MIDLAND, Mich. (AP) -- Shares of Dow Chemical jumped 6 percent in premarket trading Wednesday after the company announced significant restructuring plans.
As part of its surprise third-quarter earnings announcement late Tuesday, Dow said it plans to eliminate about 2,400 jobs and close roughly 20 manufacturing facilities as it wrestles with slowing economic growth in Europe and elsewhere.
The cuts, which amount to about 5 percent of the company's global workforce, are expected to save Dow roughly $500 million per year by the end of 2014.
Dow also plans to cut capital spending and investments, saving another $500 million. The total cost-savings target was $2.5 billion.
Materials produced by the Midland, Mich., industrial giant are used in nearly every business sector and region of the world, leaving it exposed to shifts in global economic growth.
"Citing a slow-growth and volatile world, Dow announced another tranche of cost savings and reductions in capex," Jefferies analyst Laurence Alexander wrote in a note to investors. He gives the stock a "Hold" rating.
Citi Investment Research analyst P. J. Juvekar said he will look for more details from the company on cash-flow savings, areas where investments will be cut and target markets for cost reductions. Dow was scheduled to hold a conference call for analysts Wednesday morning. Juvekar also wants to know the impact of plant closures on fourth-quarter results. He gives Dow stock a "Buy" rating.
Shares of Dow rose $1.67 to $30.22 before the opening bell.
Dow issued its third-quarter earnings report on Tuesday, even though it had been expected to come out Thursday morning.
It reported a nearly 40 percent drop in net income to $497 million, or 42 cents a share, from $815 million, or 69 cents a share, in the same quarter last year.
Revenue dropped 10 percent, to $13.64 billion, led by a 10 percent decline in Europe.
But the earnings beat Wall Street forecasts. Analysts expected 37 cents a share on $14.18 billion in revenue, according to FactSet.
The company's business has been hurt by Europe's debt crisis and slower growth in China. Manufacturers, construction businesses and some transportation customers have reduced demand for Dow products. The company's coatings and materials for electronic devices also have been weak.
"The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations particularly in Europe and mitigate the impact of current market dynamics," Andrew Liveris, Dow's chairman and CEO, said in a statement.
Rival DuPont Co. on Tuesday reported a big drop in quarterly profit and missed Wall Street expectations. The company announced a restructuring that includes 1,500 layoffs.
Over the next two years, Dow Chemical Co. plans to close certain manufacturing facilities in the U.S., Belgium, The Netherlands, Spain, the United Kingdom and Japan.
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