As of: February 23, 2024, 12:56 p.m
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A tower with the inscription “BASF” stands next to chimneys on the factory premises of the chemical company BASF.
© Uwe Anspach/dpa
The outgoing CEO Martin Brudermüller leaves his successor a difficult legacy.
The chemical giant is struggling with a lot of headwinds - and is resorting to stricter cuts.
Ludwigshafen - The world's largest chemical company BASF is reacting to its weakening business with another billion-dollar savings program and further job cuts at its main plant in Ludwigshafen.
CEO Martin Brudermüller announced on Friday in Ludwigshafen that additional annual costs of one billion euros should be saved at the headquarters of the DAX group by the end of 2026.
“The situation is serious, so we are not explicitly ruling out any measures,” said the outgoing CEO.
“Unfortunately, the further program will also involve additional job cuts.” There will be savings both in production and in areas outside of it.
Fixed costs should be reduced by increasing efficiency and production capacities should be adapted to the market.
There was initially no information on the amount of the planned job cuts.
Details are currently being worked out and employee representatives will be closely involved in the further process, it said.
Brudermüller assured that the board will continue to be strongly committed to the Ludwigshafen location.
The management and his successor Markus Kamieth, who will take over the helm after the BASF general meeting at the end of April, would update the target and the longer-term positioning of the parent plant.
This involves setting ambitious profitability goals.
Details will be available in the second half of the year.
The BASF board of directors does not expect any significant improvement for the current year either.
The weakness of the global economy from last year is likely to continue in 2024, the company said.
Growth is expected to only increase somewhat over the course of the year.
In Europe, comparatively high energy prices and unfavorable conditions continued to slow down economic development.
BASF is targeting earnings before interest, taxes, depreciation and amortization (Ebitda) and special items of between 8.0 and 8.6 billion euros this year.
In 2023, adjusted operating profit fell by almost 29 percent to almost 7.7 billion euros.
The BASF management had already announced an austerity program in 2022 due to worsening business and more difficult conditions in Europe.
This is intended to reduce annual costs by a total of 1.1 billion euros by the end of 2026.
The measures include the reduction of around 3,300 jobs worldwide, including 700 jobs in production in Ludwigshafen, as well as the closure of several energy-intensive chemical plants, for example for ammonia, as BASF specified a year ago.
Of the almost 112,000 employees, 38,710 were most recently employed in Ludwigshafen, two thirds of whom were in production.
As the largest industrial gas consumer in Germany, BASF, like many chemical companies, suffers from the relatively high energy prices in this country.
The group had already announced in advance that sales and profits in 2023 were significantly below its own expectations.
Management blames this primarily on weak demand and increased energy costs.
Last year's revenue was 68.9 billion euros, a good fifth less than the previous year, and the bottom line profit was 225 million euros.
As early as 2022, BASF had to make billions in write-downs on its subsidiary Wintershall Dea's oil and gas businesses due to the Russian attack on Ukraine.
dpa