The largest chemical group in the world, BASF, will lay off 2,600 workers spread around the world to save 500 million euros a year from 2024. BASF reported this Friday that most of the cost savings will be made at its headquarters in Ludwigshafen (Germany), where two thirds of the 2,600 scheduled will lose their jobs. The main reason behind this decision is the reduction of the production capacity and the demand for natural gas due to its increase in price in view of the Russo-Ukrainian war.
The workforce adjustment has been communicated after BASF registered net losses of 627 million euros in 2022, which implies a worsening compared to the profits of 5,523 million euros in 2021, as reported by the company. Revenues, on the other hand, stand at 87,327 million euros, and represent an increase of 11.1% compared to the turnover of 78,598 million euros of the previous year.
The German company plans to close a series of factories in Ludwigshafen, which means a cut of 700 jobs in production. Closures to a caprolactam factory, one of two ammonia factories, and related fertilizer facilities.
It will also reduce adipic acid production capacity and close the cyclohexanol and cyclohexanone factories, which are precursors to adipic acid, as well as soda ash. In addition, it is going to close the TDI (toluene diisocyanate) factory because its demand has fallen in Europe, the Middle East and Africa.
Losses accumulate since leaving Russia
BASF CEO Martin Brudermüller was confident that he could “offer most of the affected employees a job in other factories.” BASF ended its €3 billion stock reward program early.
The company already reported in mid-January that it had lost 1,376 million euros in 2022 after its oil and gas subsidiary
BASF obtained impairment losses on its stake in Wintershall This impairment results from the deconsolidation of Wintershall Dea’s exploration and production activities in Russia, which is going to leave the country completely in an orderly manner, complying with its legal obligations.
Slightly more hopeful forecasts
BASF’s turnover rose last year to 87,327 million euros (+11.1% than in 2021) after the increase in prices and positive effects of exchange rates and despite the fact that the sales volume fell. The management and the supervisory board will propose at the next general meeting of shareholders the distribution of a dividend of 3.40 euros per share, as last year.
BASF expects to generate in 2024 sales between 84,000 and 87,000 million euros and an operating profit before extraordinary items between 4,800 and 5,400 million euros. The company expects the first half of the year to be weak but expects an improvement in the second half due to the recovery in China.
