Battered by the high cost of energy and raw materials, largely exacerbated by the war in Ukraine, chemicals giant BASF announced a series of “concrete measures” to strengthen competitiveness in its recent 2022 business report. During the presentation last month, the Chairman of the Board of Executive Directors, Dr. Martin Brudermüller, announced structural changes to the Ludwigshafen site along with other cost-saving initiatives. It will cut approximately 2,600 jobs as part of its “right-sizing” efforts.
Although BASF reported an 11.1% increase in sales in 2022, reaching €87.3 billion, the growth was mainly driven by higher prices “across almost all segments due to an increase in raw materials and energy prices.” BASF’s global operational earnings were burdened by additional energy costs totaling €3.2 billion, with Europe accounting for around 84% of this increase. This mostly affected the Verbund site in Ludwigshafen, Germany, said BASF, where it has a 157-year history.
The war in Ukraine, high raw materials and energy costs in Europe, rising prices and interest rates, and inflation, all of which had a profound impact on the overall economy, will continue in 2023, according to BASF’s forecasting. It anticipates moderate 1.6% growth in the global economy for 2023 and a 2% growth in global chemical production.
“Europe’s competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and, in particular, high costs for most production input factors,” said Brudermüller at the presentation. “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,” he said before outlining the measures BASF is putting in place to weather the gathering storm.
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