(Reuters) -Dow said on Thursday it will lay off 1,500 employees as part of its $1 billion cost savings plan due to lackluster demand and margin pressures, causing its shares to drop 6.3% in morning trade.

The chemical industry has been grappling with weak demand and high input costs, leading to lower prices and margin pressures, especially in Europe, where a challenging regulatory environment has prompted some companies to rethink their strategies.

The Midland, Michigan-based company said it plans to reduce its workforce globally, with Europe and Asia in focus, and it expects to save an additional $300 million to $500 million this year by cutting back on expenses.

It said it expects sales of $10.3 billion in the current quarter, below Wall Street expectations of $10.78 billion, according to data compiled by LSEG.

Global feedstocks and energy costs are outpacing price increases, putting the company's margins under pressure and may weigh on current quarter earnings by $100 million, Dow executives said on post-earnings conference call.

Quarterly net sales from its packaging and specialty plastics segment, its largest by revenue, fell 5.8% to $5.32 billion from a year ago, as lower prices offset higher demand for its packaging products.

However, the chemical firm remains optimistic about demand growth in North America, particularly for polyethylene, a key material used in packaging.

On an adjusted basis, the company reported break-even earnings per share in the fourth quarter, below Wall Street expectations of 24 cents per share.

The company said it is on track to provide an update on its review of some of its European assets, by mid-2025.

It is also idling one of its European ethylene crackers starting second quarter, and will resume operations when market conditions improve.