The world's largest chemical company BASF expects a significant drop in earnings and wants to cut 2,600 jobs worldwide - most of them in Germany.
Ludwigshafen – The chemical giant BASF is expecting a significant decline in operating earnings in the current year.
The high level of uncertainty from last year as a result of the war in Ukraine, high raw material and energy costs in Europe, rising prices and interest rates will persist in 2023, the Dax group announced on Friday in Ludwigshafen.
All of this will weigh on global demand.
The company is therefore assuming only moderate growth for the global economy this year.
BASF wants to cut jobs and closes several production sites in Ludwigshafen
That's another reason why BASF wants to cut 2,600 jobs worldwide.
Around two thirds of this is in Germany, the Dax group announced on Friday.
The company also announced the closure of several production facilities in Ludwigshafen.
Among other things, one of the two ammonia plants and the associated fertilizer plants at the site would be shut down, the company said.
According to the group, around 700 jobs in Ludwigshafen are expected to be affected by the measures.
BASF announced an austerity program last year because of skyrocketing energy costs in Europe and the slowdown in the economy.
The company wants to save 500 million euros a year outside of production from 2024, half of which is to be realized at the main plant in Ludwigshafen.
The focus of the cost savings are service, corporate and research areas as well as the corporate headquarters.
"The competitiveness of the European region is increasingly suffering from over-regulation," said company boss Martin Brudermüller, according to the announcement.
It also suffers more and more from slow and bureaucratic approval procedures and above all from high costs for most production factors.
All of this has slowed market growth in Europe compared to other regions for many years.
In addition, high energy prices are now having a negative impact on profitability and competitiveness in Europe.
From the end of 2026, the adjustment in Ludwigshafen would probably lead to annual fixed costs being reduced by more than 200 million euros, BASF announced.
In addition to the cost-cutting program, BASF is also taking structural measures.
In this way, the main plant in Ludwigshafen should be better prepared for the increasingly fierce competition in the long term.
Chemical giant BASF expects a weak first half
For the current year, the chemical company is aiming for sales of 84 to 87 billion euros.
In the previous year, BASF had achieved sales of a good 87 billion euros.
In terms of the operating result (adjusted EBIT), BASF expects EUR 4.8 to 5.4 billion.
That would be a decrease of up to 30 percent compared to the previous year.
BASF expects a weak first half of the year.
The earnings situation should improve in the second half of the year with catch-up effects, especially in China.
Meanwhile, despite a loss last year, BASF wants to pay out just as much money to shareholders as it did in 2021. The board of directors is planning a dividend of EUR 3.40 per share, BASF announced.
Last year, a loss of 627 million euros was incurred due to billions in write-downs on the subsidiary Wintershall Dea.
That was significantly less than BASF had announced in January.
At that time, the company had assumed a loss of almost 1.4 billion euros.
The reason for this is somewhat lower depreciation on Wintershall Dea, it said.
The BASF subsidiary complains that its holdings in Russia have been expropriated and is planning a complete withdrawal from the country.
A year earlier, BASF had earned around 5.5 billion euros.
(lma/dpa)