BASF to Implement Cost-Saving Plan After Lower-Than-Expected 3Q Earnings -- Update
12 Ottobre 2022 - 3:41PM
Dow Jones News
By Ed Frankl
BASF SE said Wednesday that it would put into action a new
cost-saving program worth half a billion euros a year amid a
deteriorating energy outlook and after a writedown on its stake in
the Nord Stream 1 gas pipeline forced third-quarter earnings below
expectations.
The German chemical giant said it would implement a cost-savings
plan worth 500 million euros ($485.3 million) annually in 2023 and
2024, as conditions worsen in Europe and what it called
significantly weaker earnings.
Earnings were especially worse in Germany, where third-quarter
results were negative, BASF said.
Overall, BASF's net income in the quarter to the end of
September was EUR909 million, down from EUR1.25 billion in the same
period of 2021.
The on-year fall was due to an impairment worth EUR740 million
on the partial write-down of its 73%-owned subsidiary Wintershall
Dea's stake in Nord Stream AG, which operates the Nord Stream 1
pipeline between Russia and Germany.
Sales, however, increased on year by 12% to EUR21.95 billion on
the back of higher prices, though volumes fell, it said.
Increased prices for raw materials and energy could only partly
be passed on through higher selling prices, BASF said.
The net profit was below consensus expectations provided by the
company of EUR1.11 billion, while sales ticked above views of
EUR21.08 billion.
Operating, service and research & development divisions, as
well as its corporate center, will be streamlined, with more than
half the savings at its main base at Ludwigshafen in western
Germany, it said.
While some cost savings possible in the short term will be
implemented immediately, others will be announced in the first
quarter of 2023, including reevaluating its Verbund production
strategy, the company added.
Employee representatives would be involved regarding the
different measures, BASF said.
The company, however, said its 2022 outlook was unchanged,
including earnings before interest and taxes before special items
of EUR6.8 billion-EUR7.2 billion.
Investors reacted positively to the news, with BASF shares in
Frankfurt rising 2.0% to EUR42.30 at 1300 GMT.
BASF is due to publish full third-quarter results on Oct.
26.
Write to Ed Frankl at edward.frankl@dowjones.com
(END) Dow Jones Newswires
October 12, 2022 09:26 ET (13:26 GMT)
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