Entering text into the input field will update the search result below

Dow to cut 6% of workforce after posting Q2 loss

Jul. 23, 2020 7:35 AM ETDow Inc. (DOW)DOWBy: Carl Surran, SA News Editor12 Comments
  • Dow Inc. (NYSE:DOW) +1.5% pre-market after reporting a slightly larger than expected Q2 loss, but its 24% Y/Y decline in revenues topped analyst estimates.
  • Dow says it plans to cut its workforce by 6% as part of a restructuring program targeting more than $300M in annual EBITDA benefit by the end of 2021.
  • The company says it is raising its target for operating expense reductions to $500M from $350M previously.
  • Q2 sales in all three of Dow's major business segments fell from a year ago but beat expectations: Packaging & Specialty Plastics net sales fell 23% to $4B, Industrial Intermediates & Infrastructure fell 28% to $2.4B, and Performance Materials & Coatings fell 21% to $1.9B.
  • Dow delivered a $639M increase in cash flow from operations vs. the year-ago period, driven by working capital improvement and a $461M ethylene capacity reservation payment from Olin.

Recommended For You

Comments (12)

Have a tip? Submit confidentially to our News team. Found a factual error? Report here.

May look at it again down the road.
They waited until they could get visibility into the recovery and then they sized the workforce plan. It doesn’t say much for hopes of a quick recovery. Hiring these kinds of workers is expensive so they’re pretty sure they won’t need to in the next two years. Some folks could be given exit dates up to a year out with the chance to hire into newly posted jobs if things improve although they will do better to take the package and hop companies into a recovery.
RUWC profile picture
23 Jul. 2020
Any word or speculation on the dividend?
23 Jul. 2020
Hello. This is from the Apr 30th 2020 conference call (Howard I. Ungerleider Dow Inc. - President & CFO) "We're also working on the nonoperating side of the house. So part of our cash flow in the first quarter was the $250 million that we got from the Nova judgment on the tax side. Obviously, if earnings are that kind of depressed and oil is down, we're going to see at least a $500 million release in cash on working capital. And then we've got some of the other nonoperating things that we're working on, which is the Olin payment that's expected and contractually obligated at the end of the year of about $500 million. So even at that level, we are more than comfortable and adequately able to cover that dividend. And we've got $12 billion of committed liquidity, including $3.6 billion of cash on hand. Link to transcript Q and A page 13: s23.q4cdn.com/...
Capt Jack Daniels profile picture
It should stay the same after all they increased their cash flow despite it all by over 600 million dollars even with the current dividend.
Johnny Skyhook profile picture
For anyone curious Dow has about 35,000 employees worldwide, so pretty deep cuts but not too unexpected given weakness in industrial intermediates and infrastructure which was the segment worst impacted.

Given that supply is starting to tighten in Asia, and that as US, Europe and Latin America start to recover from Covid, in my view things look promising for an eventual recovery, even if it's a bit early to call a rebound.

So I am sidelined on Dow for now, pending good news in infrastructure, but have been slowly building a long position in $BAK Braskem which just opened a new facility in the US, is a specialist in bioplastics and looks like a good long term bet.
Capt Jack Daniels profile picture
Cash flow is up over 500 million :)

Ring that change...
Capt Jack Daniels profile picture
THey should cut a lot more dead weigh.

Maybe lose a couple of VICE presidents who do very little.
Dividend Seeker profile picture
They'll make more with stimulus anyway
Increase in cash flow and working capital is good. Pork chops taste good too.
Chicken of the Cave profile picture
Isn't that about 2000 people? Wow...
TJ Burke profile picture
That’s a big chunk of people considering how much employee attrition occurred during the merger/split phase.
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.