05/02/2025

Dow Delays Some Projects, Considers Cuts to Improve Financial Outlook

Plastics News | Frank Esposito | April 24, 2025

Dow Delays Some Projects, Considers Cuts to Improve Financial Outlook

Materials giant Dow Inc. is taking some major steps to improve the firm's financial performance.

In an April 24 earnings release, officials with Dow in Midland, Mich., said the firm was delaying construction of a major petrochemicals project in Canada and expanding its review of its European assets, primarily in polyurethanes.

The massive Path2Zero project in Fort Saskatchewan, Alberta, was approved by the Dow board in late 2023. The $6.5 billion project was designed to be the world's first ethylene cracker and downstream derivatives unit with net-zero Scope 1 and Scope 2 emissions.

The project was set to increase annual production capacity for polyethylene resin at Dow's existing Fort Saskatchewan site by about 4.4 billion pounds. It was designed to include construction of a new ethylene cracker and retrofitting of the site's existing cracker.

Officials said at the time that the project "is expected to be one of Dow's most competitive sites in the world" and that it would decarbonize 20 percent of Dow's global ethylene capacity.

Dow and other U.S. PE makers could be impacted this year by proposed U.S. tariffs that could lead to retaliatory tariffs on PE or other U.S. exports. U.S. PE makers exported almost half of their production in 2024, setting an all-time record in that category.

Dow also expects to achieve at least $1 billion in targeted cost savings by 2026, including approximately $300 million in 2025. Capital expenditures for 2025 also will be reduced by approximately $1 billion.

"Taken together, these new and previously announced actions total approximately $6 billion in cash support to effectively manage the extended downcycle," officials said.

Up to $3 billion of that amount will come from the formation of Diamond Infrastructure Solutions, a partnership with Macquarie Asset Management, resulting in the sale of a minority stake in select U.S. Gulf Coast infrastructure assets.

The expanded review of Dow's European assets could include idling or shutting down an ethylene cracker in Böhlen, Germany; idling or shutting down vinyls-related assets in Schkopau, Germany; and the closing of a basics siloxanes plant in Barry, Wales.

In the release, CEO Jim Fitterling said Dow "remains focused on disciplined execution and increased actions to improve profitability and support cash flow."

"The significant impact of slower GDP growth and volatile market conditions on our industry underscores the importance of our proactive management and best-owner mindset," he added.

In the first quarter, Dow posted a loss of $290 million after showing a profit of $538 million in the same quarter in 2024. Total sales fell 3 percent for the quarter to just over $10.4 billion.

First-quarter sales at Dow's Packaging & Specialty Plastics unit — including a major PE resin business — were down more than 2 percent to just over $5.3 billion, with operating profit plunging 43 percent to $342 million. The unit's sales volume in pounds was up 1 percent for the quarter.

Dow's Industrial Intermediates & Infrastructure business, which includes polyurethanes, saw first-quarter sales fall 5 percent to less than $2.9 billion. That unit posted a first-quarter operating loss of $128 million after showing an operating profit of $87 million in the same quarter last year. The unit's sales volume in pounds for the quarter was up 1 percent.

Dow's new actions come three months after the firm announced plans to cut 1,500 jobs worldwide as part of a $1 billion cost reduction plan.

In a Jan. 30 interview with Plastics News, Chief Financial Officer Jeff Tate said that, proportionally, half of the cost reduction will come from Packaging & Specialty Plastics. He added that the job cuts and cost reduction will be "very targeted at lower margin regions" and said it was "a fair assumption" that those targets included high-cost operations in Europe.

Dow is one of the world's largest producers of PE and specialty resins. The firm posted sales of just under $43 billion in full-year 2024 and employs approximately 36,000 globally.

On Wall Street, Dow's stock price has been impacted by general economic turmoil so far in 2025. The price began the year around $40 but was near $29 in early trading April 24 for a decline of almost 28 percent since Jan. 1.