BASF cuts back at Ludwigshafen

In its 2022 result presentation, BASF announced measures that are expected to yield cost savings of €500 million/year, mainly in Europe and about half of them at the largest verbund site in Ludwigshafen, Germany. These will be implemented in 2023 and 2024, focusing mainly on the service, operational and R&D divisions and corporate functions. All this will lead to a net loss of about 2,600 jobs and a €200 million/year reduction in fixed costs by the end of 2026.

“Europe’s competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors,” said CEO Martin Brudermüller. “All this has already hampered market growth in Europe in comparison with other regions. High energy prices are now putting an additional burden on profitability and competitiveness in Europe.”

Among the changes are the closure of: the caprolactam plant, one ammonia plants and associated fertiliser facilities; cyclohexanol, cyclohexanone and soda ash plants; and, a TDI plant and the precursor plants for DNT and TDA. All of these will continue to be supplied from other facilities. About 700 jobs in production will go. This will also reduce CO2 emissions by about 900,000 tonnes/year, about 4% of the company total.

The company expects continuing geopolitical uncertainty in 2023, with high raw materials and energy costs in Europe, rising prices and interest rates, though it expects 2H to be better than 1H thanks to recovery effects, notably in China. It projects sales of €84-87 billion and a reduced EBIT before special items of €4.8-5.4 billion.