The economy is sluggish, energy costs are depressing, competitiveness is suffering: BASF decrees a cost-cutting program that will also cost 2,600 jobs worldwide. Entire plants are even to be shut down, including in Ludwigshafen itself.
The world's largest chemical company BASF wants to cut 2,600 jobs worldwide. Around two-thirds of this is in Germany, the DAX group announced. 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 focal points 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. Among other things, one of the two ammonia plants and a TDI plant as well as plants for certain precursors are to be closed there.
The background to the job cuts are poor business prospects at BASF. The group expects a decline in sales and earnings in the current financial year. Adjusted operating profit (EBIT) is likely to drop to 4.8 to 5.4 billion euros, as the chemical giant announced when presenting the balance sheet. In 2022, profits - as has been known since January - fell by a good 11 percent to 6.9 billion euros. Recently, BASF had been less and less successful in passing on the rising costs for raw materials and energy to customers in the form of higher prices.
Sales are expected to be between EUR 84 and 87 billion this year, which is below the previous year's figure of EUR 87.3 billion. BASF anticipates a weak first half. Catch-up effects, especially in China, should lead to an improved earnings situation in the second half of the year. For the past year, the shareholders are to receive a dividend of EUR 3.40 per share, as in the previous year, despite the loss of billions.
In 2022, BASF suffered billions in write-downs on the Russian business of its production subsidiary Wintershall Dea. As early as January, BASF therefore reported a bottom line loss of around 1.4 billion euros.
