(new: statements from the press conference, share price)

LUDWIGSHAFEN (dpa-AFX) - Outgoing BASF Group CEO Martin Brudermüller is leaving a difficult legacy to his successor. At his last presentation of the annual figures of the world's largest chemical company, the 62-year-old announced a further cost-cutting program worth billions and further job cuts at the main plant in Ludwigshafen. The largest production site in the BASF Group is to be reorganized, Brudermüller said on Friday in Ludwigshafen. After early gains of up to four percent, the share price turned negative. The last price was minus 1.63 percent at 46.08 euros.

Brudermüller, who will hand over the helm at the end of the Annual General Meeting in April, assured that both the old and the new Executive Board under the leadership of Markus Kamieth will remain committed to the Ludwigshafen site. Although Ludwigshafen will become smaller, it will remain the Group's largest production site in the long term.

Specifically, additional annual costs of one billion euros are to be saved at the headquarters of the Dax Group by the end of 2026. It is still unclear how many jobs will be lost in Ludwigshafen. Brudermüller also did not rule out the closure of further plants. The management and his successor Kamieth are to reposition the largest production site, with a particular focus on greater profitability. The new Management Board team intends to present a target picture in the second half of the year.

Savings are to be made both in production and in external areas. Fixed costs are to be reduced by increasing efficiency and production capacities are to be adapted to the market. "The situation is serious, so we are explicitly not ruling out any measures," said the outgoing Group CEO, outlining the situation.

CFO Dirk Elvermann spoke of a development that had already been ongoing for some time. Of the almost 112,000 employees, 38,710 were employed in Ludwigshafen, two thirds of them in production. As the largest industrial gas consumer in Germany, BASF, like many chemical companies, is suffering from the relatively high energy prices in this country.

The chemical union IG BCE criticizes the announced savings program and the associated job cuts. Gunther Kollmuß, head of the IGBCE Ludwigshafen district, warned that instead of one cost-cutting program after the next, investments in the future and a clear, forward-looking perspective were needed.

BASF management had already announced a cost-cutting program in 2022 due to deteriorating business and more difficult conditions in Europe. The aim is to reduce annual costs by a total of 1.1 billion euros by the end of 2026. The measures include the reduction of around 3,300 jobs worldwide, including 700 jobs in production in Ludwigshafen, as well as the closure of several energy-intensive chemical plants, for example for ammonia, as BASF specified a year ago.

The managers reported that costs had already fallen by around 600 million euros by the end of 2023. The remaining 500 million euros in savings from the program are to be added from 2026. In total, the current and new savings program will result in one-off costs of around 1.8 billion euros.

The BASF Board of Executive Directors does not expect any significant improvement in the current year either. The weakness of the global economy from last year is likely to continue in 2024, Brudermüller said. Growth will probably only pick up somewhat in the course of the year. In Europe, comparatively high energy prices and unfavorable framework conditions continue to slow down economic development.

The chemical giant's management does not intend to change its China strategy due to the market opportunities, Brudermüller said explicitly. The company had recently announced that it would sell shares in the two joint ventures in Korla, China. The background to this was reports of possible human rights violations. However, according to BASF, there were no indications of human rights violations in the two joint ventures.

BASF is targeting earnings before interest, taxes, depreciation and amortization (EBITDA) and special items of between 8.0 and 8.6 billion euros for this year. In 2023, adjusted operating profit fell by almost 29 percent to just under 7.7 billion euros. The Ludwigshafen-based company did not provide any information on expected sales and profit. The dividend for 2023 is expected to remain unchanged at EUR 3.40 per share.

The Group had already announced in advance that turnover and profit for 2023 would fall significantly short of its own expectations. The management blames this primarily on weak demand and higher energy costs. Revenues amounted to 68.9 billion euros last year, a good fifth less than in the previous year, and the bottom line profit was 225 million euros. In 2022, BASF had to write down the oil and gas business of its subsidiary Wintershall Dea by billions of euros due to the Russian attack on Ukraine./glb/mne/jha/