(Reuters) -Specialty chemicals company Celanese (NYSE:CE) cut its quarterly dividend by about 95% and laid out additional cost-cut plans following a profit slump, sending its shares down 14% in extended trading on Monday.
Third-quarter net earnings fell about 87% to $120 million, as its engineered materials segment was impacted by rapid slowdowns in commercial activity in both automotive and industrial segments.
The company said the temporary dividend reduction, beginning in the first quarter of 2025, was a prudent and cost-effective path forward to support deleveraging, and its plans to cut additional costs would help it save more than $75 million by the end of 2025.
CEO Lori Ryerkerk said the teams executed value enhancing initiatives and made improvements but "these actions have been increasingly offset in the current environment and the earnings generated fell short of our expectations."
Last month, peer Dow, which is set to be replaced by Sherwin-Williams (NYSE:SHW) in the Dow Jones Industrial Average, forecast fourth-quarter revenue below market expectations and started review of some of its European assets as the company grapples with sagging demand.
Celanese also said it was "reducing manufacturing costs through the end of 2024 by temporarily idling production facilities in every region and driving cash generation through an expected $200 million inventory release in the fourth quarter."
The company forecast fourth-quarter adjusted profit of $1.25 per share, below average analysts' expectations of $2.93 per share, according to data complied by LSEG, as the company expects demand conditions to worsen.
Celanese makes chemical products that are used in coatings, paints and pharmaceutical products and polymers.
The chemicals industry, which had previously been dealing with high inventory that led to destocking, is now facing weaker demand in key markets such as China and Europe.