Layoffs are spreading past tech. That’s a troubling pattern buyers must be taking note of.
On Thursday, chemical substances big
(ticker: DOW) reported weaker-than-expected fourth-quarter numbers. It sees the worldwide economic system slowing down and is making ready for weak point by chopping prices and specializing in money technology. That’s the correct playbook for a weak working surroundings.
Still, nobody, particularly workers, likes to see weak point in enterprise.
‘s plan to cut back prices by $1 billion consists of 2,000 layoffs.
(MMM) additionally posted weaker-than-expected fourth-quarter outcomes and introduced 2,500 layoffs. Those numbers may be extra troubling than the cuts introduced by tech giants. While the numbers from tech are greater, tech corporations reported unbelievable progress in the course of the Covid-19 pandemic.
Take Google father or mother
(AMZN). That pair has introduced cuts totaling 30,000 staff in 2023. At the tip of 2021, Amazon had greater than 1.6 million workers and
employed nearly 157,000. At the tip of 2019, Amazon’s headcount was about 800,000 and Alphabet’s was lower than 120,000.
Google and Amazon appear to be adjusting workforces after a really odd pandemic-induced interval of progress. Dow and
are chopping employees as a result of they see the economic system weakening.
As for earnings, Dow reported fourth-quarter earnings per share of 46 cents from gross sales of $11.9 billion. Earnings earlier than curiosity, taxes, depreciation and amortization (Ebitda) got here in at $1.3 billion. Wall Street was searching for earnings of 57 cents a share and $1.4 billion in Ebitda from $12 billion in gross sales.
Sales “beats” and “misses,” nevertheless, aren’t all that important for chemical producers. Input prices fluctuate considerably and corporations are sometimes judged extra on the unfold they’ll earn between uncooked materials and product costs.
Cash from operations continued to be sturdy at greater than $2 billion, up from the $1.9 billion generated within the third quarter of 2022.
A 12 months in the past, within the fourth quarter of 2021, Dow earned $2.15 a share and $2.9 billion in Ebitda from $15.3 billion in gross sales.
“Team Dow continued to proactively navigate slowing global growth, challenging energy markets, and destocking,” stated CEO Jim Fitterling. “In response, we shifted our focus to money technology within the quarter as we lowered working charges, applied cost-savings measures, and prioritized higher-value merchandise the place demand remained resilient.
Dow shares had been down 1.8% Thursday. The
fell 0.1%, whereas the
Dow Jones Industrial Average
was off by 0.3%.
Investors and analysts will need to hear extra about what 2023 will carry. For the approaching 12 months, Wall Street is searching for revenue of $4.20 a share and $$7.2 billion in Ebitda from $51.9 billion in gross sales.
Dow inventory is buying and selling at about 14 occasions estimated 2023 earnings. The S&P 500 trades for about 16 occasions estimated earnings.
Write to Al Root at [email protected]