Dow Inc. outlines target actions to deliver $1B in cost savings in FY23

Dow Inc. outlined a series of targeted actions aligned to its previously stated plan to achieve $1B in cost savings in 2023. The actions will aim to optimize the company’s cost structure in response to near-term macroeconomic uncertainty, while maintaining its long-term competitiveness across the economic cycle. Specifically, Dow expects to realize $1B in cost savings in 2023 through: structural improvements of $500 million, maintaining a low cost-to-serve operating model; optimizing labor and services costs, including a global workforce reduction of approximately 2,000 roles; shutting down select assets, while further evaluating Dow’s global asset base, particularly in Europe, to ensure long-term competitiveness and enhance cost efficiency and increasing productivity via end-to-end process improvements. Operating expense reductions of $500M, focused on near-term cash flow include: decreasing turnaround spending, with a continued focus on maintaining safety and reliability; reducing purchased raw materials, logistics and utilities costs and aligning spending levels to the macroeconomic environment. "We are taking these actions to further optimize our cost structure and prioritize business operations toward our most competitive, cost-advantaged and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe," said Jim Fitterling, Dow chairman and CEO. "We remain committed to capitalizing on our long-term growth opportunities in a disciplined and balanced manner, and these actions further position us to advance our Decarbonize and Grow strategy and strengthen our competitive position." The company will record a charge of $550M to $725M in the first quarter of 2023 for costs associated with these activities, which primarily include severance and related benefit costs; costs associated with exit and disposal activities; and asset write-downs and write-offs. Longer-term, Dow remains on track to grow its underlying EBITDA by greater than $3B by 2030 while reducing its carbon emissions by 30% versus its 2005 baseline as it progresses on its path to carbon neutrality by 2050.