Dow's geographic growth and joint venture strategy

Positioning ourselves in growth markets

We established our first business outside the United States in 1942—the same year in which sales surpassed $50 million for the first time in Dow’s history. Sixty-five years later, as we broke through the $50 billion mark, roughly two-thirds of our revenue was generated overseas.

Our commitment to geographic growth remains strong, with a specific focus on emerging economies … supplying the chemical and plastic building blocks that address a vast array of human needs. As a result, the international reach of our businesses is having an evermore significant impact on the Company’s bottom line. And we expect this contribution to grow further as we reap the benefit of being the most global of all chemical companies, with assets in key regions around the world, strong partnerships with major players in many different countries, and highly talented, locally hired employees who have the relationships, the experience and the knowledge to make things happen.

Collaborating for smarter growth

As Dow focuses on improving earnings growth and consistency, joint ventures are a crucial enabler, creating opportunities to accelerate the Company’s strategic agenda across several different dimensions. Joint ventures can provide access to key markets, growth geographies, new technologies and advantaged feedstocks, while at the same time lowering capital investment and reducing risk. During 2007, we advanced our joint venture agenda on several fronts.

Most notable was our agreement with Petrochemical Industries Company (PIC), a wholly owned subsidiary of Kuwait Petroleum Corporation, to form a global petrochemicals giant. When the deal closes toward the end of 2008, the new 50:50 joint venture will have sales of more than $11 billion and employ around 5,000 people, manufacturing and marketing polyethylene, ethyleneamines, ethanolamines, polypropylene and polycarbonate to customers worldwide.

Our agreement with PIC was not the only highlight of the year. For example:

• We signed a Memorandum of Understanding with Chevron Phillips Chemical to form a joint venture involving polystyrene and styrene monomer assets in North and South America.
• We announced plans to form a joint venture with the National Oil Corporation of Libya that will operate and expand the country’s Ras Lanuf petrochemical complex.
• We signed a Memorandum of Understanding for our proposed joint venture with Saudi Aramco, to build a large-scale petrochemicals complex in eastern Saudi Arabia.
• We signed a cooperation agreement with Shenhua Group to build a world-scale coal-to-chemicals complex in the Shaanxi Province of China.
• We signed a Memorandum of Understanding with Crystalsev, one of Brazil’s largest ethanol producers, to form a joint venture to design and build a world-scale facility to manufacture polyethylene from sugar cane.
• And we signed a Memorandum of Intent with Russia’s Gazprom and SIBUR to explore a number of joint venture opportunities in the area of hydrocarbons processing.

*Sales of nonconsolidated affiliates, excluding sales to other Dow entities.

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