Earnings per sha
Slide 6: 3Q08 EPS Reconciliation
3Q08 EPS Reconciliation ® Reported EPS $0.46 Impact of Hurricanes Gustav and Ike: - Charges incurred 0.09 - Margin on lost sales 0.03 Purchased in-process R&D related to acquisitions 0.03 Acquisition-related expenses 0.02 Earnings per share excluding these items $0.63 See Appendix for Supplemental I
Slide 7: Joint Venture Financial Highlights
Joint Venture Financial Highlights Third Quarter ® 350 3Q08 3Q07 300 • Dow Corning reported record third 250 quarter sales and earnings due to excellent results for polycrystalline $MM 200 150 silicone 100 50 • OPTIMAL had margin expansion driven 0 by higher prices and advantaged Equity Distribution
Slide 8: Performance Plastics
Performance Plastics ® Tech. Licensing Dollars in millions 3Q08 3Q07 & Catalyst Dow Automotive Sales $4,252 $3,877 Specialty Plastics Dow Building & Elastomers Price up 14%; Volume down 4% Solutions EBIT $146 $409 Sales Dow Epoxy Certain items* included in EBIT $(35) - Equity earnings (included in E
Slide 9: Performance Chemicals
Performance Chemicals ® Dollars in millions 3Q08 3Q07 Designed Polymers Sales $2,462 $2,152 Specialty Price up 21%; Volume down 7% Chemicals EBIT $275 $219 Sales Certain items* included in EBIT $(14) $(9) Equity earnings (included in EBIT) $137 $90 Dow Latex • Price up in all geographies and busines
Slide 10: Agricultural Sciences
Agricultural Sciences ® Dollars in millions 3Q08 3Q07 Seeds & Traits Sales $976 $788 Ag Chem Price up 16%; Volume up 8% EBIT $61 $15 Sales Certain items* included in EBIT $(29) $(50) Equity earnings (included in EBIT) $2 $1 • Record third quarter sales and EBIT • Strong growth in Latin America led b
Slide 11: Basic Plastics
Basic Plastics ® Dollars in millions 3Q08 3Q07 Polystyrene Sales $3,535 $3,316 Polypropylene Price up 25%; Volume down 18% EBIT $481 $556 Sales Certain items* included in EBIT $(11) - Polyethylene Equity earnings (included in EBIT) $55 $39 • Price increases in all businesses and all geographies • Vo
Slide 12: Basic Chemicals
Basic Chemicals ® Dollars in millions 3Q08 3Q07 EO/EG Sales $1,500 $1,507 Price up 20%; Volume down 20% EBIT $64 $205 Sales Certain items* included in EBIT $(26) - Equity earnings (included in EBIT) $61 $115 Core Chemicals • Strong caustic soda industry fundamentals drove solid price gains; volume d
Slide 13: Financial Flexibility and Discipline
Financial Flexibility and Discipline ® Financial Flexibility • Sufficient liquidity - Credit lines of approximately $5 billion - Retail and Institutional bond access • Diversified funding sources throughout the world Financial Discipline • Targeted reductions by end of year - Capital spending reduct
Slide 14: Track Record for Rewarding Shareholders
Track Record for Rewarding Shareholders ® • A 96-Year History of Consistent Dividends – Maintained or Increased Each Year – Increased 25% Since 2006 Quarterly Dividends Paid Per Share* 1912 2008** *ADJUSTED FOR STOCK SPLITS AND STOCK DIVIDENDS **2008 DIVIDEND ANNUALIZED BASED ON Q2 YTD PAYOUT Octobe
Slide 15: K-Dow Petrochemicals Update
K-Dow Petrochemicals Update ® • On track to close K-Dow by end of year • FTC and European Commission clearance received • Project cleared by Committee on Foreign Investment in the U.S. • K-Dow leadership team named • Joint venture will have funding to operate on Day One October 23, 2008 3Q08 Earning
Slide 16: Rohm and Haas Update
Rohm and Haas Update ® • On track to close acquisition by early part of 2009 • $13 billion bridge facility fully committed and successfully syndicated • $4 billion in convertible preferred securities at 8.5% coupon • $1 billion from Kuwait Investment Authority • $3 billion from Berkshire Hathaway •
Slide 17: Rohm and Haas Cost Synergies
Rohm and Haas Cost Synergies ® • At least $800 million in annual pretax synergies • In addition to Rohm and Haas $110 million restructuring synergies • Phased-in over two years Purchasing Synergies Including Raw Materials Shared Services and Governance 35% 35% 35% 35% 10% 10% 20% 20% Corporate Busin
Slide 18: Outlook & Action Plan
Outlook & Action Plan ® Outlook • U.S. economic issues & declining consumer confidence spreading to the global economy • Financial turmoil is straining availability of credit • Demand softening around the world • Global recession throughout 2009 likely Action Plan • Dow will remain focused on financ
Slide 19: Appendix
® Appendix October 23, 2008 3Q08 Earnings Conference Call Slide 19
Slide 20: Reconciliation of Non-GAAP Financial Measure
Reconciliation of Non-GAAP Financial Measure ® Three months ended Dollars in millions 09/30/08 09/30/07 EBIT $770 $1,205 + Interest income 23 28 - Interest expense and 160 148 amortization of debt discount - Provision for income taxes 185 659 - Minority interests’ share in 20 23 income Net Income Av
Slide 21: Supplemental Information
Supplemental Information Certain items affecting results ® Earnings in the third quarter of 2008 were unfavorably impacted by costs related to Hurricanes Gustav and Ike, which hit the U.S. Gulf Coast in the third quarter. These costs, which included the repair of property damage, clean-up costs, una
Slide 22: Supplemental Information
Supplemental Information Certain items affecting results ® Pretax Impact on Net Impact on Impact (1) Income (2) EPS (3) Three months ended Three months ended Three months ended 09/30/08 09/30/07 09/30/08 09/30/07 09/30/08 09/30/07 In millions except per share amounts Impact of Hurricanes Gustav and
Slide 23: Certain Items Affecting Results
Certain Items Affecting Results Certain items reducing EBIT by Operating Segment ® Three months ended Dollars in millions 09/30/08 09/30/07 Performance Plastics $(35) - Performance Chemicals (14) $(9) Agricultural Sciences (29) (50) Basic Plastics (11) - Basic Chemicals (26) - Hydrocarbons and Energ
Slide 24: Principal Joint Ventures
Principal Joint Ventures ® 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 Compani
Slide 25: Preliminary Results for Principal Joint Ventures
Preliminary Results for Principal Joint Ventures ® Principal Joint Ventures - Total Dow Proportionate Share $ in millions - unaudited 3Q08 3Q07 $ in millions - unaudited 3Q08 3Q07 Sales $4,445 $3,418 Sales $2,091 $1,617 Adjusted Sales* $3,459 $2,651 Adjusted Sales* $1,667 $1,277 EBIT** $927 $834 EBI
Slide 26: Preliminary YTD Results for Principal Joint Ventures
Preliminary YTD Results for Principal Joint Ventures ® Principal Joint Ventures - Total Dow Proportionate Share $ in millions - unaudited YTD08 YTD07 $ in millions - unaudited YTD08 YTD07 Sales $12,594 $10,079 Sales $5,921 $4,742 Adjusted Sales* $9,738 $7,826 Adjusted Sales* $4,681 $3,759 EBIT** $2,
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The Dow Chemical Company — Q3 2008 Earnings Presentation on 6ix