Dow posts dour quarterly results, says will slash 2,000 jobs

Dow posts dour quarterly results, says will slash 2,000 jobs
© Reuters. FILE PHOTO: A Dow sign is seen at the third China International Import Expo (CIIE) in Shanghai, China November 5, 2020. REUTERS/Aly Song/File Photo

(Reuters) -Chemicals giant Dow Inc on Thursday missed Wall Street estimates for fourth-quarter results, hurt by higher energy costs, weaker demand and supply chain disruptions and said it would cut about 2,000 jobs, or about 5% of its workforce.

Production costs have risen in recent quarters following Russia’s invasion of Ukraine, while China’s COVID-led lockdowns have squeezed demand for Dow, which sells its chemicals to industries ranging from automobiles and food packaging to electronics that are also facing supply chain disruptions.

Dow said it plans to achieve $1 billion in cost savings in 2023 by reducing operating expense by $500 million. It said it will shut down assets, and further evaluate its global asset base, particularly in Europe.

The company would record a charge of $550 million to $725 million in the first quarter of 2023 for costs associated with these activities.

Shares of  the company fell nearly 4% in premarket trade to $55.80.

Net sales in the fourth quarter fell 17% to $11.86 billion, pressured by customer destocking, missing the average estimate of $12 billion, according to Refinitiv IBES data.

The Midland, Michigan-based company also missed its profit estimates. It posted an operating income of 46 cents per share, compared with the average expectation of 58 cents per share.

Quarterly sales volume fell 8%, hurt by 18% decline in Europe, the Middle East, Africa, and India (EMEAI) and destocking in building & construction and consumer durables end-markets in the U.S. and Canada.

Overall prices dropped 5% in the fourth quarter from a year earlier.

Packaging (NYSE:PKG) and Specialty Plastics segment net sales in the quarter were $6.1 billion, down 16% compared with a year earlier.

Source: Reuters