Dow Inc. will cut 6 percent of its jobs and cut costs by an additional $150 million in 2020 as the effects of the coronavirus on its business became clearer in its second fiscal quarter.
"Based on what we've seen in the second quarter and into July, we continue to expect a gradual and uneven recovery," CEO Jim Fitterling said as the company released its financial results.
Midland, Mich.-based Dow will "remain intensely focused on the actions within our control. … We will upsize our 2020 operating expense reduction target from $350 million to $500 million," he said.
The announcement comes as Dow begins reopening some plants it had shut down when demand fell early in the COVID-19 pandemic.
Dow will also restructure to increase its earnings before interest, taxes, depreciation and amortization (EBITDA) by $300 million by the end of 2021.
"This program includes a 6 percent reduction in Dow's global workforce as well as actions to exit uncompetitive assets," the company said.
Dow sales were $8.4 billion in the second quarter of 2020, a drop of of 24 compared with the same period in 2019.
Operating EBIT across the business fell 95 percent and hit $57 million. In the same period in the previous year the operating EBIT was $1 billion.
Fitterling said that despite the headline falls and losses at EBIT level, Dow had increased cash flow in the quarter.
But he warned that "extended economic lockdowns shifted the inflection point for demand recovery in key markets and geographies into June, where we began to see gradual improvements across most industries."
The growing recovery in China and early signs of improvement in Western Europe are positive indicators for the U.S. and Latin America going forward.
Dow had closed three polyethylene units and two elastomer plants earlier this year. The company has already restarted the PE unit in Bahia Blanca, Argentina, and has announced plans to restart the PE plants in Freeport and Seadrift, Texas, this month.