Dive Brief:
- Chemical manufacturer Dow announced on Thursday the launch of a cost-savings program to achieve a near-term improvement in earnings before interest, taxes, depreciation, and amortization of $2 billion.
- The strategy, dubbed “Transform to Outperform,” includes cutting its global workforce by 4,500 employees, according to a press release. Dow expects to spend approximately $1.1 billion to $1.5 billion to implement the plan, including up to $800 million on severance, COO Karen Carter said in a Jan. 29 earnings call.
- The program also aims to “radically simplify how we operate, streamline our end-to-end processes, reset our cost structure and modernize how we serve our customers,” CFO Jeffrey Tate said in the call.
Dive Insight:
The restructuring plan builds on a previously announced $1 billion savings plan that resulted in the layoff of approximately 1,500 workers. Dow later increased its savings goal to $6 billion in April 2025.
The company intends to adopt “new ways of working,” Carter said. This includes using automation and artificial intelligence throughout its end-to-end processes, which Dow expects will result in lower costs and improved efficiency across the company.
“We will modernize the way in which we grow with our customers through our industry-leading innovation capabilities and deeper insights into customer and end market needs,” Cater said. “Finally, we will fundamentally reset our cost structure. This work will result in a renewed focus on improved raw material sourcing and logistics to drive further efficiencies.
Net sales for Dow’s full year fell approximately 7% to about $40 billion compared to 2024, per the earnings release. However, the company’s net income losses jumped nearly 304% year over year to $2.4 billion.
Chairman and CEO James Fitterling said on the call that Dow recognizes many markets are shifting significantly, prompting the launch of its new cost-saving plan.
“Geopolitical dynamics, rapid advances in AI and automation and economic volatility require new breakthrough approaches, greater agility and continued technological adoption,” Fitterling said.
Dow’s fourth quarter net sales dropped 9.1% YoY to approximately $9.5 billion, whereas net income losses plunged to about $1.5 billion, much larger than last year’s $35 million net loss.
Nevertheless, Dow’s Q4 performance reflected its cost-saving measures, gaining significant traction across every segment in the second half of 2025 despite industry pressures, Carter said. She added that the manufacturer is on track to deliver more than $500 million in cost reductions, demonstrating the remainder of Dow’s 2025 $1 billion cost-savings program.
“This builds on our demonstrated ability to deliver higher-than-expected savings last year when we realized more than $400 million versus our original target of $300 million,” Carter said. “In addition to that, we are executing several strategic moves that will uniquely position Dow to win, many of which will begin to materialize in 2026.”
For example, the CFO said, Dow completed the start-up of its polyethylene 7, or Poly-7, world-scale polyethylene train last year.
The Poly-7 is designed for lower cost and increased capacity, as well as improve efficiency and flexibility, according to Carter. Moreover, it supports customer-driven demand in specialty packaging, health and hygiene, and industrial and consumer packaging applications.
Dow also completed a new ethylene oxide capacity, which will support growth in its industrial solutions segment and serve end markets such as home care, pharma and energy.
Dow’s other cost-saving efforts in 2025 include progressing its plans to shutter higher-cost upstream assets, including three in Europe. The shutdowns are expected to result in an annual EBITDA improvement of $200 million by 2029. The company will begin profiting from the shutdown of its basic siloxanes capacity in Barry, UK, by mid-2026.
