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Monday, December 11, 2023

Germany’s BASF to shed 2,600 jobs in cost-cutting drive

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Chemicals maker BASF said it plans to cut around 2,600 jobs in a cost-cutting drive spurred in part by the impact of high energy prices.

The announcement came after charges related to the exit from Russia of the company’s gas and oil subsidiary pushed it to a loss in 2022.

BASF, which is based in Ludwigshafen, Germany, said the cost-cutting programme would be implemented this year and next to generate annual savings of more than €500 million in the company’s service, operating and research and development divisions and corporate headquarters.

“Globally, the measures are expected to have a net effect on around 2,600 positions; this figure includes the creation of new positions, in particular in hubs,” BASF said in a statement.

It said that some plants at its sprawling Ludwigshafen site would close, affecting around 700 production jobs. But chief executive Martin Brudermuller said the company was “very confident that we will be able to offer most of the affected employees employment in other plants”.

Those measures are expected to be implemented by the end of 2026, with the aim of reducing fixed costs by more than €200 million per year.

BASF reported a net loss for 2022 of €627 million, following a profit of €5.5 billion the previous year. The result was pushed down by charges of €6.3 billion related largely to the exit from Russia of its Wintershall Dea gas and oil subsidiary and on the unit’s gas transportation business.

Those includeda including a complete write-down on the company’s participation in Nord Stream AG. Wintershall Dea had a 15.5 per cent stake in the operator of the Nord Stream 1 pipeline that runs under the Baltic Sea, which is majority-owned by Russia’s Gazprom and has not transported gas to Germany since August.

The pipeline was damaged in explosions in September that investigators have described as sabotage.

In announcing the cost-saving drive, Mr Brudermuller complained that “Europe’s competitiveness is increasingly suffering from over-regulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors”.

“All this has already hampered market growth in Europe in comparison with other regions,” he said. “High energy prices are now putting an additional burden on profitability and competitiveness in Europe.”

BASF says it has more than 111,000 employees worldwide.

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