8-KFinancial EventsOther Events

DOW INC. 8-K Report, Exit or Disposal Costs (Sep 30, 2020)

Filed September 30, 2020For Securities:DOW

Summary

Dow Inc. has filed an 8-K report on September 30, 2020, detailing significant restructuring actions approved by its Board of Directors. These measures are designed to reduce structural costs and enhance the company's competitiveness in response to the economic impact of the COVID-19 pandemic. The restructuring program includes a global workforce reduction of approximately 6% and rationalization of manufacturing assets through shutdowns and write-downs. The company expects to incur charges totaling between $500 million and $600 million in the third quarter of 2020. This includes significant allocations for severance costs, exit and disposal activities, and asset write-downs. The identified asset rationalization impacts specific facilities within the Industrial Intermediates & Infrastructure and Performance Materials & Coatings segments. Additionally, Dow announced the accelerated sale of its rail infrastructure assets for over $310 million and plans to divest marine and terminal operations for $620 million.

Key Highlights

  • 1Dow Inc. announced a restructuring program to reduce structural costs and improve competitiveness due to COVID-19 economic impacts.
  • 2The program involves a global workforce reduction of approximately 6%.
  • 3Manufacturing assets will be rationalized, including the shutdown of certain facilities in the Industrial Intermediates & Infrastructure and Performance Materials & Coatings segments.
  • 4Total charges for the restructuring are estimated between $500 million and $600 million, to be recorded in Q3 2020.
  • 5Asset write-downs and write-offs are estimated to range from $190 million to $210 million.
  • 6The company expects annualized EBITDA savings of over $300 million by the end of 2021 from these actions.
  • 7Dow also confirmed the accelerated sale of rail infrastructure assets for over $310 million and plans to divest marine and terminal operations for $620 million.

Frequently Asked Questions

The primary driver is the continued economic impact from the COVID-19 pandemic, which necessitates structural cost improvements and enhances competitiveness.

Dow expects to record total charges ranging from $500 million to $600 million in the third quarter of 2020. This includes severance costs, exit and disposal costs, and asset write-downs/write-offs.

The restructuring includes rationalizing manufacturing assets such as amines and solvents facilities, small-scale downstream polyurethanes facilities, coatings reactors, and upstream siloxane and silicon metal assets. Corporate assets like leased, non-manufacturing facilities are also being written off.

Dow expects to achieve total annualized EBITDA savings of more than $300 million by the end of 2021.