Chemical and plastics giant Dow (DOW) - Get Report, now a separate entity from DuPont, on Thursday posted a narrower-than-expected quarterly loss and said it was cutting its workforce by 6% as the coronavirus pandemic weakens demand for its processed materials both at home and abroad.
The Midland, Mich.-based company posted a net loss of $217 million, or 31 cents a share, vs. income of 75 million, or 10 cents a share, in the year-ago period. Analysts polled by FactSet had been expecting a loss of 41 cents a share.
Revenue came in at $8.35 billion, down from $11.01 billion in the year-earlier quarter though slightly above analysts’ forecasts of $8 billion.
A boost in demand for its materials in packaging, health and hygiene, home care and pharma wasn’t enough to offset weakness in demand for consumer durable goods-related chemicals and plastics, Dow CEO Jim Fitterling said in a statement.
“Recognizing the significant impact that Covid-19 would have on demand in the quarter, Dow took proactive actions to electively focus on cash and maintain our financial strength,” he said, noting the company continued to focus on maintaining liquidity, reducing debt and divesting assets, including some of its rail infrastructure components.
However, “Based on what we’ve seen in the second quarter and into July, we continue to expect a gradual and uneven recovery and, therefore, remain intensely focused on the actions within our control and maximizing our operational advantages,” Fitterling said.
To do that, Fitterling said Dow will “upsize” its 2020 operating expense reduction target to $500 million from $350 million, including targeting $300 million in cost reductions, in part through a 6% reduction in Dow’s global workforce as well as actions to exit uncompetitive assets.
“While these are difficult decisions, they are necessary to maintain competitiveness while the economic recovery gains traction,” Fitterling said.
Dow employs approximately 36,500 people across 109 sites in 31 countries. The commodity chemical maker was spun off of DowDuPont in April 2019, at which time it became a public company and was added to the Dow Jones Industrial Average.
Shares of Dow were down 4.67% at $42.27 in trading on Thursday.