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The chemical company responds to price pressures with a comprehensive cost-cutting program and plans significant savings by the end of 2026.
BASF provides insights into its strategy and expectations for 2025 during a recent conference call. Despite ongoing price pressures, the company expresses a cautious optimism. Chief Financial Officer Dirk Elvermann emphasizes the need for internal restructuring and multi-billion euro savings plans to enhance competitiveness.
The company aims to achieve annual savings of EUR 2.1 billion by the end of 2026. Progress is already evident, with approximately EUR 800 million in ongoing savings achieved by the end of September 2024. This is part of a comprehensive plan aimed at improving efficiency at its headquarters in Ludwigshafen. Elvermann announced that job cuts may need to be considered to reach the targeted savings.
These cost reductions are not just a reaction to price pressures but also a strategic measure to ensure long-term competitiveness. Given that about 80% of the targeted savings relate to fixed costs, BASF plans a thorough review of its structures and processes.
Market Development and Future Outlook
In the third quarter of 2024, BASF’s revenue remained stable at EUR 15.7 billion, while adjusted operating profit increased by 5% to EUR 1.6 billion. However, the company is adjusting its forecasts for the year, now expecting results at the lower end of the previously projected range for earnings before interest, taxes, and depreciation. CEO Kamieth attributes this to the challenging situation in the automotive industry, where only slight growth signals are emerging in Asia.
The company’s annual general meeting for next year will take place exclusively in a virtual format, underscoring BASF’s current strategic direction. This format will be evaluated afterward to inform future decisions regarding the organization of such events.
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