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Dow Reports Substantial Earnings Improvement for the First Quarter of 2004

Review of First Quarter Results

The Dow Chemical Company (NYSE: DOW) reported sales of $9.3 billion for the first quarter of 2004, compared with $8.1 billion a year ago, an increase of 15 percent and a quarterly record. Net income was $469 million, and earnings per share were $0.50, both a six-fold increase from last year.

Volume increased 7 percent and prices increased 8 percent, more than offsetting a nearly $100 million increase in feedstock and energy costs above the very high levels of a year ago. Volume growth was particularly strong in Asia Pacific and Latin America. First quarter EBIT* was favorably impacted by joint venture performance. Results also included the impact of charges related to ongoing restructuring activities.

"Significant productivity improvements were achieved in the first quarter, continuing to build on the structural cost reductions of 2003," said J. Pedro Reinhard, executive vice president and chief financial officer. "Broad-based economic recovery in the first quarter resulted in increased volume in all operating segments and geographic areas. In fact, this was the first time that year-over-year volume increases were achieved in all operating segments since the second quarter of 2000."

In the Performance Plastics segment, sales increased 17 percent with strong volume in a number of end-use applications and across all businesses, with the largest growth in Polyurethanes and Epoxy Products & Intermediates. Dow Automotive sales grew substantially more than the industry through increased position at key accounts, particularly with customers in Europe.

Performance Chemicals sales increased 15 percent with higher volume and prices. Dow Latex posted a double-digit increase in sales, compared with a year ago, due to improved paper industry demand from advertising, magazines and packaging. Specialty Polymers volume was up 7 percent, compared with a year ago, reflecting increased demand for FilmTec reverse osmosis membrane elements, Methocel cellulose ethers and specialty chemicals of ANGUS Chemical Company.

The Agricultural Sciences segment had another record first quarter for both sales and EBIT, with sales up 20 percent and EBIT up more than 75 percent, compared with the first quarter of 2003. Volume increased in all geographic areas, led by Latin America and Europe. Florasulam cereal herbicide, launched in 2000, continued to show substantial volume gains, while insecticides growth was led by strong performance from spinosad insect control products.

The basics segments posted significant improvement, with more than a 200 percent increase in EBIT, reflecting improved industry supply/demand balances.

In the Plastics segment, sales increased 13 percent, and some margin restoration was achieved through effective price/volume management. Polyethylene recorded a double-digit increase in sales due to improved prices and sustained demand around the world. Dow customers who convert polyethylene into stretch film for packaging reported improving business conditions.

In the Chemicals segment, sales rose 22 percent compared with the same quarter of last year. Ethylene glycol volume increased by more than 25 percent compared with a year ago, due primarily to increased demand for polyester fiber in Asia Pacific. Vinyl chloride monomer profitability improved as industry operating rates increased.

"Dow employees continue to stay focused on the Company's financial improvement program, with specific concentration on price/volume and cost management, and ongoing restructuring — the factors which we can control," said Reinhard. "While volume gains make us more confident that industry conditions are improving, one must be mindful that historically high levels of feedstock and energy costs are still an issue affecting further margin restoration. The focus on improving earnings and financial strength will continue, and we are on our way to make 2004 a better year for Dow."

*Earnings before interest, income taxes and minority interests ("EBIT"). Reconciliation of EBIT to "Net Income Available for Common Stockholders" is provided following the Operating Segments and Geographic Areas table.

Upcoming Webcasts:

• Dow will host a live Webcast of its first quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 10 a.m. EDT.
   
• Dow will host a live Webcast of its Annual Meeting of Stockholders on Thursday, May 13, at 2 p.m. EDT on www.dow.com.

About Dow
Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $33 billion, Dow serves customers in more than 180 countries and a wide range of markets that are vital to human progress, including food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its approximately 46,000 employees seek to balance economic, environmental and social responsibilities. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.

Note: The forward-looking statements contained in this document involve risks and uncertainties that may affect the Company's operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Company's expectations will be realized. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.