In an effort to preserve cash as the global economy fitfully recuperates from the COVID-19 pandemic, Dow is reducing its workforce by 6%—about 2,200 employees—and aims to shutter uncompetitive facilities.
Dow is the first major chemical company to announce earnings for the second quarter, the period most impacted by the US lockdowns intended to stem the spread of the novel coronavirus. Its sales fell by 24% compared with the same period in 2019, to $8.4 billion; it posted a net loss of $225 million.
Packaging and specialty plastics—Dow’s largest segment—saw growth in nondurable packaging, such as for food, but that was offset by poor sales to durable markets and lower selling prices. Overall, the business’s sales fell 23%.
Despite a bright spot in resins for do-it-yourself coatings, Dow’s performance materials and coatings business posted a 21% sales decline. Sales in the company’s industrial intermediates business fell 28% as polyurethanes and construction chemicals were hit hard. Operating rates at plants making polyurethane raw materials have been driven to down to roughly 50%.almost halved.
In a conference call with analysts, CEO Jim Fitterling said Dow is seeing a recovery in Asia, driven by a rebound in China. “And while Europe and North America were generally slower to restart, especially with the delays in key industries like autos and construction, we are now seeing positive demand indicators across most of our segments,” he said.
Executives said the job cuts, meant to save about $300 million annually, anticipate a gradual and uneven recovery. Fitterling said Dow is also evaluating closing facilities that have been struggling during the pandemic. Charges to earnings for the restructuring program could amount to about $1 billion.