NEW YORK Dow Chemical Co, the largest chemical maker in the United States, said on Tuesday it plans to cut 5 percent of its workforce and shutter 20 plants as part of a restructuring program aimed at countering a slowing global economy.
Dow and other chemical companies face slipping demand for products around the world. Rival DuPont slashed its earnings forecast and announced 1,500 job cuts.
"The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations..." Andrew Liveris, Dow's chairman and chief executive, said in a statement.
The company, which hopes to save $500 million a year, said the cuts would result in a loss of around 2,400 positions worldwide.
Among its planned plant closings, Dow will shutter a high density polyethylene facility in Belgium, a sodium borhidrate plant in the Netherlands, and a manufacturing facility in Midland, Michigan.
The company will also take an unspecified charge related to its Dow Kokam LLC assets, reflecting weak demand for lithium-ion batteries.
Dow said it would pare capital spending and investment in programs that are no longer a priority. It said those cuts should save it an additional $500 million.
The company will take fourth-quarter charges of around 50 cents to 60 cents per share for asset impairments and write-offs, severance and other costs related to the measures.
Dow had initially planned to release its restructuring plans along with its third-quarter earnings on Thursday, but the news was inadvertently sent to a reporter at the Bloomberg News, according to a source on Dow's board of directors.
As a result, the company reported third-quarter earnings late on Tuesday and said it would hold a conference call on the results on Wednesday at 9 a.m. ET.
Dow posted a 39 percent fall in quarterly profit to $497 million, or 42 cents per share, hurt by weaker demand and price declines.
That compared with a profit of $815 million, or 69 cents per share in the same quarter last year, or adjusted earnings of $729 million, or 62 cents per share.
Sales were $13.6 billion, down 10 percent, or 7 percent on an adjusted basis. The decline was led by Europe where sales fell 10 percent, also hit by adverse exchange rates.
Analysts, on average, were expecting Dow to earn 37 cents a share, excluding items, on sales of $14.22 billion, according to Thomson Reuters I/B/E/S.
Shares of Dow fell 20 cents to $28.55 after the close of regular trading. The stock fell 4 percent in New York Stock Exchange trading.
(Additional reporting by Sakthi Prasad and Garima Goel in Bangalore, Michael Erman in New York, Braden Reddall in San Francisco, and Nichola Groom in Los Angeles; Writing by Anna Driver in Houston; Editing by David Gregorio and Chris Gallagher)