Dow AgroSciences: Delivering Beyond the Expected
Jerome Peribere President and CEO
March 10, 2009
® Credit Suisse Agriculture Conference ®Trademark of The Dow Chemical Company Dow AgroSciences Delivering Beyond Expectations in Key Areas
Consistent Financial Seed/Trait Business Performance Geographic Expansion
Franchise Expansion Technology Delivery
Credit Suisse Agriculture Conference ® 3 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company 2008 Results Deliver Growth Beyond Expectations
2008 2001-2008 Performance1 Actual CAGR
Volume and Price Sales 20% 8% Focused efforts to Sales New Product Success build value Market Share Growth Segmentation fine- tunes market offer
R&D investment Technology continues to excite our customers SARD2 15% New Product Ramp-up 3% Geographic expansion Investing for long-term growth
Record EBIT in 2008 Impressive growth driven by technology EBIT3 36% Capitalized on strong 25% EBIT agricultural market Diverse portfolio enables high-value growth
1Percentage growth from prior year. 2 Research & Development, and Selling, General and Administrative expenses. 3 Non-GAAP financial measure; excludes certain items. See www.dow.com for additional information.
Credit Suisse Agriculture Conference ® 4 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Dow AgroSciences Delivering Beyond Expectations in Key Areas
Consistent Financial Seed/Trait Business Performance Geographic Expansion
Franchise Expansion Technology Delivery
Credit Suisse Agriculture Conference ® 5 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Pyroxsulam Extends Cereal Herbicide Franchise in Europe
Market Share Growth Expected in Key European Countries
Key Brands Enable Segmentation
• Globally launchedlaunched in 5 countries,countries, 4545 toto go • 9 EuropeanEuropean CountriesCountries toto launchlaunch pyroxsulam in 2009 • Global MaturityMaturity salessales now expected ttoo be >$200 Million • Maturity Sales in Europe > $100 Million
Western Eastern In 2013 with In 2013 with Europe Europe Today Today Pyroxsulam Pyroxsulam Grasses Grasses and cross and cross 1% 17% spectrum 2% 26% spectrum
In 2013 with In 2013 with In 2013 with France Today Germany Today UK Today Pyroxsulam Pyroxsulam Pyroxsulam Grasses Grasses Grasses and cross 1% 18% and cross 0% 16% and cross 1% 15% spectrum spectrum spectrum
Credit Suisse Agriculture Conference ® 6 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Excellent Portfolio Fit in Russia & Ukraine Illustrates Franchise Potential
3.5 Market Size in 2016 ($ Millions) Vines/grapes
3 S.Beet OSR $193 $78 Veggies Cereals Rice $51 High $766 2.5 Corn Non-crop- $47 Industrial Sunflower 2 $90 Stored Soybean $31 grains
1.5 Pome fruit Potatoes Medium 1 Other
0.5 Low Dow AgroSciences Portfolio Fit Dow AgroSciences Portfolio 0 Low Medium High 1,000 10,000 100,000 1,000,000
Growth Source: Industry information OSR = Oil Seed Rape
Credit Suisse Agriculture Conference ® 7 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Dow AgroSciences Delivering Beyond Expectations in Key Areas
Consistent Financial Seed/Trait Business Performance Geographic Expansion
Franchise Expansion Technology Delivery
Credit Suisse Agriculture Conference ® 8 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Expanding Global Seeds Business
EUROPE NORTH AMERICA Dow AgroSciences MTI Mycogen Duo Maize ASIA Triumph SWS Dairyland Foundation seed development Brodbeck China Renze India Schillinger Philippines LATIN AMERICA Aus/NZ
Mexico: Dow AgroSciences Brazil: Dow AgroSciences, Agromen SOUTH AFRICA Argentina: Dow AgroSciences
Foundation seed development
Credit Suisse Agriculture Conference ® 9 J. Peribere March 10, 2009 8 ®Trademark of The Dow Chemical Company Acquisitions Establish Seed Presence in EU
SWS a Strategic Acquisition • A well-run European seed company Duo Maize • Provides elite germplasm adapted • Outstanding germplasm programs in corn to the early silage markets for Europe • Developer of key Brown Mid-Rib and insect resistance projects • Hybrid lineup that is ready for • Very advanced in new breeding commercialization technologies • Strength in early corn markets • Strong brand and customer base MTI via SAATEN-UNION GmbH MTI • Complementary fit of genetic • Strong, deep germplasm pool material, locations, and activities developed from Eastern Europe • Compatible company cultures institutes • Eastern Europe adapted material that brings both stress (drought & cold) and disease tolerance
Credit Suisse Agriculture Conference ® 10 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company 1507 Maize (Herculex®) Desired by EU Farmers
• Only one GM maize 67% Of Italian Farmers Would approved for EU cultivation Grow GM Maize In Key Growing • Where farmers can access Area If The Law Permitted It GM maize, there is double- digit annual adoption • Farmers want more variety • Feb. 25 vote to approve 1507 for EU cultivation ended with no decision • 2/3 of Member States neither supported nor rejected the proposal 67% equates to an •Next Steps additional 210,000 ha
• EU Environment Ministers Source: Industry Information to vote, if no decision: EU Commission adopts
Credit Suisse Agriculture Conference ®Trademark of Dow AgroSciences LLC ® 11 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Building a Seed Platform To Bring Value-Added Dow AgroSciences Traits And Innovation To European Customers
Corn Healthy Oils Nutritionally enhanced corn Drought/cold/heat resistance Omega 3 Value BMR Herbicide Added tolerance Low Sat Traits
Seeds Platform
Seeds Platform – Licensing and Proprietary
Credit Suisse Agriculture Conference ® 12 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Herculex® I Approved For Sale in Brazil
Expected Market Segment Share • Approved in January • Approved in January Growth in Brazil • Leading in-plant Bt to protect corn against devastating Fall Armyworm 25 • Herculex® I, combined with our leading tropical corn germplasm, accelerates 20
growth in Brazil 15
- Includes 2B710, one of the largest Corn Market Share 10 selling hybrids in Brazil 5
0 2008 2012
® I Provides Outstanding Fall Ramping Up Herculex® I in Agromen and Herculex Armyworm Protection* Dow AgroSciences Brands *2005-06 Trials, multiple hybrids
s High damage d i
Hybr Davis Scale (0-9) 0 = no damage 9 = high damage
mber of Low damage mated Nu ti s E
Credit Suisse Agriculture Conference ® 13 J. Peribere March 10, 2009 ®Trademark of Dow AgroSciences LLC ®Trademark of The Dow Chemical Company Dow AgroSciences Delivering Beyond Expectations in Key Areas
Consistent Financial Seed/Trait Business Performance Geographic Expansion
Franchise Expansion Technology Delivery
Credit Suisse Agriculture Conference ® 14 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company SmartStax™ Technology Creates New Standard
SmartStax™ Performance Will Dual Effective Dose Drives Value Lead the Industry Opportunity for 5-10% HigherHigher Yield
YieldGard VT Triple Pro Herculex®XTRA SmartStax
100 98.4 98.2 99.4 90 93.6 92.6 80 85.8 79.2 70 60 63.1 50 40 42.0 30 20
10 Corn Yield Bu/Acre 0 WBCW CEW FAW Western Bean Cutworm Corn Earworm Fall Armyworm % Reduction in Ear Damage % Reduction in Ear Damage % Reduction in Foliar Damage (5 Trials) (8 Trials) (9 Trials)
Regulatory submissions Q4 Regulatory Milestones Being Met -Argentina Regulatory Regulatory U.S. launch Field trials in submissions >750,000 yield Brazil, Q2 - Brazil Argentina, Brazil plots supporting Argentina launches launch 2008 2009 2010 2011 2012
®Trademark of Dow AgroSciences LLC Credit Suisse Agriculture Conference ™SmartStax,the SmartStax logo and ® YieldGard are trademarks of Monsanto Company 15 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company EXZACT Technology Redefining Future via Innovation
EXZACT Technology provides multiple methods to improve crops through genome modification:
EXZACT Edit Rewrites gene sequences to produce healthier crops and products
Targets known specific DNA sequences in a plant and precisely EXZACT Add adds one or more beneficial traits
EXZACT Delete Improves crops by erasing undesirable plant traits
Credit Suisse Agriculture Conference ® 16 J. Peribere March 10, 2009 ™Trademark of Dow AgroSciences LLC ®Trademark of The Dow Chemical Company New Products Fuel Profitability
$MM New Ag Chem Product Sales Today: • New products $ Millions spinetoram, aminopyralid, pyroxsulam, penoxsulam and novel formulations ramp up Future: • Ramp-ups plus innovation in pipeline will continue to fuel sales
Projected
Credit Suisse Agriculture Conference ® 17 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Dow AgroSciences Delivering Beyond Expectations in Key Areas
Consistent Financial Seed/Trait Business Performance Geographic Expansion
2009 Outlook
Franchise Expansion Technology Delivery
Credit Suisse Agriculture Conference ® 18 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company 2009 Outlook: Demand Moderates
Total Industry Sales
Crop Protection Seeds/Traits $ Billions $55.0 B $50.0 B
$45.0 B $40.0 B ? $35.0 B
$30.0 B $25.0 B
$20.0 B
$15.0 B
$10.0 B
$5.0 B $.0 B 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Phillips McDougall
Pros Cons • Ag Chemical prices holding at retail level • Fertilizer prices to impact planting • Livestock sector appears to be nearing end of decisions/crop mix; retail fertilizer dealers’ production cuts cash flow is tied up in high-priced inventory • Acreage will be planted • Projected ending stock levels for • Mandates remain to support biofuel demand commodities are increasing, resulting in lower commodity prices • Biotech adoption and acceptance continues
Credit Suisse Agriculture Conference ® 19 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company Continuing To Deliver Beyond Expectations
Expect consistent performance
Expect franchise growth
Expect Seed/Trait business geographic expansion
Expect technology expansion
Credit Suisse Agriculture Conference ® 20 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company SEC Disclosure Rules
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, a reconciliation to the most directly comparable GAAP financial measures and other associated disclosures are provided on the internet at www.dow.com in the Financial Reports page of the Investor Relations section.
Credit Suisse Agriculture Conference ® 2 J. Peribere March 10, 2009 ®Trademark of The Dow Chemical Company