Sector News

Dow Chemical to cut more jobs ahead of DuPont merger

February 2, 2016
Chemical Value Chain

(Reuters) – Dow Chemical Co (DOW.N) said it would cut 500 more jobs as it speeds up cost reductions, ahead of its merger with DuPont (DD.N), to counter the impact of a strong dollar and weak demand for agrichemicals and seeds.

Shares of the company, which reported a better-than-expected quarterly profit on higher margins, rose as much as 4 percent to $44.46 in morning trading.

Dow is targeting an additional $300 million from cost savings in 2016, building on the $345 million it realized last year, Chief Financial Officer Howard Ungerleider said on a post-earnings call.

DuPont said last Tuesday it would cut $730 million in costs in 2016, with annual savings adding up to $1 billion.

The two companies have said their combination – which will later split into three businesses, focused on material sciences, specialty products and agriculture – will save $3 billion annually.

The job cuts announced on Tuesday takes Dow’s total workforce reduction to 2,200, Chief Executive Andrew Liveris said on the call, adding that the company has laid off 1,200 employees so far. Dow employed 49,500 people worldwide in 2015.

DuPont, similarly, plans to cut 10 percent of its workforce of about 54,000 employees.

Dow also named James Fitterling president on Tuesday. Fitterling, who will continue as COO, will report to Liveris.

The chemical maker is facing renewed pressure from activist investor Daniel Loeb of hedge fund Third Point, who is now calling for the removal of Liveris from the merged company.

Loeb, who had previously called for a break-up of the company, sent a private letter to the company’s board in December, raising questions about the timing of the DuPont deal, according to the Wall Street Journal.

Cost cuts boosted Dow’s operating margin by 406 basis points to 20.9 percent in the three months ended Dec. 31. Cost of sales fell 24 percent to $8.81 billion.

Operating EBITDA at Dow’s plastics business, its biggest by sales, rose to $1.3 billion from $1.2 billion a year ago, due to historically low crude costs.

Excluding a gain of $1.96 per share from the spinoff of Dow Chlorine Products, the company earned 93 cents per share, handily beating the average analyst estimate of 70 cents, according to Thomson Reuters I/B/E/S.

Net sales fell 20 percent to $11.46 billion, beating analysts’ estimate of $11.2 billion.

(Reporting by Amrutha Gayathri in Bengaluru; Editing by Anil D’Silva)

comments closed

Related News

February 4, 2023

Eastman acquires performance films company Ai-Red Technology

Chemical Value Chain

Eastman Chemical Co. (Kingsport, Tenn.) announced it has acquired Ai-Red Technology (Dalian) Co., Ltd., a manufacturer and supplier of paint protection and window film for auto and architectural markets in the Asia Pacific region.

February 4, 2023

BASF and StePac partner on chemical recycling MAP packs to fight food waste

Chemical Value Chain

BASF and Israeli packager StePac have joined forces to create the “next generation” of fresh produce packaging. BASF will provide StePac with greater flexibility to advance contact-sensitive packaging formats to a higher sustainability standard by supplying StePac with Ultramid Ccycled – a chemically recycled polyamide 6.

February 4, 2023

TotalEnergies and Intraplás partner on food-grade renewable biopolymer production

Chemical Value Chain

TotalEnergies’ biorefinery in La Mède, France, allows direct access to renewable feedstock for its drop-in RE:newable polymer range derived from bio-based products. The company claims these polymers retain virgin-like properties.

How can we help you?

We're easy to reach