BASF announces an additional adjustment plan, including job cuts, after earning 225 million in 2023

Trust in the momentum of China's chemical industry by 2024.

BASF announces an additional adjustment plan, including job cuts, after earning 225 million in 2023

Trust in the momentum of China's chemical industry by 2024


The German chemical group Basf achieved a net profit of 225 million euros in 2023, compared to the losses of 625 million recorded a year earlier, as confirmed by the multinational, which has announced an additional cost savings program of 1,000 million euros until 2026 for the company's headquarters in Ludwigshafen, Germany, which will include job cuts.

Basf's sales for the year as a whole totaled 68,902 million euros, a figure 21.1% lower than that of 2022 and below the company's expectations of between 73,000 and 76,000 million euros.

The company attributed this sales evolution to considerably lower prices and volumes, noting that lower raw material costs led to lower prices in almost all segments, while sales volumes fell in all business areas such as result of weak demand from many industries.

Specifically, Basf's sales decreased by 30.4% in the chemical business, to 10,369 million; 23.3% in materials, with 14,149 million; 19.8% in industrial solutions, with 8,010 million; 23.9% in surfaces, up to 16,204 million; and 1.8% in agriculture, with 10,092 million.

Likewise, the German company's income fell in all regions, including a 22.9% drop in Europe, with 27,631 million; 21.9% in North America, with 19,003 million; 19.6% in Asia Pacific, up to 17,142 million; as well as 12.4% in South America, the Middle East and Africa, with 5,126 million.

In the fourth quarter, Basf recorded losses of 1,587 million euros, compared to the 'red numbers' of 4,847 million recorded in the same interval of 2022, after assuming an adverse impact due to atypical events of 1,287 million, five times more than in the fourth quarter of the previous year. The company's sales in the quarter totaled 15,871 million, 17.9% less.

Looking ahead to 2024, Basf expects the weakness of last year's global economic momentum to persist and only anticipates economic growth to accelerate slightly as the year progresses, adding that, in Europe, comparatively high energy prices and Unfavorable framework conditions for industrial value creation continue to hold back economic development.

In this way, Basf assumes that global industrial production will likely grow by 2.2%, compared to 1.4% in 2023, and that global chemical production will accelerate to 2.7% from 1.7% last year. , driven mainly by the growth of the Chinese chemical industry.

Thus, the company aims for an Ebitda before extraordinary items of between 8,000 and 8,600 million euros in 2024, compared to 7,700 million in 2023, as well as a free cash flow of between 100 and 600 million euros, compared to 2,700 million. million last year.

On the other hand, Martin Brudermüller, Chairman of the Board of Directors of Basf, and Dirk Elvermann, Chief Financial Officer, announced this Friday an additional adjustment plan for the Ludwigshafen headquarters to achieve additional annual cost savings of 1 billion until the end of 2026.

"Unfortunately the program will also lead to more job cuts," Brudermüller acknowledged.

The program will generate cost savings in both production and non-production areas, the company has indicated, which will seek to reduce its fixed costs to boost efficiency in business structures and adapt its production capacities to market needs.

Additionally, the company has indicated that it intends to significantly reduce variable costs by redesigning processes.

This adjustment program is in addition to the existing cost savings program in non-productive units focused on Europe and the adaptation of production structures in Ludwigshafen, the company has indicated.