LONDON, Feb 24 (Reuters Breakingviews) - BASF (BASFn.DE) continues to provide the best metaphor for the German economy. The 45 billion euro chemicals group confirmed on Friday that 2022 was indeed the annus horribilis it had described last month in its preliminary results, due to rocketing gas prices and a 7.3 billion euros impairment on its Russian operations. At least it’s now splitting the pain between workers and shareholders.
The group will cut 2% of its workforce in a 550 million euros cost-cutting effort that includes plant closures. Investors who might have cheered the news sent the stock tanking by 6% as BASF boss Martin Brudermüller is also suspending a 3 billion euros share buyback. Politically that may have allowed the group to maintain its dividend at a planned 3.40 euros a share.
The closure of one of two ammonia plants in the company’s stronghold of Ludwigshafen was expected - a Belgian plant in Antwerp can supply the global market. But a similar decision to nix a facility producing TDI - used to make foam for household products - came as a surprise.
Brudermüller used the occasion to decry Europe’s “overregulation” and “slow and bureaucratic processes”. The group’s long association with Russia’s Gazprom (GAZP.MM), the vicissitudes of the Chinese market, and its own missteps are better explainers for BASF’s current woes. (By Pierre Briancon)
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