Overview of Dow's strategy and PeRformance Based Agenda

Better earnings growth. Better earnings consistency. To achieve these twin goals, we have embarked on a path to transform the Company in ways that will deliver greater long-term value for our stockholders. Rather than being a company predictable in its cyclicality, we will be a company that is more predictable in its profitability, even in an economic downturn. It’s a new direction—and we are well on our way.

Building on a strong foundation

Dow already bears the hallmarks of an industry leader: a drive for financial discipline and operational excellence, a balanced portfolio with significant presence in all major chemical chains, unmatched global reach, the low-cost advantages of site and product integration, and a depth of technological innovation that extends to both new and improved products and manufacturing processes.

On this solid foundation, we are shaping the new Dow. We are focusing our investments on projects that will significantly bolster our Performance portfolio. We are expanding our geographic presence, strengthening our position in key emerging economies around the world. We are creating exciting growth opportunities for our Basics businesses through strategic joint ventures. And we are driving ahead with our innovation agenda, building a robust pipeline of differentiated solutions … new products and new processes.

A focus on Performance

Our Performance portfolio, with its array of higher margin products and market-facing activities, promises faster growth and more consistent profitability than can be achieved within our Basics businesses. For that reason, it is the focus of Dow’s invest-for-growth agenda.

In 2007, we announced three new Market Facing businesses—Dow Coating Solutions, Dow Footwear Solutions and Dow Fabric and Surface Care—and we continued to aggressively grow our existing Performance business portfolio, both in size and geographic reach. Highlights from the year include:

• Dow Building Solutions successfully started up a manufacturing plant for the production of STYROFOAM™ brand insulation on the outskirts of Moscow, the Company’s first-ever production facility in Russia. This plant enables Dow to better serve its growing customer base in both Russia and Eastern Europe—regions where demand for insulation materials is increasing rapidly.
• Dow AgroSciences took a number of significant steps to strengthen its position in the corn seeds business, including the acquisitions of Brazilian company Agromen Tecnologia, The Netherlands-based Duo Maize and assets of Maize Technologies International, an Austrian corn seeds company.
• The Company completed its acquisition of Wolff Walsrode from the Bayer Group and, in doing so, announced the formation of Dow Wolff Cellulosics, a $1 billion business serving a broad spectrum of industry sectors, including construction, personal care, pharmaceuticals and food.
• And we made a number of other strategic, bolt-on acquisitions, among them two European polyurethanes systems businesses—Hyperlast Limited and Edulan A/S—and three leading epoxy formulators—UPPC AG in Germany, and POLY-CARB Inc. and GNS Technologies in the United States.
• Moving forward, our Performance growth agenda will center around strategic acquisitions that strengthen our position in areas such as health, energy, infrastructure and consumerism—major opportunities that we see developing across the globe. As we pursue that growth agenda, however, we will do so with discipline and diligence, making sure that every acquisition is strategically aligned, properly valued and takes place in a time frame that makes sense for Dow.

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