 "BASF")
Germany's BASF will slash another 1 billion euros ($1.1 billion) in annual costs at its Ludwigshafen headquarters, citing weak demand and high energy costs in its home market, highlighting the country's economic woes.
The annual cost savings will be reached by the end of 2026, affecting both production and administrative activities at its largest chemical complex, the German chemicals giant said in a statement on Friday.
It also predicted that group earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, would rebound to between 8 billion and 8.6 billion euros in 2024. Last year, it fell 29% to 7.67 billion.
CEO Martin Brudermueller, who will quit in April to become non-executive chairman of carmaker Mercedes-Benz, cited high competitiveness of the group outside of Germany under challenging conditions.
"On the other hand, the negative earnings at our Ludwigshafen site show the urgent need for further decisive actions here to enhance our competitiveness," he added.
An economic downcycle at home is weighing on volumes affecting specialty chemicals and more basic petrochemicals known as its upstream business, the company said. This would lead to more job cuts that are being discussed with shop stewards.
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"Higher production costs due to structurally higher energy prices predominantly burden the upstream businesses." The German government this week cut its 2024 economic growth projection to 0.2%, from 1.3% previously, amid weak global demand, geopolitical uncertainty and persistently high inflation.
High interest rates and cost inflation have in particular burdened the construction industry, hitting BASF chemicals that go into insulation slabs, among other uses.
Major economic research institutes said in January that the 2024 outlook for the country's construction
sector is grim, with spending by builders set to fall for the first time since the financial crisis.
A year ago, BASF already laid out detailed plans to close sites, slash costs and shed about 2,600 jobs in Europe amid structurally weak demand there, affecting mainly Ludwigshafen.
In October, the company ramped up cost cuts further to around 1.1 billion euros annually from the end of 2026, having previously targeted a 1 billion euro reduction.
It will propose an annual dividend of 3.40 euros per share, unchanged from a year earlier, it said on Friday.
