Good day, everyone, and welcome to The Dow Chemical Company's first quarter 2013 earnings results conference call. (Operator Instructions). Also, today's call is being recorded. At this time, it is my pleasure to turn the conference over to Doug May, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Nicole. Good morning, everyone, and welcome. As usual, we are making this call available to investors and the media via webcast. This call is the property of The Dow Chemical Company and any redistribution, retransmission or rebroadcast of this call in any form without Dow's expressed written consent is strictly prohibited. On the call with me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer, Bill Weideman, Executive Vice President and Chief Financial Officer and Dale Winger, Associate Director of Investor Relations. Around 7 A.M. this morning, April 25, our earnings release went out on Business Wire and was posted on the internet on dow.com. We have prepared slides to supplement our comments in this conference call. These slides are posted on our website and through the link to our webcast. Now, some of our comments today include statements about expectations for the future. Those expectations involve risks and uncertainties. It cannot guarantee the accuracy of any forecast or estimates and we do not plan to update on forward-looking statements during the quarter. If you would like more information on the risks involved in forward-looking statements, please see our SEC filings. In addition, some of our comments will reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website. Unless otherwise specified, all comparisons presented today will be on a year-over-year basis. EBITDA, EBITDA margins and earnings comparisons exclude certain items. The agenda for today's call is on slide three. Now I will now hand the call over to Andrew.

Thank you, Doug. Good morning, everyone and than you for joining us. Turning to slide four. In the first quarter, our focus on execution and controlling what we could control, produced strong results despite a persistent challenging macroeconomic environment. We delivered adjusted earnings per share of $0.69, a 13% increase year-over-year. Strong local pricing actions delivered 1% overall increase in price. This is a strong achievement, given the deflationary environment that existed late in the quarter in key commodity inputs. Excluding Feedstocks and Energy, volume was flat indicating share gains in key sectors as the year-on-year market comparable was against a strong Q1 2012. Notably, we drove demand and share growth in emerging geographies, particularly in Latin America. Our performance plastics franchise delivered a very strong performance due to a robust and positive U.S. feedstock fundamentals and focused price discipline in Europe where the market remains very soft. Agricultural sciences achieved record level sales and EBITDA on healthy farmer demand and increasing sales of new technologies. Equity earnings increased due primarily to strong performance from our ethylene-based joint ventures in Kuwait. As a result, adjusted EBITDA grew nearly 10% and adjusted EBITDA margins expanded 170 basis points, a strong outcome in the current environment and we continued our intense focus on cash management evidenced by nearly $500 million increase in cash flow from operations year-over-year. Finally, in line with our stated cash priorities, we continued to de-leverage reducing gross debt just over $900 million in the period. In sum, our result this quarter clearly illustrates the level of blocking and tackling and operational excellence with which our executive team and business leaders are aggressively manage our businesses. Every member of our leadership team is personally accountable for driving price and volume management, delivering our committed cost reductions, optimizing cash generation capabilities across our global asset grid and prioritizing working capital and capital expenditures. We are driving a total focus on cash, capital and cost with price maximization wherever we can get it, all of this in a soft global environment. As we enter the second quarter, we continue to make progress with strategic investments that enable us to capture growth in our focused approach to end user and geographic markets while at the same time aggressively managing our portfolio. We are actively slipping out of those units that are underperforming and deciding on their future as well as applying a best owner mindset and discerning lens across the entire company. I am confident we have the right plan in place to deliver near-term's earnings growth and the right long-term catalyst to reach our target and drive sustainable value. I'll have more to say on this on in a moment, but first let me turn it over to Bill for more detail on our financial and operating results in the quarter.

Thank you, Andrew. Let me begin by providing financial summary on slide six. Dow reported earnings of $0.46 per share or $0.69 per share, excluding certain items. Certain items in the quarter totaled $0.23, which included a charge for the early extinguishment of debt and implementation costs associated with our restructuring activities, as well as a non-cash charge related to adjustment of uncertain tax positions. EBITDA and adjusted EBITDA grew in the quarter, reflecting focused price and volume management, which brings me to slide seven. Price momentum was strong in the first quarter, up 1% despite a year-over-year decline in purchase, feedstock and energy costs. Local price increased in most operating segments. Importantly, we also delivered a 2% price increase, sequentially. We remain diligent in our price volume discipline and we will continue to keep a sharp focus here going forward. Overall, volume was down 3%. Excluding feedstock and energy, volume was flat. At a geographic level, volume was flat in North America, or up 4%, excluding feedstock and energy. Volume grew in Latin America due to strength in our agricultural sciences and performance plastics businesses. However, volume declined in Europe. Now moving to our operating performance on slide eight, overall, we grew EBITDA and expanded margins due in large part to the price volume management I just discussed. Another positive driver of performance was equity earnings, which were up year-over-year due to gains in our Kuwait joint ventures. In addition, we benefited from the impact of our previously announced restructuring actions. In total, we have already shut down 17 sites, and the remainder progressing according to schedule. In addition, our workforce reduction targets are tracking ahead of schedule. The savings from our restructuring actions will continue to ramp as we move through the year. Now turning to our operating…

Thanks, Bill. As you know, we've laid out clear plans to aggressively drive value growth. At a strategic level, our actions were squarely focused on driving cash, cost, capital and driving measures, with clear plans in each of our businesses. Improving our overall return on capital and reviewing our entire portfolio for strategic opportunities to maximize and optimize value. Let me show you show you how on slide 13. Our focus on ROC is critical in our decision making process as this is the lens through which we are prioritizing investments and value creation opportunities moving forward. For example, in electronic and functional materials, performance plastics and agricultural sciences, we continue to invest for strategic value growth as these businesses are exhibiting very strong underlying fundamentals in their end-use markets and Dow is very competitively advantaged. However, in our coatings and infrastructure and performance materials segments, we recognize that there is still work to be done. I will share more of these actions in a moment. In addition to ROC improvement, we are applying a best owner view of our entire portfolio to optimize shareholder value. Turning to slide 14, for example, since 2009, we have divested non-core businesses representing about $8 billion in revenue. At our investment forum in December, we announced the near-term divestiture goal of $1 billion. And in March, we accelerated this target moving to $1.5 billion of proceeds within 18 months. This demonstrates our bias to achieve more sooner. Here again, our actions are well underway. In the first quarter alone, we divested the stabilizers portion of our plastic additives business, announced an agreement to sell our 50% ownership in Nippon Unicar Company Limited, a Japanese joint venture aligned with the Dow Electrical and Telecommunications business. We divested our 50% ownership in Nichigo-Morton Company. We…

Thank you, Andrew. Now let's move on to your questions. First, however, I would like to remind you that my comments regarding forward-looking statements and non-GAAP financial measures apply to both, our prepared remarks and the following Q&A. Nicole, would you please explain the Q&A procedure?

Certainly. I'd be happy to. (Operator Instructions). Our first question will come from P.J. Juvekar with Citi.

Andrew, overall your price volume strategy, it seems like you had the first positive pricing quarter in a long time, but your volumes turned negative. So, I guess, was that a deliberate strategy and what's the risk? Because many companies that have tried this many times it has backfired on them especially in a weak environment, so I just was wondering if you can talk a about that strategy.

Yes. So, let me go backwards. The volume point actually as I said to you this morning is something that is hidden in the way the volume loss was. Actually, it primarily reflects some end-of sales agreements from our polypropylene divestiture year-on-year, therefore the comparable on feedstocks and energy is not good because of that loss of those agreements as we were expecting it of course, plus a lot of feed slates, led to lower co-product sales, so it was less about losing volume based on price measures and that was mostly therefore in our feedstocks and energy business. Rest assured that we are watching very carefully price volume trade-offs and we believe that the ability to lead price increases in a lot of our businesses was based on understanding where to maximize margin. There are some very competitive assets that we have where we can really play our low-cost position, but we also have to watch our operating rate. So, yes, that's a weekly tracking activity P.J., we are very, very selective on how to get it done and there are some change, where price wasn't very responsive but in the main we got price where we needed to get them.

Then secondly if I look at your divestitures so far they've been mostly in commodity areas, polypropylene, polystyrene some technology there. Would you think of divesting any specialty assets that are underperforming?

Well, the announced list that we did in March that Bill did at one of the conferences included a couple of specialties, plastic additives and polypropylene, so the first cut polypropylene licensing is a true high-margin specialty business, the plastic additives and polypropylene businesses therefore good performance in the specialty portfolio, but we don't see them as strategic versus our other choices. And really that's our lens. It's ROC and strategic choices. Strategic choices are made on where we can actually be winners in end-use markets like electronics for example where we got a little bit of M&A going on occasionally, AgroSciences is a little bit of M&A going on occasionally, portfolio managing, so we can grow where we need to grow and if we see specialty businesses that we can't grow, we will divest them, so yes you can count on us doing more.

Our next question will come from Hassan Ahmed with Alembic Global.

A question around obviously your volumes were very strong on the Latin American side of things, and over the last couple of days there's been this tax reduction announcement as it pertains to certain raw materials for petrochemical producers out in Brazil. Now, how do you see that, if at all, impacting trade flows and the like, going forward?

Well, as you know, our portfolio in Latin America and the quarter showed this, the big performers were AgroSciences, which has nothing to do with that particular point, and Performance Plastics, which has a little to do with that point, but also remember that a bulk of our Performance Plastics in Latin America is from our Argentinean asset which is solution Lilia low-density polyethylene that goes into things like food packaging. We have customers for example, multilayer fills for food packaging in Brazil, we just had a big win where five of the six layers, are our film, our plastic in that film. So a very high end specialty. We don’t see therefore the down drop from the commodity petrochemical side as much as others, because of the nature of our mix.

I would also expect that being mostly naptha based producers out there, sure their local competitiveness, it may boost margins locally but the delta between ethane and naptha is so high that I wouldn’t expect trade flows to be negatively impacted at all.

I wouldn’t either and I would not neither, Hassan, and I - look you can see that from a variety of different ways, Braskem wanting to invest in Mexico, lots of Latin American producers coming up to the U.S. We have said our assets in Texas and Louisiana being built for U.S. demand. But if we export some of that will go to the Americas and therefore we will be advantaged even with that point you are making.

And a follow-up, if I may. On the polyurethane side of things, obviously you talked about volume strength but, I am sorry, some pricing strength at the cost of volumes but on a sequential basis did you see an uptick in profitability?

We did sequentially on polyurethanes. Yes. Basically the point that P.J. made, strong bulk and tackling price volume management. Our polyurethanes and epoxy business is sequentially and our coatings business really improved based on exactly that point.

Our next question will come from Kevin McCarthy, Bank of America Merrill Lynch.

Good morning. Question for you, Andrew, regarding your ethylene cycle outlook and specifically the $2 billion EBITDA uplift that you put forth. I am wondering how much of that relates to or depends on a scarcity driven peak in the ethylene chain? It would seem at the moment that there is not a lot of help on the demand side to get operating rates up. I think one of the industry-leading consultants has rates peaking out around $88. Do you disagree with that? Do you think it will go higher on operating rates? And if so, how do we get there? Are you counting on asset rationalization, for example?

in the main, Kevin, the commentary is around 2.5% to 3.5% global GDP growth rate these next several years with the early years, like this one, being at 2.5%, close to the 2.5% versus 3.5%. So look, that 2% delta, we have it going into the 90s early next year based on conservative GDP assumptions. Again, we can always go south from there. If you go south from 2.5% global GDP, you will get rationalizations, I think, especially I have never seen a cash cost curve on ethylene as steep as this one. The Northeast Asians, the Southeast Asians and the Europeans are very disadvantaged in the slow growth economy or no growth economy. So, there will be pressure if the GDP goes down side from our assumptions. Our assumptions, I think, they are pretty solid and have the operating rates in the 90s next year.

Okay, and then as a follow-up, if I may. Shifting gears to chloralkali. I was wondering if you could provide us with an operational update but also some thoughts on the strategic outlook for that business and whether or not you are still seeking a partner for the medium term?

Yes, ECU dynamics what Dow have, as we stated many times, value add to chlorine for our downstream derivatives. As time goes by, we will continue to look for more partners of the Mitsui kind and the Shintech kind who are interested in the EDC vinyl chain. We are not, and therefore, we are, if you like asset liking less capital intensity in that area. As we get assets coming up the end of useful life we will make decisions around partnership or shut down. I think that is protecting our downstream assets. If we can find a low-cost chlorine provider, versus producing our own, we will go that path. We are firmly on that path and one nothing will take us off that path, because we see the value add. Remember, also we now have a PO process that doesn't need chlorine. So, as we look at building against PO and PO derivatives in the U.S. that will be chlorine based, so you can see us making those moves over the next several while. Once we get DMCA started up in the back half of this year, we will be we relooking at the next a lot of chlorine investment with a view of not doing it ourselves.

(Operator Instructions). Our next question will come from Duffy Fischer, Barclays.

Yes. Good morning. Congrats on a good quarter. Andrew, there have been several statements over the last probably four or five months around the divestitures so first was $1 billion in revenue then we had 1.5 billion of proceeds. Today in the press release it looks like you are kind of increasing the scope of that. Can you triangulate those numbers over the next two years, what kind of sales contribution should we be thinking about as going and what kind of proceeds would we get back all-in for what's on tap now?

I'll let Bill answer that, Duff, if you don't mind.

Yes, Duffy, so to your point I mean we first announced that we are going to divest a $1 billion and as you know we upped that to $1.5 billion over the next 18 months. That $1.5 billion is defined as pre-tax proceeds, okay? So, that is the definition. And, as Andrew highlighted in his comments, we've already announced the plastic additives and the polypropylene licensing in catalyst. I can just give you a quick update on those. The plastic additives, we actually took to market in March, and so we are expecting the signing sometime in the second quarter and closing by the end of the year. In the polypropylene licensing and catalyst we'll take to market in the second quarter with an anticipated signing third quarter, again, target of signing by the end of the year. So, I can tell you without giving any specific numbers, those that we've already laid out will be a significant portion already of that target that we laid out and our target is to complete those by the end of the year, so hopefully that helps, so it's pre-tax proceeds in the next 18 months, and the ones we already have announced we are targeting to complete by the end of the year.

Okay. Then if we switched to Dow Agro, I guess kind of two questions there. One the deal that DuPont signed with Monsanto, where it looks like now DuPont is going to take the double stack of Dicamba plus round up into their soybeans, where before it looked like DuPont was going to take your enlist. Strategically, what does that do to your outlook for enlist in soybeans. Then just a second question, how many Herculex acres either standalone or inclusive of SmartStax do you think you will get this year?

On the rates with Monsanto and DuPont put together our enlist soybeans license with DuPont is global just to remind you and it's particularly valuable in the Latin American market where Dicamba does not enjoy the same registrations and widespread uses 2,4-D, so we don't really see much effect of that license and the Monsanto license with DuPont only covers North America. And frankly, the NPVs on our list entire project with the arrangement we now have the Monsanto actually have improved NPVs in totality including this new arrange between Monsanto and DuPont. I think on the number of Herculex acres for this particular year, we are seeing a pretty rapid, I mean it's about 70% of our own portfolio, but I don't have the acres top of mind, so we will get back to you specifically on that if you don't mind, Duffy.

We'll go next to Bob Koort, Goldman Sachs.

Good morning. It's actually Brian Maguire on for Bob today. Andrew, I was a little surprised by your comments around the volume decline in feedstock business that it was due to a lightning the cracker feed slate. Seem that last year the light end of the feed slate was pretty well advantaged over the heavy and I guess the polypropylene contract had something to do with your decision around a little bit heavier, but did you make any efforts of the lighten the feed slate over the last year that enable you to run lighter. I think you mentioned specifically in Europe you ran a little lighter. Were you just able to run a little bit more propane to (Inaudible) and or were there any efforts done over there to lighten the feed slate?

I love it when a question has the answer. That's great. That's exactly, but the propane in Europe was exactly the lighter aspect of it. And, as you know we have the ability to be the lightest of the crackers in Europe is into news because of our conversion of propane over the many years we have been there, so it just led to less our remaining sales because we had co-product sales from cracking propane.

Great, and then on slide 18. I noticed it looked like you have raised the target EBITDA for the St. Charles cracker. I think you had been talking about $150 million previously. Now you are talking about a $350 million run rate. Just wondering what changed there and for 2013, are you still thinking $150 million? And is that just because of running at lower operating rates for some reason?

Yes. Just two data points we have given the market now. $150 million was this year. $350 million was its run rate number, which the ramp up will be as we get the ethylene cycle and that will be the next year or two as I already answered on a previous question.

Our next question will come from Peter Butler, Glen Hill Investments.

I was looking at Ag Chemical numbers and you had a very healthy sales gain but the EBITDA was up just a lot less. And I am wondering why. There are several possible reasons but among which the bad weather and also Easter week was last week in the quarter. So that could have had an impact. Did you see a shift in earnings from this first quarter into the second quarter and if so how much?

So, Peter, a little bit but no, not much shift at all. Really, at the end of the day, less shift than normal, way less and it was really what it really is. We have said this is the market for sometime. This year is a big year, as is next year for the launch of four major new products for Dow AgroScience. Dow AgroScience has big year-on-year growth. It was the beginnings of all those new product launches are appearing in the expense column ahead of the revenue column and so refuge advanced power coal, Sulfoxaflor and ENLIST are all coming now this year and this big EBITDA numbers that we are pre-funding with R&D and marketing and promotional strategies. That’s why a disproportion amount of the sales dollar went into funding all that versus the EBITDA column. That’s it pretty much and that is alone. I just want to reaffirm, this agreement with Monsanto is validating game changing agreement for ENLIST and basically says it is going to be the trait of choice, frankly, for not just corn but for a variety of traits for soybean.

During your presentation, I think Weideman, when he was discussing the extraordinary sales growth you had in Seeds and Traits, I think he said something about that this part of the business had a high profitability and that isn’t my understanding. I thought that the Seeds and Traits, due to very high front end expenses was running no profits or even a loss. So did I just not catch that right?

Yes, Peter, the way you answer that is correct. You didn’t catch that right. So what I was talking was about, is a significant revenue increase that Andrew anger talked about 37%. But you are correct. We are investing in this business with all these product launches. So really what I just talked about a 37% increase was on the revenue line.

And I would also state that has been a high invest business for us, the Seeds, Traits and Oils. I will just tell you that that’s approaching breakeven these days.

We will go next to John McNulty, Credit Suisse.

Thanks for taking our questions and good morning. So with regard to the portfolio management, it sounds like you are taking maybe a little bit more of an aggressive tone in terms of identifying potential divestiture candidates and strategic actions and opportunities. First of all, is that the right way to think about, you are looking at it that it is a little bit more, there is more scrutiny but also does this potentially mean there may be larger scale assets that historically might have always been viewed as core that might not be going forward?

John, your question. So since we had the December investor forum, we talked about ROC. We also talked about markets where Dow can really grow because of its successes. Packaging, from a plastics point of view. AgroSciences, where we just finished talking about and food nutrition, so it's natural the portfolio context to do two things and if it across as more aggressive then fine. One, a market-driven capabilities and keep investing the thing you are winning at with an ROC best owner mindset, therefore nothing is sacred. We are going to keep driving that. That's what you can expect from us in the next many months and next many quarters and it's not just businesses that are on the commodity end as for the question P.J. We will be looking at specialty businesses that we can't grow at the pace that need to be grown and will be making those decisions from a portfolio point of view.

Great. Then just maybe as a follow-up with regard cash flows, your cash flows in the quarter were much bigger than they normally are, at least seasonally this tends to be a pretty light quarter for you and they were pretty strong, so is there anything different about this year that maybe changes the seasonality of that or should we be expecting kind of usual big ramp up as we get later on in the year in terms of your cash flows coming in?

Yes. Sure. This is Bill. You should continue to expect our cash flow to ramp as go through the year, because our working capital is a use of funds, because as you know and we build inventories ahead of a turnaround season and also we build inventory in the first quarter for product launches that Andrew talked about in age. So, going forward, you should expect our cash flow to continue to ramp. What drove our significant improvement in cash flow this quarter versus the year ago were higher earnings and also the actions that we've taken. For example, our CapEx spending is lower this quarter versus a year ago and will be lower the full year, so you should expect cash flow to continue to ramp as we go through the year?

Our next question will come from Vincent Andrews, Morgan Stanley.

Thanks. Good morning, everyone. Andrew, if I heard your comments earlier in regards to the ethylene cycle correct, it sounds like you are assuming probably a greater than historical GDP multiplier for ethylene. Is that correct? And if so, what gives you confidence in that given the data that's out there so far?

No. We don't expect greater, what we know, used historically. Back historically it's been as high. Two, we are using a 30-year average when we look at the multipliers, so no change there is the short answer, Vincent.

What is the more hedge multiplier is?

Yes. 1.4.

On average, right, but it has variability of course..

Our next question will come from David Begleiter, Deutsche Bank.

Thank you. Good morning. Andrew, just on ethane prices, as you look into 2014 and given the new ethane supply, is there a potential for ethane price to drop materially into low 20s even teens cents per gallon basis?

Well, yes. That's a fascinating question. I think if you are the producer side of this, you are basically seeing ethane at rejection levels. You know all the dry gas wells shutting, when gas prices went down below $3. As you know gas prices are rocketing up. And, as we predicted, but ethane is staying quite low and the question we put out is that to keep producing NGLs, what's the bottom. I don't think we are smart enough to call bottom, but I can definitely tell you that ethane is going to be like this now over the next year or two or three and we will keep testing bottoms and frankly keep testing breakthroughs higher than 30 or 35. So, I think ethane will be range bound with sorts of bottoms that you are talking about possible, maybe as kind detours, but in the 20s for the next year or two. I think is what our guys are calling.

Just on China quickly, Andrew. While your volume is up in Q1, what's your forecast for your China volumes?

In China, volumes were down 3% year-on-year, so now remembering that Chinese New Year and all the things Peter talked about Easter and all that nothing affects them, but just [global]. On little fact audition on China, their GDP now only has 25% of it driven by exports, where that number used to be historically around 50% to 60%. That's a big change, one. Two, consumption is down. That have was down government spending on all wasteful areas including things like backlog, so I would tell you China is soft, but started to show trend positive. I am not calling the turn. I think, we are planning is it going to be soft year, but there's a chance of tailwinds in second half.

Maybe time for one more question?

And our final question will come from Don Carson with Susquehanna International.

Yes. Thank you. A question on the propylene impacting in Q1 and how that is going to play out in Q2. We saw propylene spike in January, February reverse most of that. So what was the absolute dollar impact on your margins for the Performance Materials and Coatings and are you going to be able to recover that surge given that it is falling back and I understand about half of your propylene derivatives aren’t indexed to propylene itself.

Yes, propylene moving around like it did in the quarter was not a good thing for more commodity based propylene derivatives in terms of price power. The good news is that all of the coatings stuff is not impacted by that as much as it used to be. The ones that are, like (inaudible) where there is weak markets there is clearly going to be margin squeeze in the face of falling propylene. It is going to be hard to maintain price momentum. The way we are answering that is, we are not looking at deselecting customers and deselecting assets if we have to so that we can keep a high margin or, if you like, above the cost of capital, that’s our ROC lens. But there will be volatility and with downward projector already in April, there is going to be top sledding to get the price momentum in more commodity like propylene derivatives. A bottom line answer.

Finally, Andrew, on the last call, you indicated that as Freeport joint venture with Mitsui came up, you would make some offsetting closures and that you would have an update for us on what you are going to do with the Louisiana chloralkali assets. So can you make a comment on that?

Yes, as the last question, I don’t make this the headline again. The comment I have is no comment. We are basically, we will reevaluate after DMCA comes up, what happens to the chlorine envelope as I answered on our previous question.

Okay, Andrew, maybe you want to make a few closing comments.

Yes, I do. Thanks very much, everyone, for tuning in. Obviously we feel good about our quarter because we control what we could control. We had an EPSB. The revenue miss is not great because of what Bill said and I said about the feedstocks. We feel good, not because of the base, we feel good because of what we are doing. And what we are doing is we are working hard on the portfolio, we working very, very much on the things that matter to us in terms of prioritizing growth with the best on our mindset and shareholder value for us is key. You can expect us to continue to reduce debt. You can expect to continue to rewarding shareholders. At the end of the day, as the economy stabilizes to continue to control what we can control. Thanks, Doug.

Well, thank you everyone for your questions and for joining us this morning. We appreciate your interest in Dow. Four your reference, a copy of our prepared comments will be posted on Dow's website later today. This concludes our call for today. we look forward to speaking with you again soon. Thank you.

Thank you. Once again, that will conclude our call for today. Thank you all for your participation. You may now disconnect. Have a wonderful day.