Dow forecasts dour quarterly revenue, says will slash 2,000 jobs
By Ankit Kumar
(Reuters) -Dow Inc on Thursday forecast current-quarter revenue below estimates and said it would cut about 2,000 jobs as the chemical giant navigates challenges including inflation and supply chain disruptions.
Production costs have risen in recent quarters following Russia’s invasion of Ukraine, while China’s COVID-led lockdowns and signs of a global economic slowdown have squeezed demand for Dow’s chemicals used in industries ranging from automobiles, food packaging to electronic items.
Dow Chief Financial Officer Howard Ungerleider said while the pace of inflation has moderated, the overall cost levels remain elevated.
Shares of the company fell 2.3% to $56.55 in morning trade. They fell 11.2% last year.
The company expects the recent shifts in China’s COVID policy to stimulate demand, but that would take some time to take effect.
“Chemical prices are likely to go up in the first quarter (2023) and we will see better demand in the second quarter,” said Aleksey Yefremov, analyst at KeyBanc Capital Markets.
Dow plans to save $1 billion in 2023. It said it would exit certain assets, and further evaluate its global asset base, particularly in Europe. Its announcement of job cuts will hit 5% of its workforce.
Chief Executive James Fitterling said the headcount reduction was not all specific to Europe, “although Europe is a big part of the earnings decline that’s driving us to take these actions”.
The company would record a charge of $550 million to $725 million in the first quarter of 2023 for costs associated with these activities.
The Midland, Michigan-based firm expects first-quarter revenue to be between $11 billion and $11.5 billion compared with average analysts’ expectations of 13.02 billion, according to Refinitiv data.
It expects 2023 capital expenditure be $2.2 billion, about 21% higher than last year.
Dow also missed Wall Street estimates for fourth-quarter profit and revenue.
(Reporting by Ankit Kumar; Editing by Shinjini Ganguli)