The world's largest chemical company is reacting to the gas crisis and is also cutting jobs at its headquarters in Ludwigshafen. The outlook for this year is bleak.
The chemical giant BASF wants to respond to high energy prices and poor business prospects with severe cuts at the main plant in Ludwigshafen. 2,600 jobs will be lost worldwide, almost two-thirds of them in Germany, as the group announced on Friday. Several particularly energy-intensive plants in Ludwigshafen are to be closed.
CEO Martin Brudermüller sharply criticized the framework conditions in Europe: “The competitiveness of the European region is increasingly suffering from over-regulation.” In addition, there are slow and bureaucratic approval procedures and high production costs. All of this has slowed market growth in Europe for many years. “And it is not to be expected that Europe will become a growth area again in the medium term.” Almost half of the investments are to flow to Asia in the next few years.
Largest industrial gas consumer in Germany
BASF, as the largest industrial gas consumer in Germany, suffered greatly last year from the increased energy and raw material costs. Brudermüller now wants to make the group weatherproof with a new annual savings program of 500 million euros, which he announced in October.
BASF intends to achieve around half of this at the company's headquarters in Ludwigshafen. The company employs around 39,000 of its 111,500 employees there. According to the current site agreement, redundancies in Ludwigshafen are excluded until the end of 2025. “Ludwigshafen will remain the largest and most strongly integrated site in the BASF Group,” emphasized Brudermüller.
Group wants to close energy-intensive plants
In the production network at its largest site, BASF is planning far-reaching steps “to better prepare Ludwigshafen for the increasingly fierce competition in the long term”. The chemical company wants to close several energy-intensive plants, including those for the Perlon precursor caprolactam, one of the two ammonia plants and the associated fertilizer plants.
BASF headquarters in Ludwigshafen
Production at the ammonia plants had already been scaled back because they require large quantities of natural gas. The plant for the plastic precursor TDI, which only went into operation in 2015 but was not fully utilized, is also to be closed. Around 700 more jobs in production will be affected by the cuts.
As a result, Brudermüller expects to be able to reduce fixed costs by more than 200 million euros per year. The affected employees in production should be offered work in other companies. The fact that BASF could resume operation of the plants in the future is more than impossible, said the CEO. In Germany, the company's earning power has recently deteriorated massively, resulting in an annual operating loss of 126 million euros.
In Ludwigshafen, BASF intends to make further significant investments, said Brudermüller. In the next few years, however, almost half of the investments will go to Asia. Because in China, the world's largest chemical company is currently building a new Verbund site in the southern province of Guangdong for up to ten billion euros.
Share buyback will be terminated early
With a minus of more than four percent, BASF shares were the biggest losers in the leading index Dax. After the loss in the previous year, shareholders should only receive a dividend of EUR 3.40 per share at the level of 2021. In addition, the share buyback program, which was originally supposed to have a volume of up to three billion euros, will be terminated prematurely at around 1.4 billion. The future prospects are bleak: in 2023, BASF is preparing for a significant decline in adjusted operating profit (EBIT) to between EUR 4.8 and 5.4 billion.
Last year, earnings were already up by 11. 5 percent down to 6.9 billion. Sales are likely to fall to 84 to 87 billion euros from 87.3 billion euros in 2022.
A total loss of 627 million euros was incurred in 2022 after a profit of 5.5 billion euros in 2021. In January, BASF According to preliminary figures, a net loss of 1.38 billion euros was reported due to billions in write-downs on the stake in the oil and gas group Wintershall Dea. In the end, however, the value adjustments turned out to be lower than initially assumed. BASF still intends to part with Wintershall Dea, which has to digest billions in expenses due to the withdrawal from its Russian business, but has not presented a new timetable for this.
ul/hb (rtr, dpa)