GLOBAL – American multinational chemical corporation, Dow Inc. has announced plans to cut 5% (2,000) of its workforce in its pursuit to achieve US$1 billion (€0.92 billion) in cost savings in 2023.
The decision was revealed alongside fourth-quarter results showing a 17% year-on-year decline in net sales, to US$11.9 billion, and earnings impacted by higher production costs.
This optimization falls under the company’s goal of achieving US$500 million’s worth of structural improvements.
Such an ambition also includes increasing productivity via end-to-end process improvements and shutting down select assets.
Dow plans to evaluate its global asset base with a particular focus on Europe, hoping to ensure long-term competitiveness and enhance cost efficiency.
The other US$500 million is expected to be saved through operating expense reductions with a particular focus on near-term cash flow.
This is set to include a reduction in logistics and utility costs and raw materials purchased; a decrease in turnaround spending with a continued focus on maintaining safety and reliability; and aligning spending levels to the macroeconomic environment.
A charge of US$550 million to US$725 million is set to be recorded in the first quarter of the year, with asset write-downs and write-offs, costs associated with exit and disposal activities, and severance and related benefit costs expected to be the biggest drivers.
According to the company, its long-term plan of growing its underlying EBITDA by greater than US$3 billion by 2030 while reducing its carbon emissions by 30% in comparison to its 2005 baseline remains on track, as does its goal of reaching carbon neutrality by 2050.
It now plans to engage local stakeholders in each region and in compliance with local regulations and consultation processes.
Jim Fitterling, CEO and chairman and at Dow said: “We are taking these actions to further optimize our cost structure and prioritize business operations toward our most competitive, cost-advantaged, and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe.
“We remain committed to capitalizing on our long-term growth opportunities in a disciplined and balanced manner, and these actions further position us to advance our Decarbonize and Grow strategy and strengthen our competitive position.”
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