BASF cuts jobs, warns on earnings

BASF is to axe more than 2,000 jobs and shutter plants, the German chemicals giant said on Friday, sending the shares lower.

The group, which has been hit hard by soaring energy and raw materials costs, said it expected around 2,600 net job losses as part of previously announced plans to reduce annual non-production costs by €500m in Europe.

Around 65% of the job losses will be in Germany, with most in administration and research.

BASF also confirmed it would shutter a number of lines at its headquarters in Ludwigshafen, including two ammonia plants. It will also stop production of caprolactam, which is used in engineering plastics and nylon, at the site, with production transferring to Belgium.

The Ludwigshafen complex employs around 39,000 staff, but most affected workers will be transferred internally, BAF said.

Martin Brudermuller, chief executive, added that BASF remained "committed" to Ludwigshafen. "We are doing this because we believe in the future of the site, which is now in its 158th year. We believe in the people who work here, and we believe in the region."

The update came as BASF reported an 11% increase in annual sales to €87.3bn, while earnings before interest, tax and special items fell nearly 12%, to €6.9bn. Pre-tax income slid to €1.2bn from €7.4bn a year previously.

Looking to the current year, BASF noted: "The high level of uncertainty that arose over the course of 2022, due to the war in Ukraine, high raw materials and energy costs in Europe, rising prices and interest rates, inflation and the development of the pandemic, will continue in 2023.

"All of these factors will negatively impact global demand."

BASF is forecasting annual sales of between €84bn and €87bn for 2023, with EBIT before special items falling to between €4.8bn and €5.4bn. "The company expects a weak first half, followed by an improved earnings environment in the second half due to recovery effects, especially in China," it noted.

BASF is also halting a proposed €3bn share buyback early, after €1.4bn was spent, because of the "profound changes" in the global economy.

Shares in BASF were down 6% as at 1145 GMT.