BASF plans to slash jobs and reduce costs at its Ludwigshafen site after a tough year

BASF plans to slash jobs and reduce costs at its Ludwigshafen site after a tough year

The German chemical giant BASF said on Friday that it will launch a new cost-cutting program at its Ludwigshafen site, which will result in job losses and plant closures. The company also confirmed its 2023 results, which were hit by lower margins and impairments.

BASF said it will implement structural measures at Ludwigshafen to save more than 200 million euros ($212 million) a year by the end of 2026. The measures include shutting down its TDI plant, which produces a chemical used in foam, and its caprolactam plant, which produces a chemical used in nylon. The company will also reduce its production capacity of adipic acid, a chemical used in plastics, and close its cyclohexanol, cyclohexanone and soda ash plants, which are used in various industries. The measures will affect around 700 production jobs and 10% of the asset value of the site, BASF said.

Trucks are parked in front of a warehouse of German chemical company BASF in Ludwigshafen.

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The new program is in addition to a previous cost-cutting program that BASF launched in 2022, which aims to save 500 million euros a year in non-production areas by the end of 2024. That program will affect around 2,600 jobs, BASF said.

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BASF said its net loss for the fourth quarter of 2023 was 4.85 billion euros, compared with a net profit of 898 million euros in the same period of 2022. Its sales for the quarter fell by 2.3% to 19.32 billion euros. Its earnings before interest and taxes before special items for the quarter were 373 million euros, down from 1.23 billion euros.

BASF said its net loss for the full year of 2023 was 627 million euros, compared with a net profit of 5.52 billion euros in 2022. Its sales for the year fell by 21% to 87.33 billion euros. Its earnings before interest and taxes before special items for the year were 4.8 billion euros, down from 8.5 billion euros.

BASF said its 2023 results were affected by lower margins in its chemicals and materials segments, as well as by impairments related to its stake in Wintershall Dea, a German oil and gas company. BASF booked around 6.3 billion euros in special charges in 2023, mainly due to the deconsolidation of Wintershall Dea’s Russian activities.

BASF said it expects a weak first half of 2024, followed by an improvement in the second half. The company said it targets sales of between 84 billion euros and 87 billion euros, and earnings before interest and taxes before special items of between 4.8 billion euros and 5.4 billion euros for 2024.

BASF said it will propose a dividend of 3.40 euros per share for 2023, unchanged from 2022. The company also said it has terminated its share buyback program ahead of schedule.

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Source : The Wall Street Journal

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