Business

Brudermüller warns of historically unprecedented dangers

D.BASF’s boss used the Dax Group’s general meeting on Friday to outline the unprecedented dangers to his industry and company. In extreme cases, Martin Brudermüller said at the virtual event, there is a risk of “irreversible damage” to the economy – and worse still for his company headquarters: the huge chemical plant in Ludwigshafen is expected to essentially close down if the gas supplies from Russia stopped overnight. They are irreplaceable.

As bitter as it is: “Russian gas supplies form the basis for the competitiveness of our industry.” There is no short-term solution to replace them. Dependence on Russian gas must be reduced, but this is not done “at the push of a button”.

Brussels intervention

The situation is bad enough without the threat of a gas embargo from anywhere. Massively high energy prices are affecting the energy-intensive chemical industry to such an extent that Brudermüller has resorted to historical classification. The implementation of the European Commission’s Green Deal under such adverse circumstances, which he too is undisputed, is unprecedented: “It will put our industrial competitiveness to the toughest test in its history”.

The trick is in the details: Brussels’ new chemicals law, for example, will likely affect 12,000 chemicals, or 45% of all substances. Many of these would fall under a ban.

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Nor have the warnings become quieter because BASF is very stable. The group already had a very good year in 2021 and also did well in the first months of 2022. Last year, sales of 78.6 billion euros were 33% higher than in 2020, EBIT before special items was exceeded by 118% and stood at € 7.8 billion. Regarding volume growth of 10.6% – 4.5 percentage points higher than global chemical production – BASF was said to have grown stronger than it has been in a long time. There should now be a dividend of € 3.40 per share, up 10 cents from the previous year. This corresponds to a distribution of 3.1 billion euros.

In the first quarter of 2022, it didn’t look like the trend would end, as sales increased 19% to € 23.1 billion during this period and EBIT before specialty items by 21% to € 3.8 billion. . The company has confirmed its objectives for the full year: it expects a slight reduction in sales from 74 to 77 billion euros and an operating result from 6.6 to 7.2 billion euros.

War affects business

In any case, the war in Ukraine is also keeping BASF in suspense. The company has not started any new business in Russia and Belarus since the beginning of March and this week decided to also stop existing business activities in both countries by the beginning of July. All in all, that’s about one percent of group sales, so it’s bearable. Only food production remains intact to counter the threat of famine caused by the lack of grain exports from Ukraine and Russia.

This leaves the BASF Wintershall Dea yard. Brudermüller has confirmed that he wants to make the company public without any changes. Although the company is not affected by sanctions, it has interests in Russian manufacturing facilities. This makes an IPO “currently difficult”. BASF owns nearly 70 percent of Wintershall Dea, the rest is in the hands of the former owner of Dea Letter One.

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