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Meta stock spikes despite earnings miss, as Facebook hits 2 billion users for first time and sales guidance quells fears

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Meta Platforms Inc. shares soared in after-hours trading Wednesday despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year and promised more share repurchases amid cost cuts.

Meta
META,
+2.79%
said it hauled in $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.

Analysts polled by FactSet expected Meta to post fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that also met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts on average were projecting first-quarter sales of $27.2 billion.

Shares jumped more than 18% in after-hours trading immediately following the release of the results, after closing with a 2.8% gain at $153.12.

Alphabet Inc.’s
GOOGL,
+1.61%

GOOG,
+1.56%
Google and Pinterest Inc.
PINS,
+1.56%
benefited from Meta’s results, with shares for each company rising 4% in extended trading Wednesday.

“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”

Read more: Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss

Facebook’s 2 billion-user milestone was slightly better than analysts expected for user growth on Meta’s core social network. Daily active users across all of Facebook’s apps neared, but did not crest, another round number, reaching 2.96 billion, up 5% from a year ago.

Meta has been navigating choppy ad waters as it copes with increasing competition from TikTok and fallout from changes in Apple Inc.’s
AAPL,
+0.79%
ad-tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta has invested heavily in artificial-intelligence tools to rev up its ad-targeting systems and making better recommendations for users of its short-video product Reels, but it laid off thousands of workers after profit and revenue shrunk in recent quarters.

The cost cuts seemed to pay off Wednesday. While Facebook missed on its earnings, it noted that the costs of its layoffs and other restructuring totaled $4.2 billion and reduced the number by roughly $1.24 a share.

Meta executives said they now expect operating expenses to be $89 billion to $95 billion this year, down from previous guidance for $94 billion to $100 billion. Capital expenditures are expected to be $30 billion to $33 billion, down from previous guidance of $34 billion to $37 billion, as Meta cancels multiple data-center projects.

In a conference call with analysts late Wednesday, Zuckerberg called 2023 the “year of efficiency.”

“The reduced outlook reflects our updated plans for lower data-center construction spend in 2023 as we shift to a new data-center architecture that is more cost efficient and can support both AI and non-AI workloads,” Li said in her outlook commentary included in the release.

Meta expects to increase its spending on its own stock. The company’s board approved a $40 billion increase in its share-repurchase authorization; Meta spent nearly $28 billion on its own shares in 2022, and still had nearly $11 billion available for buybacks before that increase.

“Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending,” said Jesse Cohen, senior analyst at Investing.com.

The results came a day after Snap Inc.
SNAP,
-10.29%
posted fourth-quarter revenue of $1.3 billion, flat from a year ago and the worst year-over-year sales growth Snap has ever reported. But they also arrived on the same day Facebook scored a major win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta’s planned acquisition of VR startup Within Unlimited.

Read more: Meta wins bid to buy VR startup Within Unlimited, beating U.S. FTC in court: report

Meta shares have plunged 53% over the past 12 months, while the broader S&P 500 index 
SPX,
+1.05%
has tumbled 10% the past year.

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Business

Airbus Revives Order From Qatar Airways Following Paint-Dispute Settlement

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LONDON—

Airbus

EADSY 2.36%

SE agreed to revive orders for close to 75 aircraft from Qatar Airways after reaching a settlement with the Middle East airline over a long-running dispute about chipping paint on its A350 wide-body models.

A spokesman for Airbus said it would now go ahead with delivering 50 A321 narrow-bodies and 23 remaining A350 twin-aisles previously ordered by Qatar.

The orders had been scrapped as part of an escalating, multibillion-dollar legal battle over the paint issue, which the airline had claimed could pose a safety concern. Airbus repeatedly denied the claims.

Airbus and Qatar Airways earlier Wednesday said in a joint statement that they had reached an “amicable and mutually agreeable settlement” in relation to the legal dispute. The companies didn’t disclose the details of the settlement other than to say the agreement didn’t amount to an admission of liability from either party. A program to repair the degradation on Qatar’s current fleet is under way, the companies added.

Qatar Airways had previously grounded 29 of its A350 jets and refused new deliveries over the issue, reducing its capacity amid a surge in travel to Doha for the 2022 FIFA World Cup. The airline has said the peeling paint was exposing the meshed copper foil that is designed to protect the aircraft from lightning strikes.

That led Qatar Airways to initiate legal proceedings against Airbus in London, in which the carrier had sought damages partly based on the impact on its operations from not being able to use the aircraft. A possible trial had been scheduled for later this year.

While the paint issue has also affected other A350s in service at other Airbus customers, only Qatar Airways had taken the step to unilaterally ground the aircraft. Airbus and the European Union Aviation Safety Agency, which oversees the Toulouse, France-based plane maker, have insisted that the issue is only cosmetic.

The situation had led to a broad fallout between Airbus and one of its biggest customers. In August, Airbus ended all new business with Qatar Airways, canceling contracts valued at more than $13 billion according to the latest available list prices and before the hefty discounts plane makers typically give to customers.

After Airbus canceled a deal to sell Qatar Airways 50 of its A321 jets, the Gulf carrier ordered up to 50 of rival

Boeing Co.

’s 737 MAX 10 single-aisle jets within two weeks. Qatar Airways had previously canceled most of an existing MAX order in 2020 after receiving five of the planes.

Airbus lawyers alleged that Qatar Airways had exaggerated concerns about the issue in an attempt to claim compensation and refuse delivery of aircraft that it didn’t need as the pandemic hit demand for air travel. The plane maker complained in court that the airline and its regulator, the Qatar Civil Aviation Authority, had failed to provide documentation that showed the technical justifications behind grounding the aircraft.

Qatar Airways has said it provided images of the damage, which it purported showed the scale of the issue and the potential safety risk.

Qatar Airways Chief Executive

Akbar Al Baker

has long had a reputation as a tough customer, publicly lashing out at both Airbus and Boeing when he perceives delivery or quality issues.

Write to Benjamin Katz at ben.katz@wsj.com

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Business

Despite ban, China nuclear-weapons lab has bought U.S. chips for years

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SINGAPORE — China’s top nuclear-weapons research institute has bought sophisticated U.S. computer chips at least a dozen times in the past two and half years, circumventing decades-old American export restrictions meant to curb such sales.

A Wall Street Journal review of procurement documents found that the state-run China Academy of Engineering Physics has managed to obtain the semiconductors made by U.S. companies such as Intel Corp.
INTC,
-6.41%
and Nvidia Corp.
NVDA,
+2.84%
since 2020 despite its placement on a U.S. export blacklist in 1997.

The chips, which are widely used in data centers and personal computers, were acquired from resellers in China. Some were procured as components for computing systems, with many bought by the institute’s laboratory studying computational fluid dynamics, a broad scientific field that includes the modeling of nuclear explosions.

Such purchases defy longstanding restrictions imposed by the U.S. that aim to prevent the use of any U.S. products for atomic-weapons research by foreign powers. The academy, known as CAEP, was one of the first Chinese institutions put on the U.S. blacklist, known as the entity list, because of its nuclear work.

A Journal review of research papers published by CAEP found that at least 34 over the past decade referenced using American semiconductors in the research. They were used in a range of ways, including analyzing data and generating algorithms. Nuclear experts said that in at least seven of them, the research can have applications to maintaining nuclear stockpiles. CAEP didn’t respond to requests for comment.

The findings underline the challenge facing the Biden administration as it seeks to more aggressively counter the use of American technology by China’s military. In October, the U.S. expanded the scope of export regulations to prevent China from obtaining the most advanced American chips and chip-manufacturing tools that power artificial intelligence and supercomputers, which are increasingly important to modern warfare.

An expanded version of this report appears on WSJ.com.

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Business

DOJ Seeks to Ban Sam Bankman-Fried From Contacting FTX Employees

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The Justice Department on Friday asked a federal judge to bar FTX founder

Sam Bankman-Fried

from communicating with current and former employees of the collapsed crypto exchange without a lawyer present after prosecutors alleged he recently contacted a potential witness in his criminal case.

Mr. Bankman-Fried, who faces federal charges related to the implosion of FTX, reached out to the general counsel of the company’s U.S. operation through an encrypted messaging application earlier this month, federal prosecutors said in a filing. Prosecutors said Mr. Bankman-Fried has also contacted other current and former FTX employees and are concerned that the communications could lead to witness tampering.

Prosecutors also requested the judge prohibit Mr. Bankman-Fried from communicating through encrypted messaging applications like Slack and Signal, saying that when he headed FTX he directed employees of the company and his crypto-investment firm Alameda Research to set their communications on these platforms to auto-delete after 30 days. That policy has impeded the government’s investigation, prosecutors said.

“Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted because of settings implemented at the defendant’s direction,” prosecutors said in the filing.

Lawyers for Mr. Bankman-Fried in a letter to the judge said the government was mischaracterizing innocuous conduct by their client in “an apparent effort to portray our client in the worst possible light.” They said the government’s request was overbroad and unnecessary, proposing instead that Mr. Bankman-Fried be prohibited from contacting certain limited witnesses, not all of FTX’s current and former employees.

FTX’s U.S. general counsel, Ryne Miller, couldn’t immediately be reached.

The Manhattan U.S. attorney’s office charged Mr. Bankman-Fried last month with stealing billions of dollars from FTX customers while misleading lenders and investors. He pleaded not guilty and is currently under court-ordered confinement in his parents’ Palo Alto, Calif., home while he awaits trial.

Mr. Bankman-Fried sent a Jan. 15 Signal message to the general counsel in which prosecutors allege he said he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”

Prosecutors didn’t identify the other employees that Mr. Bankman-Fried has allegedly tried to contact but called the communications to the general counsel and others troubling.

“Were the defendant to ‘vet’ his version of relevant events with potential witnesses, that might have the effect of discouraging witnesses from testifying in a manner contrary to the defendant’s narrative,” the Justice Department said in the filing.

Mr. Bankman-Fried’s lawyers said the message to Mr. Miller was more reasonably read as an attempt by Mr. Bankman-Fried to offer his assistance to FTX, not a “sinister attempt” to influence testimony at trial.

Write to James Fanelli at james.fanelli@wsj.com

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Business

Chevron Rides High Oil Prices to Record $35.5 Billion Annual Profit

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Chevron Corp.

CVX -4.44%

banked historic profit last year as the pandemic receded and the war in Ukraine pushed oil prices to multiyear highs, with its shares climbing 53% for the year while other sectors tumbled.

The U.S. oil company in its quarterly earnings reported Friday that it collected $35.5 billion in its highest-ever annual profit in 2022, more than double the prior year and about one-third higher than its previous record in 2011. Almost $50 billion in cash streamed in from its oil-leveraged operations, another record that is underpinning plans to pay investors through a new $75 billion share-repurchase program over the next several years.

That payout, announced Wednesday, is roughly equivalent to the stock-market value of companies such as the big-box retailer

Target Corp.

, the pharmaceutical firm

Moderna Inc.

and

Airbnb Inc.

Chevron, the second-largest U.S. oil company after

Exxon Mobil Corp.

, posted revenue of $246.3 billion, up from $162.5 billion the previous year. The San Ramon, Calif., company reported a fourth-quarter profit of $6.4 billion, up from $5.1 billion in the same period the prior year.

The fourth-quarter results came short of analyst expectations, and Chevron shares closed down more than 4% Friday.

For all of its recent winnings, though, Chevron and its rival oil-and-gas producers could face a rockier year in 2023, according to investors and analysts, if an anticipated slowdown in U.S. economic growth dents demand for oil, and if China’s reopening from strict Covid-19 restrictions unfolds slowly.

U.S. oil prices have held steady this year, but are off about 36% from last year’s peak. The industry is proceeding with caution, holding capital expenditures for 2023 below prepandemic levels and saying production will grow only modestly. Chevron has said it plans to spend about $17 billion in capital expenditures this year, up more than 25% from the prior year, but $3 billion less than it planned to spend in 2020 before Covid-19 took root.

Oil companies are still outperforming other sectors such as tech and finance, which have seen widespread job cuts in recent weeks. The energy segment of the S&P 500 index has climbed 43.7% over the past year, compared with a 6.7% drop for the broader index.

Chevron Chief Executive Mike Wirth said the company is unsure of what 2023 will bring after global energy supplies were squeezed because of geopolitical events last year, particularly in Europe following Russia’s invasion of Ukraine. He said markets appeared to be stabilizing.

“We certainly have seen a very unusual and volatile year in 2022,” Mr. Wirth said, noting the European energy crisis has proven less dire than anticipated thanks to milder winter weather, growing natural gas inventories in Europe. “China’s economy has been slow throughout the year, which looks to be turning around. It’s good that markets have calmed.”

Chevron projects its output in the Permian Basin of West Texas and New Mexico to grow at a slower pace this year.



Photo:

David Goldman/Associated Press

Chevron hit a record in U.S. oil-and-gas production in 2022, increasing 4% to about 1.2 million barrels of oil equivalent a day, stemming from its increased focus on capital investments in the Western Hemisphere, particularly in the Permian Basin of West Texas and New Mexico, where it boosted output 16% last year. Worldwide, Chevron’s oil-and-gas production was down 3.2% compared with the prior year, at 2.99 million barrels of oil-equivalent a day.

Its overall return on capital employed came in at 20%, it said.

“There aren’t many sectors generating the type of free cash flow that energy is right now,” said

Jeff Wyll,

an analyst at investment firm Neuberger Berman, which has invested in Chevron. “The sector really can’t be ignored. Given the supply-demand balance, you have to have some things go wrong here to see a pullback in oil prices.”

Even so, institutional investors have shown limited interest so far in returning to the energy sector, after years of poor returns and heightened concerns about their environmental impact prompted large financiers to sell off their stakes in oil-and-gas companies or stop investing in drillers outright.

Pete Bowden,

global head of industrial, energy and infrastructure banking at

Jefferies Financial Group Inc.,

said energy companies in the S&P 500 index are throwing off 12% of the group’s free-cash flow, but only account for about 5% of the index’s weighting—an indication their stock prices are lagging behind.

Investors’ concerns around environmental, social and governance-related issues are a constraint on the share prices of energy companies, “yet the earnings power of these businesses is superior to the earnings power of companies in other sectors,” he said.

Chevron and others have faced criticism from the Biden administration and others that they are giving priority to shareholder returns over pumping oil and gas at a time when global supplies are tight and Americans are feeling pain at the pump. On Thursday, the White House assailed Chevron’s $75 billion buyout program, saying the payout was proof the company could boost production but was choosing to reward investors instead.

Pierre Breber,

Chevron’s finance chief, said the company expects oil prices to be volatile but within a range needed to sustain its dividend and investments. There are some optimistic signs, he added, including that the U.S. economy grew faster than expected in the fourth quarter, at 2.9%.

“Supply is tight. Oil-field services are near capacity, and we continue to have sanctions on Russian production,” Mr. Breber said. “You’re seeing international flights out of China are way up, and low unemployment in the U.S.”

Mr. Breber said Chevron’s output in the Permian this year is expected to grow at a slower pace, around 10%, because it has exhausted much of its inventory of wells that it had drilled but hadn’t brought into production.

Exxon, which has typically posted quarterly earnings on the same day as Chevron, will report Tuesday. Analysts expect it will also post record profit for 2022, according to FactSet.

Both companies expect to slow their output growth this year in the Permian, considered their growth engine. The two U.S. oil majors, which had been growing output faster in the U.S. than most independent shale producers, are beginning to step up their focus on shareholder returns and allow output growth to ease, said Neal Dingmann, an analyst at Truist Securities.

“This has all been driven by investor requirements,” Mr. Dingmann said.

Write to Collin Eaton at collin.eaton@wsj.com

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Business

CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues

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CVS, the largest U.S. drugstore chain by revenue, plans in March to cut or shift hours at about two-thirds of its roughly 9,000 U.S. locations. Walmart plans to reduce pharmacy hours by closing at 7 p.m. instead of 9 p.m. at most of its roughly 4,600 stores by March.

Walgreens Boots Alliance Inc.

previously said it was operating thousands of stores on reduced hours because of staffing shortages. Combined, the three chains operate some 24,000 retail pharmacies across the U.S. 

Walmart last year raised pay for pharmacy technicians.



Photo:

Ryan David Brown for The Wall Street Journal

Earlier in the pandemic, CVS and Walgreens struggled to meet demand for Covid shots and vaccines. The chains cut hours and, in some cases, closed pharmacies for entire weekends. Walmart, which sells a wider variety of goods, cut overall store hours, in part, to cope with Covid-related labor shortages and make time to restock empty shelves as demand for basics such as toilet paper surged.  

CVS, in a recent notice to field leaders, said most of its reduced hours will be during times when there is low patient demand or when a store has only one pharmacist on site, which the company said is a “top pain point,” for its pharmacists. 

CVS said in a statement it periodically reviews pharmacy operating hours as part of the normal course of business to ensure stores are open during high-demand times. “By adjusting hours in select stores this spring, we ensure our pharmacy teams are available to serve patients when they’re most needed,” the company said, adding that customers who encounter a closed pharmacy can seek help at a nearby location. 

At Walmart, the shorter hours offer pharmacy workers a better work-life balance and best serve customers in the hours they are most likely to visit the pharmacy, said a company spokeswoman. “This change is a direct result of feedback from our pharmacy associates and listening to our customers,” she said. Some Walmart pharmacies already close before 9 p.m., which will become standard across the country after the change.

An online community message board for Holliston, Mass., a small town about 30 miles outside Boston, was populated with messages last month from locals venting about the unpredictable hours of the CVS in town, said resident Audra Friend, who does digital communications for a nonprofit. Ms. Friend said she struggled for a week in November to refill a prescription for a rescue inhaler at the store because the pharmacy was sporadically closed.

“I would go in, and there was a note on the door saying, ‘Sorry, pharmacy closed,’” said Ms. Friend, who switched her prescriptions to a 24-hour CVS about 5 miles away. She said it would be better to have consistently shorter hours if that meant fewer unexpected closures. “At least that way we’re not just showing up at CVS to find out the pharmacist isn’t there,” she said.

A CVS spokeswoman said that in recent weeks the Holliston store has had no unexpected closures.

The drugstore chains have been working to stop an exodus of pharmacy staff by offering such perks as bonuses, higher pay and guaranteed lunch breaks. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. Walgreens recently said staffing problems persist and remain a drag on revenue. 

Retail pharmacies, which benefited from a bump in sales and profits during the pandemic, are now reworking their business models as demand for Covid tests and vaccines decline and generic-drug sales generate smaller profits.

CVS and Walgreens are closing hundreds of U.S. stores and launching new healthcare offerings as they try to transform themselves into providers of a range of medical services, from diagnostic testing to primary care.  

This past summer, Walgreens was offering bonuses up to $75,000 to attract pharmacists, while CVS is working to develop a system in which pharmacists could perform more tasks remotely. The median annual pay for pharmacists was nearly $129,000 in 2021, according to Labor Department data, which also projected slower-than-average employment growth in the profession through 2031. 

In the past year, the chains have poured hundreds of millions of dollars into recruiting more pharmacists and technicians but staffing up has proven difficult. Pharmacists remain overworked, pharmacy-chain executives have acknowledged, and fewer people are attending pharmacy schools. The number of pharmacy-school applicants has dropped by more than one-third from its peak a decade ago, according to the Pharmacy College Application Service, a centralized pharmacy-school application service.

Meanwhile, many pharmacists who aren’t quitting the field are leaving drugstores to work in hospitals or with other employers. 

Walmart raised wages for U.S. pharmacy technicians in the past year, bringing average pay to more than $20 an hour. Walmart said it planned to raise the minimum wage for all U.S. hourly workers in its stores and warehouses to $14 next month, from $12.

CVS and Walgreens last year raised their minimum wages to $15 an hour.

Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com

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Business

Goldman Sachs Cut CEO David Solomon’s Pay to $25 Million in 2022

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Goldman Sachs Group Inc.

GS 0.07%

Chief Executive

David Solomon

took a nearly 30% pay cut in 2022.

Mr. Solomon received $25 million in total compensation last year, down from $35 million in 2021. His 2022 pay package consisted of a $2 million base salary, a cash bonus of $6.9 million and a $16.1 million stock award that is tied to how well the bank performs in the next few years, Goldman said in a regulatory filing.

Mr. Solomon’s 2022 compensation reflects the bank’s performance compared with 2021, Goldman said in the filing. Profit fell 48% last year, and revenue declined 20%, largely due to a slowdown in corporate deal-making that had previously fueled blockbuster earnings. Still, Goldman shares outperformed the KBW Nasdaq Bank Index and the broader S&P 500 last year. 

In 2021, the bank’s shares were soaring and the bank was minting money in a merger boom that kept its high-price bankers busy. 

Goldman doubled Mr. Solomon’s pay that year, an acknowledgment of the bank’s record profits and following a year when he was penalized for the firm’s involvement in the 1MDB corruption scandal. The bank also awarded Mr. Solomon a one-time stock award of about $30 million that year, citing “the rapidly increasing war for talent in the current environment.”

Late last year, Mr. Solomon engineered a restructuring of Goldman’s businesses meant to spotlight steadier businesses like asset and wealth management, taking some of the focus off its more volatile Wall Street operations. 

He’s also paring back the bank’s consumer-facing Marcus operations and has admitted that Goldman’s attempts to do too much there contributed to missteps. The bank’s newly created Platform Solutions division, which houses credit cards and other pieces of the consumer business, lost about $2 billion on a pretax basis in 2022. 

Mr. Solomon has moved to cut costs at Goldman. The bank laid off some 3,000 employees this month and slashed bonuses for many bankers by up to 40%. 

Goldman’s compensation committee also considered the bank’s “continued progress in its strategic evolution as well as Mr. Solomon’s strong individual performance and effective leadership,” according to the filing. 

Mr. Solomon’s pay fell more than his Wall Street counterparts. 

Morgan Stanley

paid Chief Executive James Gorman $31.5 million for his work in 2022, a 10% pay cut from the year before.

 JPMorgan Chase

& Co. awarded CEO Jamie Dimon $34.5 million in 2022 compensation, in line with a year earlier.

Wells Fargo

& Co. CEO Charles Scharf’s 2022 pay also stayed flat at $24.5 million in 2022.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

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World

Russia Seeks Gains in Ukraine Before Western Tanks Turn Up

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Russian forces pressed an offensive in eastern Ukraine on Friday, seeking to seize an advantage in the months before tanks pledged by Kyiv’s Western allies begin to arrive on the battlefield.

Ukrainian forces said on Friday they had repelled Russian attacks on Vuhledar and several other villages in the eastern Donetsk region over the preceding 24 hours. Russia also launched 148 attacks along the front line with Ukrainian forces in the southern Zaporizhzhia region over the past day using tanks, rockets and artillery, the regional military administration said. 

Russia’s Defense Ministry said it had undertaken more offensive maneuvers over the past 24 hours both in Zaporizhzhia and Vuhledar, where it said it had launched strikes on Ukraine’s 72nd Brigade and had downed a Ukrainian Su-25 warplane.

The European Union on Friday, meanwhile, extended its economic sanctions on Russia for the next six months. The decision affects a swath of sanctions imposed last year, from financial sanctions on Russian banks and its central bank to export and import bans. 

There had been concerns that Hungarian Prime Minister

Viktor Orban

could push to weaken the sanctions package. In recent months, he has attacked the EU’s sanctions, especially the EU oil import embargo on Moscow, saying they are more costly for Europe than for Russia. Decisions on sanctions are taken by consensus among the EU’s 27 member states. 

While Hungary stepped back from objecting to renewing the economic sanctions, it is pushing for the EU to drop sanctions on several Russian executives who have been blacklisted by the EU, according to several EU diplomats. A decision is due in March on rolling over these sanctions. 

Ukraine’s President

Volodymyr Zelensky

discussed the situation in Vuhledar and the city of Bakhmut at a meeting with military chiefs on Thursday, he said in his nightly address.

Russian servicemen in Ukraine launch rockets in an image released Friday by the Russian Defense Ministry.



Photo:

Russian Defense Ministry Press O/Zuma Press

After months of setbacks, Russian forces earlier this month broke through Ukrainian defenses in the east to seize the town of Soledar. That has made it harder for Ukraine to keep hold of neighboring Bakhmut, which has been at the epicenter of the war for several months. The city is central to Russia’s main goal: to take over the remainder of Donetsk, and the wider industrial area known as Donbas. But the fighting there has come at huge cost for both sides.

“The more Russia loses in this battle for Donbas, the less its overall potential will be,” the Ukrainian president said. “We know what the occupiers are planning. We are countering it.”

Ukrainian officials warn that Russia is gearing up for a renewed onslaught this spring after mobilizing some 300,000 men to shore up its faltering campaign last fall. For Moscow, there is a window before tanks pledged this week by Kyiv’s Western allies arrive in Ukraine, potentially tilting the battlefield again. 

Russia’s Defense Ministry said Friday its forces had launched a series of strikes over the past day on Ukrainian military and infrastructure targets that had disrupted the transfer of weapons, including those from countries in the North Atlantic Treaty Organization, being delivered to the front.

Kyiv’s allies are rushing to assemble two battalions’ worth of Leopard 2 tanks from a range of European countries after Germany and the U.S. committed to provide their own tanks. The initial battalion is expected to arrive in Ukraine within three months.

A Ukrainian serviceman in Bakhmut rests next to an armored medical vehicle.



Photo:

anatolii stepanov/Agence France-Presse/Getty Images

Poland, which has been at the forefront of pushing for increased military support for Ukraine, on Friday said it would send 60 upgraded T-72 tanks—half of them Polish-made PT-91 Twardy tanks—in addition to its contribution of 14 Leopards.

The U.S. has also pledged 31 M1 Abrams tanks, but those will take much longer to arrive in Ukraine because they are being procured through the defense industry instead of being pulled from existing American defense stocks. 

Mr. Zelensky has urged Western countries to speed up the delivery of tanks and the training of Ukrainian forces to use them as Russia regains initiative.

Russian officials have said the tanks won’t alter dynamics on the battlefield and will only lead to escalation in the war.

Stefano Sannino,

secretary-general of the European Union’s European External Action Service, said during a visit to Japan that German and U.S. tank provisions weren’t escalatory and were meant to help Ukrainians defend themselves, rather than making them attackers. The decision to supply them is in response to Russian escalation, Mr. Sannino said, accusing Moscow of carrying out indiscriminate attacks on civilians and cities. 

Shelling has caused damage in central Bakhmut as Ukrainian and Russian forces fight over the city.



Photo:

Emanuele Satolli for The Wall Street Journal

The tanks will enable Ukraine to destroy enemy tanks, offer greater protection and support combined operations, the U.K.’s Ministry of Defense said.

Assessing recent Russian claims of advances, the U.K.’s Defense Ministry said Russian forces had likely conducted local, probing attacks near Vuhledar in the east and Orikhiv in the Zaporizhzhia region but that Russia hadn’t achieved substantial gains. 

Russian military sources are deliberately spreading misinformation in an effort to imply that the Russian operation is sustaining momentum, the ministry said.

Write to Isabel Coles at isabel.coles@wsj.com

As the U.S. and its allies start sending Abrams, Leopards and other tanks to help Ukraine, those vehicles are set to change the dynamics of the war along the front lines. WSJ examines how the tanks that Ukraine will receive from the West compare with Russia’s vehicles. Illustration: Adam Adada

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Business

Dow to Cut 2,000 Jobs Globally

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Dow is slashing jobs and shutting down assets as it looks to make cost savings.



Photo:

Sean Proctor/Bloomberg News

Dow Inc.

DOW 0.40%

said it is laying off about 2,000 employees globally as job cuts that have so far been concentrated in the technology sector spread to other parts of the economy.

The Midland, Mich.-based chemicals company said it is targeting $1 billion in cost cuts this year as slowing economic growth and a drop-off in demand weigh on sales.

Dow said it is also shutting down certain assets and broadly looking to align spending with the macroeconomic environment. The company said it expects to book a charge of $550 million to $725 million in the first quarter for costs tied to the cost-cutting moves.

Chief Executive

Jim Fitterling

said the company is optimizing its cost structure amid macroeconomic uncertainties and “challenging energy markets, particularly in Europe.”

Shares of Dow rose less than 1% to close at $58.12 on Thursday.

Dow’s layoffs come after manufacturing conglomerate

3M Co.

said earlier this week that it was cutting 2,500 jobs globally, or about 2.6% of the company, as it confronts weakening demand.

The companies join a wave of technology companies that are cutting thousands of jobs as they recalibrate after growing rapidly at the start of the Covid-19 pandemic. On Wednesday,

International Business Machines Corp.

said it would cut 3,900 jobs, while software company

SAP SE

on Thursday said it would shed 3,000 positions.

Dow on Thursday also posted weaker-than-expected results for the fourth quarter. Revenue fell more than 17% to $11.86 billion, missing analysts’ estimates, with the company citing slowing economic growth around the world and destocking of inventory by customers.

The company’s fourth-quarter profit tumbled to 85 cents a share, down from $2.32 a share a year earlier. Adjusted earnings for the quarter missed estimates by a penny.

“While we see initial positive signs from moderating inflation in the U.S., improving outlook for energy in Europe, and reopening in China, we continue to be prudent and proactive,” Mr. Fitterling said.

Dow said it is targeting $500 million in structural improvements and another $500 million in operating cost reductions. The company said it would look to cut costs tied to purchasing raw materials, logistics and utilities.

Write to Will Feuer at Will.Feuer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 27, 2023, print edition as ‘Dow to Cut Headcount by 2,000.’

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Corporate Layoffs Spread Beyond High-Growth Tech Giants

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The headline-grabbing expansion of layoffs beyond high-growth technology companies stands in contrast to historically low levels of jobless claims and news that companies such as

Chipotle Mexican Grill Inc.

and

Airbus SE

are adding jobs.

This week, four companies trimmed more than 10,000 jobs, just a fraction of their total workforces. Still, the decisions mark a shift in sentiment inside executive suites, where many leaders have been holding on to workers after struggling to hire and retain them in recent years when the pandemic disrupted workplaces.

Live Q&A

Tech Layoffs: What Do They Mean?

The creator of the popular layoff tracker Layoffs.fyi Roger Lee and the head of talent at venture firm M13 Matt Hoffman sit down with WSJ reporter Chip Cutter, to discuss what’s behind the recent downsizing and whether it will be enough to recalibrate ahead of a possible recession.

Unlike

Microsoft Corp.

and Google parent

Alphabet Inc.,

which announced larger layoffs this month, these companies haven’t expanded their workforces dramatically during the pandemic. Instead, the leaders of these global giants said they were shrinking to adjust to slowing growth, or responding to weaker demand for their products.

“We are taking these actions to further optimize our cost structure,”

Jim Fitterling,

Dow’s chief executive, said in announcing the cuts, noting the company was navigating “macro uncertainties and challenging energy markets, particularly in Europe.”

The U.S. labor market broadly remains strong but has gradually lost steam in recent months. Employers added 223,000 jobs in December, the smallest gain in two years. The Labor Department will release January employment data next week.

Economists from Capital Economics estimate a further slowdown to an increase of 150,000 jobs in January, which would push job growth below its 2019 monthly average, the year before pandemic began.

There is “mounting evidence of weakness below the surface,”

Andrew Hunter,

senior U.S. economist at Capital Economics wrote in a note to clients Thursday.

Last month, the unemployment rate was 3.5%, matching multidecade lows. Wage growth remained strong, but had cooled from earlier in 2022. The Federal Reserve, which has been raising interest rates to combat high inflation, is looking for signs of slower wage growth and easing demand for workers.

Many CEOs say companies are beginning to scrutinize hiring more closely.

Slower hiring has already lengthened the time it takes Americans to land a new job. In December, 826,000 unemployed workers had been out of a job for about 3½ to 6 months, up from 526,000 in April 2022, according to the Labor Department.

“Employers are hovering with their feet above the brake. They’re more cautious. They’re more precise in their hiring,” said

Jonas Prising,

chief executive of

ManpowerGroup Inc.,

a provider of temporary workers. “But they’ve not stopped hiring.”

Additional signs of a cooling economy emerged on Thursday when the Commerce Department said U.S. gross domestic product growth slowed to a 2.9% annual rate in the fourth quarter, down from a 3.2% annual rate in the third quarter.

Not all companies are in layoff mode.

Walmart Inc.,

the country’s biggest private employer, said this week it was raising its starting wages for hourly U.S. workers to $14 from $12, amid a still tight job market for front line workers. Chipotle Mexican Grill Inc. said Thursday it plans to hire 15,000 new employees to work in its restaurants, while plane maker Airbus SE said it is recruiting over 13,000 new staffers this year. Airbus said 9,000 of the new jobs would be based in Europe with the rest spread among the U.S., China and elsewhere. 

General Electric Co.

, which slashed thousands of aerospace workers in 2020 and is currently laying off 2,000 workers from its wind turbine business, is hiring in other areas. “If you know any welders or machinists, send them my way,” Chief Executive

Larry Culp

said this week.

Annette Clayton,

CEO of North American operations at

Schneider Electric SE,

a Europe-headquartered energy-management and automation company, said the U.S. needs far more electricians to install electric-vehicle chargers and perform other tasks. “The shortage of electricians is very, very important for us,” she said.

Railroad CSX Corp. told investors on Wednesday that after sustained effort, it had reached its goal of about 7,000 train and engine employees around the beginning of the year, but plans to hire several hundred more people in those roles to serve as a cushion and to accommodate attrition that remains higher than the company would like.

Freeport-McMoRan Inc.

executives said Wednesday they expect U.S. labor shortages to continue to crimp production at the mining giant. The company has about 1,300 job openings in a U.S. workforce of about 10,000 to 12,000, and many of its domestic workers are new and need training and experience to match prior expertise, President

Kathleen Quirk

told analysts.

“We could have in 2022 produced more if we were fully staffed, and I believe that is the case again this year,” Ms. Quirk said.

The latest layoffs are modest relative to the size of these companies. For example, IBM’s plan to eliminate about 3,900 roles would amount to a 1.4% reduction in its head count of 280,000, according to its latest annual report.

As interest rates rise and companies tighten their belts, white-collar workers have taken the brunt of layoffs and job cuts, breaking with the usual pattern leading into a downturn. WSJ explains why many professionals are getting the pink slip first. Illustration: Adele Morgan

The planned 3,000 job cuts at SAP affect about 2.5% of the business-software maker’s global workforce. Finance chief

Luka Mucic

said the job cuts would be spread across the company’s geographic footprint, with most of them happening outside its home base in Germany. “The purpose is to further focus on strategic growth areas,” Mr. Mucic said. The company employed around 111,015 people on average last year.

Chemicals giant Dow said on Thursday it was trimming about 2,000 employees. The Midland, Mich., company said it currently employs about 37,800 people. Executives said they were targeting $1 billion in cost cuts this year and shutting down some assets to align spending with the macroeconomic environment.

Manufacturer

3M Co.

, which had about 95,000 employees at the end of 2021, cited weakening consumer demand when it announced this week plans to eliminate 2,500 manufacturing jobs. The maker of Scotch tape, Post-it Notes and thousands of other industrial and consumer products said it expects lower sales and profit in 2023.

“We’re looking at everything that we do as we manage through the challenges that we’re facing in the end markets,” 3M Chief Executive

Mike Roman

said during an earnings conference call. “We expect the demand trends we saw in December to extend through the first half of 2023.”

Hasbro Inc.

on Thursday said it would eliminate 15% of its workforce, or about 1,000 jobs, after the toy maker’s consumer-products business underperformed in the fourth quarter.

Some companies still hiring now say the job cuts across the economy are making it easier to find qualified candidates. “We’ve got the pick of the litter,” said

Bill McDermott,

CEO of business-software provider

ServiceNow Inc.

“We have so many applicants.”

At

Honeywell International Inc.,

CEO

Darius Adamczyk

said the job market remains competitive. With the layoffs in technology, though, Mr. Adamczyk said he anticipated that the labor market would likely soften, potentially also expanding the applicants Honeywell could attract.

“We’re probably going to be even more selective than we were before because we’re going to have a broader pool to draw from,” he said.

Across the corporate sphere, many of the layoffs happening now are still small relative to the size of the organizations, said

Denis Machuel,

CEO of global staffing firm Adecco Group AG.

“I would qualify it more as a recalibration of the workforce than deep cuts,” Mr. Machuel said. “They are adjusting, but they are not cutting the muscle.”

Write to Chip Cutter at chip.cutter@wsj.com and Theo Francis at theo.francis@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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