Materials giant Dow Inc. is cutting 2,000 jobs as part of a cost-savings plan.
Midland, Mich.-based Dow announced the moves Jan. 26, the same day it released fourth-quarter and full-year 2022 financial results. Officials said in a news release the proactive actions "will further optimise [Dow's] cost structure in response to near-term macroeconomic uncertainty, while maintaining its long-term competitiveness across the economic cycle."
The job cuts are part of $500 million in structural improvements that also includes "shutting down select assets, while further evaluating Dow's global asset base, particularly in Europe, to ensure long-term competitiveness."
Dow also plans $500 million in operating expense reductions for a total of $1 billion in cost savings in 2023. Those reductions will include decreasing turnaround spending, reducing purchased raw materials, logistics and utilities costs, and aligning spending levels to the macroeconomic environment.
"We are taking these actions to further optimise our cost structure and prioritise business operations toward our most competitive, cost-advantaged and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe," Chairman and CEO Jim Fitterling said.
He added that Dow "remains committed to capitalising on our long-term growth opportunities in a disciplined and balanced manner…these actions further position us to advance our 'Decarbonize and Grow' strategy and strengthen our competitive position."
Dow will record a charge of $550 million to $725 million in the first quarter of 2023 for costs associated with these moves. Those costs primarily include severance and related benefit costs; costs associated with exits and disposals; and asset write-downs and write-offs.
For full-year 2022, Dow reported sales of $56.9 billion, up 3.5 percent vs. 2021. But the firm's net profit — not counting a provision for income taxes — declined almost 28 percent to $4.64 billion.
Dow's Packaging and Specialty Plastics unit — including polyethylene resin — saw full-year 2022 sales grow 4 percent to $29.3 billion, although operating EBITDA slid 31 percent to $5.5 billion. Based on sales, P&SP was the largest of Dow’s three operating units in 2022, bringing in just over 51 percent of total sales.
In Dow's Industrial Intermediates and Infrastructure unit, including polyurethanes, 2022 sales were down 1.5 percent to $16.6 billion as operating EBITDA declined 32 percent to just under $2 billion.
On Wall Street, Dow’s per-share stock price was down about 1 percent to $57.40 in early trading Jan. 26. The price is up almost 14 percent since Jan. 1.
Dow is one of the world's largest producers of polyethylene and specialty resins. The firm employs 37,800 worldwide.