Michigan-based company Dow Inc. announced Thursday that it would lay off 1,500 employees as part of a $1 billion cost-cutting initiative, citing sluggish demand and margin pressures. The announcement sent Dow’s shares tumbling 6.3% in morning trading.
Like much of the industry, the chemical giant is grappling with rising input costs and weak pricing power, particularly in Europe, where regulatory challenges have forced companies to rethink their strategies.
Focus on Europe and Asia
The company plans to implement workforce reductions worldwide, with a focus on Europe and Asia.
In addition to job cuts, Dow expects to save between $300 million and $500 million this year by streamlining expenses.
The company also provided a disappointing sales forecast for the current quarter, projecting revenue of $10.3 billion—falling short of Wall Street’s expectations of $10.78 billion, according to LSEG data.
Executives warned that higher global feedstock and energy costs continue to outpace price increases, squeezing margins. They estimate this will negatively impact earnings by approximately $100 million in the current quarter.
Dow’s largest revenue-generating segment, packaging, and specialty plastics, saw a 5.8% decline in quarterly net sales, dropping to $5.32 billion compared to the same period last year. While demand for packaging products remained strong, lower prices offset those gains.
Dow remains optimistic about polyethylene demand
Despite these challenges, Dow remains optimistic about polyethylene demand growth in North America, a key component in packaging materials. The company is also actively reviewing its European operations and expects to provide an update by mid-2025.
On the earnings front, Dow reported adjusted break-even earnings per share (EPS) for the fourth quarter, missing analysts’ expectations of 24 cents per share.
To navigate the tough market conditions, Dow announced plans to idle one of its European ethylene crackers in the second quarter, with operations set to resume once market conditions improve.
Dow’s cost-cutting strategy highlights the mounting pressures facing the chemical industry as weak global demand, rising costs, and regulatory challenges weigh on growth. While the company looks to stabilize its margins, investors remain cautious as economic uncertainties persist.
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