Ahead of its proposed merger with Dow Chemical Co., DuPont plans to shed approximately 10% of its workforce as part of the company’s 2016 global cost savings and restructuring plan, which is designed to reduce $700 million in costs compared with 2015. The 2016 cost reductions include a range of structural actions across all businesses and staff functions globally.
As a result of these actions, the company expects to record a pre-tax charge to earnings of $780 million, consisting of $650 million of employee separation costs and $130 million of asset-related charges and contract terminations. The plan calls for reducing DuPont’s global workforce by 10%. According to media sources, this equates to approximately 5,400 employees.
DuPont also highlighted 2016 macroeconomic expectations. Given global economic conditions in agriculture and emerging markets, the company expects sales growth in 2016 to be challenging. Currency headwinds are expected to be about $0.25 per share, due to the continued strengthening of the US dollar primarily against the Brazilian real. The company also expects $0.05 to $0.10 per share of pressure from a higher base tax rate, reflecting expectations of the geographic mix of earnings and cost savings that will be recognized primarily in the US. The company plans to provide full-year 2016 guidance during its fourth-quarter 2015 earnings announcement scheduled for Jan. 27, 2016.
Dow and DuPont first announced their "merger of equals" on Dec. 11. The combined companies will create DowDuPont, which the two companies say will have a market capitalization of approximately $130 billion.