Dow Inc. has announced plans to lay off 1,500 employees as part of a $1 billion cost-saving initiative.
The move comes as the chemical industry struggles with weak demand, high input costs, and declining margins, particularly in Europe.
The announcement sent Dow’s shares tumbling 6.3% in morning trading on Thursday.
Global Workforce Reductions and Expense Cuts
- The layoffs will be global, with a focus on Europe and Asia.
- Dow aims to cut additional expenses, expecting savings between $300 million and $500 million this year.
- The company continues to review its European operations, with an update expected by mid-2025.
Sales Miss and Margin Challenges
Dow’s financial outlook remains under pressure:
- The company forecasts $10.3 billion in sales for the current quarter, missing analysts’ expectations of $10.78 billion.
- High global feedstock and energy costs are eroding margins.
- Executives warned that these cost pressures could impact quarterly earnings by $100 million.
Packaging Segment Takes a Hit
The packaging and specialty plastics segment, Dow’s largest revenue driver, saw a 5.8% drop in quarterly net sales to $5.32 billion. Lower prices outweighed increased demand for packaging products.
Despite challenges, Dow remains optimistic about demand growth in North America, particularly for polyethylene, a key material in packaging.
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European Operations Under Review
Dow is taking steps to adjust to the challenging market in Europe:
- The company is idling one of its European ethylene crackers starting in the second quarter.
- Operations will resume once market conditions improve.
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Navigating a Tough Market
Dow’s break-even earnings per share in the fourth quarter fell short of Wall Street’s estimate of 24 cents per share. As the company navigates ongoing cost pressures, it is making strategic cuts while keeping an eye on future demand recovery, particularly in North America.
With a major restructuring underway, investors will be watching closely for further updates on Dow’s European asset review and the impact of its cost-cutting measures.
