Dow to Cut Costs, Lay off 900 - Analyst Blog

By Zacks Equity Research,

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The Dow Chemical Company ( DOW ) announced that it will be cutting costs owing to weak demand of its products in Europe. As part of the move, the company has announced the closure of its manufacturing plants in Europe, North America and Latin America.

In addition, Dow plans to shut down three plants that produce Stryofoam Brand Insulation products. These plants are located in Estarreja, Portugal; Balatonfuzfo, Hungary; and Charleston, Illinois. The shutdown plans, which are expected to complete within a period of two years, will also include the idling of a Netherlands operation and the closing of a factory in Brazil.

Separately, Dow expects to lay off 900 workers as part of its previously announced cost-reduction efforts and its "Efficiency for Growth" program initiated in 2011.  The company also anticipates saving approximately $250 million annually from these actions. As part of this initiative, the company expects restructuring charges and write-downs of about $350 million to be incurred during the first quarter of 2012.

The company announced, in February 2012, its fourth-quarter 2011 results. Its revenues and earnings for the quarter missed the Zacks Consensus Estimates.

Dow did not forecast much improvement in market conditions for the first quarter of 2012. However, the company projected economic recovery to gain momentum into the second quarter and the remainder of the year. Dow expects to meet its short and long-term targets irrespective of the economic conditions.

Dow faces stiff competition from EI DuPont de Nemours & Co. ( DD ). We currently have a long-term Neutral recommendation the company. The stock maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report
DOW CHEMICAL ( DOW ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: DD , DOW , EI

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