Dow Chemical Company's stock tumbled 5.11% in pre-market trading on Thursday, following the company's announcement of plans to cut approximately 1,500 jobs globally and implement a $1 billion cost-cutting program in response to persistently weak macroeconomic conditions and sluggish demand recovery.

The materials science giant, which employs around 36,000 people worldwide, reported a break-even quarter for the fourth quarter of 2024, missing analysts' expectations of earnings per share of $0.24. The company cited lower demand for packaging and specialty plastics as a key factor weighing on its performance.

In a statement, Dow's Chairman and CEO Jim Fitterling said, "While these decisions are difficult, we must continue to take proactive actions to reduce costs while we navigate through this ongoing slower-than-expected macroeconomic recovery." The company aims to achieve $500 million to $700 million in direct cost reductions, primarily through cuts in purchased services and third-party contract labor.

The chemical industry has been grappling with a challenging regulatory environment, particularly in Europe, where some companies are reassessing their strategies. Last year, Dow announced a review of its European assets, focusing on its polyurethane business. The company also disclosed plans to shut down its Freeport unit in 2025, representing around 20% of North America's industry capacity, in an effort to reduce exposure to low-value merchant orders.

Dow expects to incur a charge of $250 million to $325 million in the first quarter of 2025 for costs related to the workforce reduction and associated benefits. The company remains optimistic about future demand growth in attractive end markets such as packaging, energy, and electronics, but cautioned that further cost reductions are necessary until a definitive recovery takes hold.