The Dow Chemical Company Credit Suisse Basic Chemicals Conference Jim Fitterling Vice Chairman, Business Operations September 17, 2015 The Dow Chemical Company
Agenda Moving Narrower and Deeper Portfolio is Structured to Capture Value Executing on Our Commitments 3
Going Narrower with Our Portfolio Dow Exceeds Divestiture Target Kuwait and Other JV Optimization 3B Pre-Tax Proceeds (B) In Progress Tax Eq. Dow Chlorine Products 7B - 8.5B 0.9B AgroFresh 5B 1.4B Angus and Pre-Tax…
Stepping Down Right-Size Specialty Ethylene Derivatives and Chlorine Envelopes Right-Size EO Envelope and Move Away from EO/EG Actions Taken Commodity Applications Reduced ownership of NAA EO/EG capacity with MEGlobal JV formation…
Focusing Asset Base Toward Highest Value U.S. Margins for Ethylene Based Products Dow is Focused on Participation 2010-2014 in Highest Value Markets 60 Dow participation in highest margin markets for Ethylene1 50 64% in 2002…
Going Deeper in Higher Margin Chains Focused Uses of Ethylene Dow Ethylene Capacity Utilization Other derivatives 83% of operated capacity Heritage contracts DCP goes directly into high- margin markets 8% Sold ethylene capacity…
Dow and Olin A Long-Term Strategic Win/Win Chlorine Dow best long-term Olin best long-term ethylene owner chlorine owner Ethylene High-return uses of ethylene Low-cost ECU producer Dow retains site integration Olin is fully…
Olin Synthetic Ethylene Ownership Dow Benefits Olin Benefits Receives reinvestment economics on Immediate back integration to USGC 1980 ethylene capacity connected to ethylene economics chlorine derivatives Access of up to 345…
Strength of New Olin The Global Leader in Chlorine Derivatives with Unmatched Scale, Integration and Diversification In-House Cell Diverse (as of 2016) Brine Power Ethylene Technology Chlorine Integration Integration Integration…
Agenda Moving Narrower and Deeper Portfolio is Structured to Capture Value Executing on Our Commitments 11
Portfolio is Structured to Capture Value Differentiation Attractive Supply / Demand Taking Advantage of Energy Disconnects 12
Maximizing Long-Term Shareholder Value Sources of Value Vary Over Time Optimizing Integrated Returns Ethane/Naphtha Spread Ethylene/Naphtha Margin PE/Ethylene Margin Run to maximize integrated volumes 100% Grow physical capacity…
Differentiation at Every Step of the Value Chain Meeting customer needs through global marketing and sales organization Collaboration with customers (i.e. Pack Studios) Competitively advantaged through science and technology…
Integrated Polyethylene and Elastomers Balances Remain Favorable Global Ethylene Demand / Capacity / Operating Rate 500 100% Balances expected to tighten Capacity and Demand (B lbs.) Demand Capacity Operating Rate over next…
Demand Matters Low Global Demand High Global Demand Key Variables High feedstock cost High feedstock cost Tight Oil Low price pass through Good price pass through Supply Low commodity margins High oil/gas spreads Weak specialty…
Agenda Moving Narrower and Deeper Portfolio is Structured to Capture Value Executing on Our Commitments 17
Largest Global Increase of Integrated PE and Derivatives (today - 2018) 30 470 Global Ethylene Capacity (B lbs.) LA-3, TX-9 Sadara 25 SC-2 Sadara 420 Dow Ethylene Capacity (B lbs.) 20 370 15 320 10 270 5 220…
U.S. Gulf Coast Investments On Plan PDH TX-9 Derivative Assets LA-3 2.0B CAPEX (1.2B CAPEX) (1.7B CAPEX) (including 0.3B de-bottleneck) (0.2B CAPEX) Synced with start-up of TX-9 Next-generation NORDEL De-bottlenecks plant…
Disciplined and Delivering Narrower and deeper execution is driving performance Integrated franchises are powerhouses today On track for the largest advantaged integrated polyethylene and elastomers expansion in the Americas and…
Dows Industry Leading Feedstock Flexibility Enables Optimized Feedslate Economics Increasing U.S. Ethane Capability Dow Europe LPG Cracking Volume Increasing Dow U.S. Dow Americas Capability for Ethylene Dow Ethane Cracking 90%…
Applying Unique High Throughput R&D Across Dow Unique Capabilities Improve Probability of Success 5x-10x increase in experimental productivity Cut time to discovery in half Catalyst Discovery and Development Formulation Development…
Capturing Value From Science and Technology Margin Premium on Patent Advantaged Sales 800 1200 1,000bps 1000 600 US Patent Applications 800 US Patent Grants 400 600 400 200 200 0 0 2004 2005 2006 2007 2008…
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