Dow Reports Second Quarter Results

Second Quarter 2011 Highlights

• Dow reported earnings of $0.84 per share. This compares with reported earnings of $0.50 per share in

the same period last year. The Company delivered earnings of $0.85 per share excluding certain

items(2), compared with $0.54 per share on the same basis in the year-ago period.

• EBITDA increased 24 percent year-over-year to $2.3 billion, with gains in every operating segment.

This contributed to a record first-half EBITDA excluding certain items. On the same basis, Electronic

and Specialty Materials and Performance Systems each achieved quarterly records. Health and

Agricultural Sciences and Chemicals and Energy grew more than 40 percent.

• EBITDA margin(3) excluding certain items expanded for the ninth consecutive quarter on a year-overyear

basis, with improvements in excess of 200 basis points in Health and Agricultural Sciences,

Performance Systems, and Chemicals and Energy. On the same basis, Plastics delivered the eighth

consecutive quarter in excess of 20 percent.

• On a reported basis, sales were $16 billion, the second highest quarter in the Company’s history. Sales

excluding the impact of divestitures increased 28 percent year-over-year, with double-digit gains in

all operating segments and geographic areas.

• In emerging geographies, sales reached $4.9 billion, a new quarterly record for the Company. Volume

growth in these regions was 14 percent excluding the impact of divestitures. Sales in Asia Pacific

reached a new quarterly record of $2.7 billion, and grew 23 percent excluding divestitures.

• Health and Agricultural Sciences set a new sales record for the first half of the year, surpassing

$3 billion. In the quarter, EBITDA margin rose more than 370 basis points versus the year-ago period.

• Volume rose 9 percent versus the same quarter last year excluding the impact of divestitures, with

gains across nearly all operating segments. On the same basis, demand grew in all geographic areas.

• Price was up 19 percent excluding the impact of divestitures, with increases in all operating segments

and double-digit gains in all geographic areas.

• Equity earnings were $291 million. The Company’s year-to-date equity earnings of $589 million

represent a new record for the first half of the year.

• Dow retired $1.5 billion of gross debt in the quarter and reduced net debt(4) to total capitalization to

41.6 percent. In the first half of the year, the Company retired $4 billion of gross debt.

Comment

Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:"This marked another quarter of tremendous progress for Dow. We delivered significant and broad-basedtop-line growth, and reached a new quarterly sales record in emerging geographies. The performance ofour diverse and balanced portfolio once again overcame continuing headwinds in certain sectors. Moreimportantly, we remain firmly on the trajectory to reach our near-term earnings targets, as evidenced byEBITDA growth of nearly 25 percent – up in every operating segment – as well as overall marginexpansion for the Company. Further, our year-over-year EPS growth and our EBITDA run-rate of$9 billion are approaching our near-term target.

"Our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is nowperforming at a new level. This is fueling higher-growth, higher-margin performance through superiormarket-reach, customer intimacy and innovation. We’re delivering all of this while maintaining oursteadfast commitment to enhance financial flexibility by paying down debt, and increasing shareholderremuneration. Coupled with the strength of our integrated business model, Dow is firmly on the rightstrategic path of sustained earnings growth."

Review of Second Quarter Results

The Dow Chemical Company (NYSE: DOW) achieved sales of $16.0 billion in the second quarter of2011, the second highest quarter in the Company’s history. Sales increased 18 percent, driven by pricegains of 17 percent compared with the same period last year.

Sales excluding the impact of divestitures increased 28 percent, with double-digit gains in all operatingsegments and all geographic areas.

At a Company level, volume grew 9 percent excluding the impact of divestitures, with gains in alloperating segments excluding Coatings and Infrastructure, which was flat despite difficult conditions inconstruction end-markets, and Chemicals and Energy. On the same basis, double-digit volume growthwas reported in Health and Agricultural Sciences (13 percent) and Plastics (10 percent). Volumeincreased in all geographic areas, led by Latin America (23 percent) and Asia Pacific (11 percent).

Price excluding the impact of divestitures rose 19 percent, with double-digit increases in all geographicareas. All operating segments except Electronic and Specialty Materials (up 7 percent) and Health andAgricultural Sciences (up 5 percent) reported double-digit price gains. Price gains more than offset a$1.5 billion increase in purchased feedstock and energy costs.

Sales in emerging geographies reached $4.9 billion, a new quarterly record for the Company. Growth wasled by Latin America, which increased more than 35 percent excluding the impact of divestitures. Volumein emerging geographies increased 14 percent excluding the impact of divestitures, with double-digitgains in Electronic and Specialty Materials, Health and Agricultural Sciences, and Plastics.

At a Company level, EBITDA rose $451 million, or 24 percent, to $2.3 billion. This contributed to a newrecord first-half EBITDA excluding certain items. On the same basis, new quarterly records wereachieved in both Electronic and Specialty Materials and Performance Systems. Health and AgriculturalSciences and Chemicals and Energy each posted EBITDA increases in excess of 40 percent.

EBITDA margin excluding certain items expanded year-over-year for the ninth consecutive quarter at aCompany level, with Health and Agricultural Sciences, Performance Systems, and Chemicals and Energyeach expanding more than 200 basis points. Electronic and Specialty Materials reported its ninthconsecutive quarter of at least 25 percent EBITDA margin, excluding certain items, and Plastics deliveredthe eighth consecutive quarter in excess of 20 percent.

Reported earnings for the quarter were $0.84 per share, compared with reported earnings of$0.50 per share in the same period last year. The Company delivered $0.85 per share excluding certainitems, compared with $0.54 per share on the same basis in the year-ago period. Certain items in thecurrent quarter consisted of a loss on the early extinguishment of debt of $0.01 per share.Supplemental Information at the end of the release for a description of certain items affecting results.)

Dow’s global operating rate was 84 percent, up 4 percent from the same year-ago period. Sequentially,the Company’s operating rate rose 1 percent.

Research and Development (R&D) expenses rose 1 percent versus the same period last year. TheCompany continued to invest in technology-driven segments led by Coatings and Infrastructure forDOW™ POWERHOUSE™ solar shingles and Electronic and Specialty Materials.

Selling, General and Administrative (SG&A) expenses rose 7 percent versus the year-ago period,primarily driven by increased spending in Health and Agricultural Sciences and Electronic and SpecialtyMaterials in support of product launches and growth initiatives.

Equity earnings were $291 million, led by Dow Corning, MEGlobal and the Company’s joint ventures inKuwait. The Company’s year-to-date equity earnings were $589 million, marking the Company’s highestever first-half equity earnings.

The Company continued to surpass its growth synergy targets, delivering $1.5 billion in sales on anannual run-rate basis. Sequentially, the Company’s run-rate grew 24 percent.

Net debt to total capitalization declined to 41.6 percent. In line with continued deleveraging efforts, theCompany retired $1.5 billion of gross debt in the quarter, bringing the year-to-date total debt retirement to$4 billion and reducing interest expense by $250 million on an annual basis going forward.

"This marked another quarter of tremendous progress for Dow," said Andrew N. Liveris, Dow’s chairmanand chief executive officer. "We delivered significant and broad-based top-line growth, and reached anew quarterly sales record in emerging geographies. The performance of our diverse and balancedportfolio once again overcame continuing headwinds in certain sectors. More importantly, we remainfirmly on the trajectory to reach our near-term earnings targets, as evidenced by EBITDA growth ofnearly 25 percent – up in every operating segment – as well as overall margin expansion for the

Company. Further, our year-over-year EPS growth and our EBITDA run-rate of $9 billion areapproaching our near-term target.

"Our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is nowperforming at a new level. This is fueling higher-growth, higher-margin performance through superiormarket-reach, customer intimacy and innovation. We’re delivering all of this while maintaining oursteadfast commitment to enhance financial flexibility by paying down debt, and increasing shareholderremuneration. Coupled with the strength of our integrated business model, Dow is firmly on the rightstrategic path of sustained earnings growth."

Electronic and Specialty Materials

Sales in Electronic and Specialty Materials were $1.5 billion, up 13 percent from the same quarter lastyear, driven by 6 percent volume growth and price gains of 7 percent. Dow Electronic Materials reporteda solid volume gain, with the strongest demand growth in the Display Technologies and GrowthTechnologies businesses, driven by new product introductions. In Asia Pacific, Dow Electronic Materialsreported double-digit demand growth, with gains across all business units, resulting from favorabledemand trends in the region. The business recorded several customer wins in the quarter, includingelectroplating materials, chemical mechanical planarization pads and display films.

Specialty Materials reported a solid year-over-year sales increase, with double-digit gains across allgeographic areas. Dow Water and Process Solutions reported quarterly sales and EBITDA records, drivenby double-digit volume growth in all geographic areas except North America. Volume gains werereported in ion exchange resins, reverse osmosis membranes and the business’ ultrafiltration platform.Dow Wolff Cellulosics reported an increase in sales, with double-digit volume gains in Europe, MiddleEast and Africa (EMEA) and Latin America, driven by strength in food and pharmaceuticals demand.

Dow Microbial Control continued to see volume growth in North America, led by ongoing demand fromenergy end-markets.

Equity earnings were $97 million, reflecting a solid contribution from Dow Corning. This compares withequity earnings of $112 million in the same period last year. EBITDA for the segment was $429 million,which compares with EBITDA of $426 million in the year-ago period.

Coatings and Infrastructure

Coatings and Infrastructure sales were $1.6 billion. Excluding the impact of divestitures, sales were up14 percent, completely driven by price gains. Double-digit sales gains were reported in Dow Adhesivesand Functional Polymers, Dow Building and Construction, and Dow Coating Materials. Volume growthin Dow Building and Construction and Dow Coating Materials continued to be restrained by soft demandfrom construction and architectural end-markets in developed regions.

Dow Adhesives and Functional Polymers reported volume growth in all geographic areas, except EMEA,with the largest gain in Asia Pacific. The business also reported a double-digit increase in price, reflectingactions taken in response to high raw material costs. Dow Building and Construction reported demandgrowth across all geographic areas except North America, where new construction starts remainsignificantly depressed. The business reported a double-digit volume gain in Asia Pacific, drivenprimarily by demand in China. Results for the business were partly impacted by ongoing investment in

DOW™ POWERHOUSE™ solar shingles. Dow Coating Materials reported price gains across allgeographic areas as the business responded to a sharp rise in raw materials costs. In architectural coatings,volume gains were reported in Latin America, Asia Pacific and EMEA, while industry conditionsremained difficult in North America. Industrial coatings volume fell as a result of strong pricinginitiatives to offset higher raw material costs, particularly in the epoxy chain.

EBITDA for the segment was $231 million, which compares with EBITDA of $230 million in the same

period last year.

Health and Agricultural Sciences

Health and Agricultural Sciences reported record second quarter sales of $1.5 billion, up 18 percentcompared with the year-ago period. Volume increased 13 percent and price rose 5 percent. All geographicareas reported double-digit sales gains versus the same period last year. The business also posted recordfirst-half sales of more than $3 billion.

Seeds, Traits and Oils reported demand growth of more than 35 percent. A continued increase in adoptionof SmartStax® hybrids in North America and a strong growing season in Latin America drove significantvolume increases in corn. Cotton finished a strong season with first-half sales up more than 50 percent,driven by an increase in U.S. planted acres and continued penetration of PhytoGen® cottonseeds. Also inthe quarter, the business announced plans to acquire Prairie Brand Seeds, a leading provider of topquality,high-yielding soybeans, further expanding Dow AgroSciences’ broad range of product offerings.

Double-digit growth in agricultural chemical sales was driven by volume gains resulting from newproduct sales and increased demand for range and pasture products. Globally, new agricultural chemicalproduct sales were up nearly 40 percent versus the same quarter last year, led by increased demand forrice herbicides in Asia Pacific and strong sales of cereal herbicides in the United States and Canada.

EBITDA for the segment was $287 million, which compares with $196 million in the year-ago period.

Performance Systems

Sales in Performance Systems were $1.9 billion. Sales excluding divestitures were up 19 percentcompared with the same quarter last year. Price was up 17 percent, reflecting actions taken in response tohigher raw material costs, with double-digit increases achieved in all geographic areas. Volume increased2 percent, led by Latin America and North America. Dow Automotive Systems reported double-digitvolume expansion in Latin America, primarily driven by demand growth in Brazil and Mexico. Thebusiness also reported demand growth for its technology-differentiated products in acoustical andadhesives (e.g., glass bonding) applications. Dow Elastomers reported sales growth of more than25 percent, driven by volume and price gains across all geographic areas. The business’ sales in AsiaPacific rose more than 50 percent, primarily due to the successful start-up of a new joint venture specialtyelastomers train in Thailand.

Dow Formulated Systems volume contracted in the quarter due to continued weakness in constructionend-markets, particularly in EMEA, as well as lower demand for wind energy applications in China. DowWire and Cable reported a double-digit sales increase, driven by broad-based price gains, as well asvolume growth resulting from robust demand for power transmission and telecommunicationsapplications in Latin America, particularly in Brazil and Mexico.

EBITDA was $260 million, representing a new quarterly record for Performance Systems. In the year-agoperiod, EBITDA was $225 million, which included a $15 million pretax gain on the divestiture of Styron.

Performance Products

Sales in Performance Products were $3.2 billion. Sales excluding divestitures were up 29 percentcompared with the year-ago period. Price increased 20 percent, as a result of pricing initiatives to offsethigher raw material costs. Volume increased 9 percent and grew in all geographic areas, with double-digitgains in North America and Asia Pacific. Amines posted a double-digit volume increase, driven byethanolamines used in agricultural chemicals and by ethyleneamines demand in China. The Epoxybusiness continued to report strong double-digit year-over-year sales growth, with a volume gain of more

than 25 percent, led by EMEA and North America. Polyglycols, Surfactants and Fluids also reportedvolume growth, led by Latin America and Asia Pacific. Demand was particularly strong for surfactants infood and fuel applications, and also for lubricants, driven by uses in steel and automotive industries.

Oxygenated Solvents reported double-digit price gains across all geographic areas. The businesscontinues to see strong underlying demand in its key end-use markets of energy, health and nutrition andoil additives. Polyurethanes sales growth was driven by double-digit price gains in all geographic areas.

Volume growth was led by North America and Latin America, as the business benefited from tight supplyconditions in the polyurethanes industry.

EBITDA for Performance Products was $387 million. This compares with EBITDA of $330 million forthe year-ago period, which included a $26 million pretax gain on the divestiture of Styron, partially offsetby a $12 million adjustment to the 2009 restructuring charge.

Plastics

Sales in Plastics were $3.3 billion. Sales excluding divestitures increased 30 percent compared with thesame quarter last year. Volume increased 10 percent, while price rose 20 percent. Polyethylene reportedbroad-based sales gains, driven by double-digit increases in both volume and price. The businesscontinued to record volume growth in Asia Pacific due, in part, to additional sales from a new jointventure manufacturing facility in Thailand. As a result of disciplined price and volume management andthe Company’s cost-advantaged position in feedstocks, Plastics maintained strong margins despite highand volatile raw material costs. Polypropylene reported a significant sales increase in all geographic areasexcept Asia Pacific as broad-based, double-digit price gains in the packaging and hygiene and medicalsectors were achieved in response to rising propylene costs. The business reported robust demand inNorth America due to low inventory levels in the value chain and growing demand in automotive,consumer durable goods, and packaging end-markets.Equity earnings for the segment were $65 million, compared with $59 million in the year-ago period.

EBITDA for the segment was $751 million. In the same period last year, EBITDA was $696 million,which included a $10 million pretax gain on the divestiture of Styron.Chemicals and EnergySales in the Chemicals and Energy segment were $1.0 billion, up 23 percent from the same period lastyear. Volume decreased 3 percent and price rose 26 percent. The Chlor-Alkali/Chlor-Vinyl businessreported strong sales growth, particularly in EMEA where the business achieved double-digit priceincreases. The largest price gains were reported in caustic soda, where tight supply and continued strongdemand in the alumina and pulp and paper industries supported further pricing initiatives. Vinyl chloridemonomer sales were higher than the same period last year due to strong price increases in response torising ethylene costs. Ethylene Oxide/Ethylene Glycol volume increased from the year-ago period as theindustry experienced unplanned production outages and planned turnarounds. The business reported adouble-digit increase in price, led by gains in EMEA and North America.Equity earnings were $130 million for the quarter, compared with $54 million in the year-ago period.

EBITDA for the segment was $282 million, which compares with EBITDA of $100 million in the sameperiod last year.

Outlook

Commenting on the Company’s outlook, Liveris said:"Dow’s broad geographic reach and leadership in many attractive, high-growth end-markets firmlyposition us to benefit from the megatrends that are defining our future. On the whole we see growthcontinuing to gain traction in developed markets, albeit at a somewhat uneven and jagged pace givenpersistently high unemployment in the United States and sovereign debt concerns in Europe. In fastgrowingemerging geographies, despite some inflationary pressures, the rapid expansion of the middleclass continues to drive robust underlying fundamentals, and our strong presence and diversification inthese high-growth economies continues to serve us well.

"Overall, while no one is immune to unexpected global economic developments, Dow’s focus remainssteadfast on achieving our strategic objectives, and we are optimistic about our growth prospects in thesecond half and beyond. Our investments to drive growth, coupled with our actions to further enhance ourfinancial flexibility and market diversification, provide a foundation of strength. With these strengths wewill continue to mitigate volatile external conditions and capitalize on areas of greatest opportunity –evidenced by the top- and bottom-line growth we delivered once again this quarter. This is the power ofour strategy in action."

For more information, contact:+1 989 638 8568

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