2500 employees affected
BASF is facing a massive corporate restructuring
December 7, 2023, 3:13 p.m
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Big changes are coming at BASF, and almost ten percent of the workforce at the main plant will be affected. This involves a spin-off of the agricultural chemicals business and that with battery materials. The IG BCE speaks of bad news.
The Ludwigshafen-based chemical company BASF is facing a massive restructuring. The agricultural chemicals business and that with battery materials are to be separated from BASF SE and transferred to legally independent units. However, a sale of the areas is not the aim of these measures and is not on the agenda. According to the IG BCE union, almost 2,500 employees, almost ten percent of the workforce at the main plant in Ludwigshafen, will be affected by the spin-off. There are no plans for layoffs.
BASF wants to increase its competitiveness by adapting its business management, explained CFO Dirk Elvermann. “We combine the advantages of a more differentiated approach to managing individual businesses with the advantages of the group and our positioning as an integrated company.” Stores were given more space to meet the needs of their specific customer industries. In addition to the agricultural sector and battery materials, this also affects the coatings business, which has been independent as a GmbH since 2010 and produces, among other things, vehicle paints and architectural paints.
Expansion of electromobility as a glimmer of hope
The DAX group expects the highest returns in the future from the battery materials business, in which BASF has high hopes due to the expansion of electromobility. The aim is for an operating return (Ebitda margin) of 30 percent or more by 2030. BASF expects a medium-term growth of 23 percent or more for agricultural chemicals and 15 percent or more for coatings. The remaining businesses in the group are expected to achieve 17 percent over the chemical cycle. In 2022, the agricultural business accounted for twelve percent of group sales of 87.3 billion euros, with coatings contributing just under five percent. BASF has not yet published any business figures for battery materials, but according to previous information, the group is aiming for sales of more than seven billion euros in this area by 2030.
The IG BCE union spoke of bad news for the workforce shortly before Christmas. “The year ends for the employees as it began, with bad news that unsettles their colleagues,” explained district manager Gunther Kollmuß. The union insists on a documented waiver of sales; the new units must remain part of the BASF group. “When something is separated, it sounds like a sale to people. Experience shows that,” said works council leader Sinischa Horvat to the Reuters news agency. “But we were assured by management that the measures were only about making various areas more effective. BASF should remain an integrated company, and for this the company must build trust.”
No more sales forecasts in the future
The IG BCE and the works council also called for an extension of the location agreement at the main plant until 2030. According to the current location agreement, redundancies for operational reasons are excluded in Ludwigshafen until the end of 2025. CEO Martin Brudermüller announced a new austerity program in February that would result in the loss of 2,600 jobs worldwide, almost two thirds of them in Germany. Several energy-intensive systems at the main plant in Ludwigshafen are to be closed.
After a slump in business this year, BASF no longer wants to make any sales forecasts in the future. For the year 2024, on February 23, the board of directors will only name targets for earnings before interest, taxes, depreciation and special items (adjusted Ebitda) as well as cash inflow, as the DAX group announced at an investor event. BASF had previously stated annual targets for sales, earnings before interest, taxes and special items (adjusted EBIT) and return on operating capital (ROCE).