German chemicals maker BASF SE will sack 2,600 employees, around 2% of its global workforce to reap cost savings as the company adjusts to a future without cheap Russian gas. The chemical giant will also close a number of factories, including two ammonia plants and related fertilizer facilities, according to Bloomberg news. 

The closing down of these factories will result in 700 job cuts at its main Ludwigshafen plant in Germany, the company said, adding that it is also terminating a share buyback program ahead of time due to the deterioration in the global economy.  

In an official statement, BASF Chief Executive Officer Martin Brudermueller informed that Europe's competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes. “High energy prices are now putting an additional burden on profitability and competitiveness in Europe."  

Previously, the company said it is targeting annual cost cuts of €500 million as it doesn’t expect gas prices to return to pre-war levels. BASF’s gas bill surged by €2.2 billion ($2.3 billion) last year compared to 2021, even as consumption fell by 35%. 

BASF also issued a forecast for 2023, expecting adjusted earnings before interest and taxes of as much as €5.4 billion, after earnings declined 12% in 2022 to €6.9 billion. 

The company expects improving market conditions during the second half of the year following a weak first half due to recovery effects, especially in China.

BASF last month unveiled a 7.3 billion euro writedown for 2022 on the value of its Wintershall Dea energy business, which is pulling out of Russia, Reuters reported. 

According to the unscheduled release at the time, that led to a 1.38 billion euro net loss for BASF during the year, citing preliminary figures, but the company on Friday reviewed the net loss downwards to 627 million euros because the impairment charge was less than initially feared.

Source: Mint