Dow Inc. shares fell 14% after the chemical producer announced it would cut its quarterly dividend payment by 50%.
The new dividend will be USD 0.35 per share, down from USD 0.70 previously, the company announced.
In a press release, Dow Inc. said: "Today's announcement is designed to maximize long-term shareholder value as we navigate a prolonged industry downturn.
" Prior to the payout cut, Dow Inc. stock had a dividend yield of 9.22% -
one of the highest on Wall Street.
With the new payout, the yield will fall to around 5%.
The new dividend payments will cost the company USD 1 billion annually.
Cash savings Dow Inc. expects to generate free cash flow of USD 500 million this year and USD 600 million in 2026.
This is a significant decrease compared to the years 2020 to 2023, when Dow Inc.'s free cash flow averaged more than USD 5 billion per year.
Management stated that the dividend would be cut to conserve cash. The dividend cut was announced along with Dow Inc.'s second quarter financial results.
The company, which is known for the production of chemicals for plastics and silicones, reported a loss per share (EPS) of USD 0.42 and sales of USD 10.1 billion.
Wall Street had expected a loss of 0.17 US dollars and sales of 10.2 billion US dollars.
Management said it was struggling with a global oversupply of chemicals in the market, which was squeezing profit margins and forcing the company to control costs, including dividends.
