BASF is not planning a new savings program

Ludwigshafen (dpa) - Following its multi-billion euro cost-cutting programs, the chemical company BASF has no further red pencil concept in the pipeline. However, in order for the chemical giant to become competitive and profitable again, the announced cost-cutting programs must also be implemented, said CFO Dirk Elvermann at the annual press conference in Ludwigshafen. "We cannot take a back seat here." There are currently no plans for further programs.

The Ludwigshafen-based DAX-listed company has set itself the goal of achieving annual savings of 2.1 billion euros by the end of 2026. "We are well on track," the manager assured. By the end of last year, annual cost savings totaling around one billion euros had been achieved. Of the total cost savings, around 100 million euros were attributable to the Ludwigshafen site.

Job cuts and plant closures

The chemical giant's headquarters is considered to be the management's biggest problem child due to low capacity utilization and competitiveness. According to the Executive Board's plans, costs of one billion euros are to be cut in Ludwigshafen alone by the end of next year. Overall, the red pencil strategy envisages cutting around 3,300 jobs worldwide, 700 of which will be in production in Ludwigshafen.

CEO Markus Kamieth did not want to give any details about the staff reductions that have taken place so far. However, cost reductions in the billions are only possible if personnel costs are also significantly reduced. Plant closures at the Ludwigshafen site are also planned step by step.

Problem child Ludwigshafen remains in focus

"We will continue to systematically implement our restructuring measures in order to reduce costs in line with current market conditions," emphasized Kamieth in his outlook for the coming months. "The Ludwigshafen site remains a clear focus of these measures. We want to at least compensate for inflation by increasing efficiency." A total annual cost reduction of around 1.5 billion euros is to be achieved by the end of this year.

According to CFO Elvermann, the implementation of the savings programs had resulted in cumulative one-off costs of around 900 million euros by the end of last year. This amount corresponds to around half of the total one-off costs expected by the end of 2026. "By then, we want to have completed all programs and benefit from the full savings every year."

Cautious outlook - hope for China

The chemical giant is rather cautious about the current financial year: Management continues to expect high geopolitical and trade policy uncertainties as well as a moderate increase in industrial production, demand for goods and the global chemical industry. In the second half of the year, a start is to be made on ramping up the new Verbund site in China. Most of the plants should be up and running by the end of the year.

The target for earnings before interest, taxes, depreciation and amortization (EBITDA) and special items in 2025 is between 8.0 billion and 8.4 billion euros. BASF's management did not provide a forecast for sales and earnings after taxes.

Profit increase due to sale of oil and gas business Wintershall Dea

The chemical company had already presented its key figures for the past financial year in January: According to this, 2024 sales shrank by 5.3 percent year-on-year to 65.3 billion euros. This was due to significantly lower prices and volumes. Thanks to the sale of the Wintershall Dea oil and gas business, the bottom line was a profit of just under 1.3 billion euros after 225 million euros in the previous year. The number of employees in the Group fell only slightly year-on-year by 169 (minus 0.2 percent) to 111,822. 38,710 people were last employed in Ludwigshafen.