Dow Implements Cost-Reduction Plans, Anticipates Annual Savings of Approximately $250 Million
Actions Reinforce Dow’s Previously Announced Cash Flow Intervention Capabilities
MIDLAND, Mich.--(BUSINESS WIRE)--The Dow Chemical Company (NYSE:DOW) announced today that it is implementing cost reductions in line with its commitment to actively manage its portfolio and in response to continued weakness in the European economy. Actions will include closing certain manufacturing plants in Europe, North America and Latin America, as well as canceling a selection of capital projects and implementing workforce reductions, as part of the Company’s previously announced cost-reduction efforts and its Efficiency for Growth program initiated in 2011.
Dow anticipates that it will save approximately $250 million annually from these actions. The savings are in addition to the $500 million in cash flow that Dow already delivered in 2011 from the inception in May 2011 of its Efficiency for Growth program, and are part of the Company’s goal to deliver an additional $250 million of cash flow from cost interventions in 2012. The Company anticipates that approximately 900 positions will be eliminated worldwide, and in the first quarter, Dow will take charges totaling approximately $350 million for asset impairments and write-offs, severance and other costs related to these measures.
“These actions, while difficult, are in full alignment with our commitment to continually manage our portfolio to adapt to changing and volatile economic conditions, as we are seeing particularly in Western Europe, and to preferentially invest in our fast-growing, technology-rich businesses,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “Today’s announcement further demonstrates our resolve and ability to take swift, strategic cash flow interventions that will keep Dow solidly on a trajectory to deliver $10 billion in EBITDA in the near term.”
Dow will shut down three plants that produce STYROFOAM™ Brand Insulation products located in Estarreja, Portugal; Balatonfuzfo, Hungary; and Charleston, Illinois; and idle a plant in Terneuzen, The Netherlands. Dow will also close its toluene diisocyanate (TDI) plant in Camaçari, Brazil. In addition to these closures, Dow will consolidate certain other assets in its Polyurethanes and Epoxy businesses, optimizing their operations while remaining focused on meeting customer needs and sourcing through non-impacted assets. These actions are expected to take place over the next two years.
Dow (NYSE: DOW) combines the power of science and technology to passionately innovate what is essential to human progress. The Company connects chemistry and innovation with the principles of sustainability to help address many of the world's most challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing agricultural productivity. Dow's diversified industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 160 countries and in high growth sectors such as electronics, water, energy, coatings and agriculture. In 2011, Dow had annual sales of $60 billion and employed approximately 52,000 people worldwide. The Company's more than 5,000 products are manufactured at 197 sites in 36 countries across the globe. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at www.dow.com.
Note: The forward-looking statements contained in this document involve risks and uncertainties that may affect the Company’s operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Company’s expectations will be realized. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.