BASF to cut 4,000 jobs

August 7, 2001 Posted: 0640 GMT

LONDON (CNN) -- BASF, Europe's biggest chemicals company, said on Tuesday it would axe 4,000 jobs, as it posted a 15 percent drop in quarterly profit.

The German company issued a profit warning in June, blaming high raw material prices and a global economic slowdown. The company said then it would close factories, but refused to say how many jobs it would cut.

BASF also warned that earnings for the whole of 2001 would fall short of last year's level, as it said second-quarter operating profit before one-time items fell 15 percent to 746 million ($656 million).

VIDEO

BASF's CEO on falling Q2 profits

Real

Windows

QuickTime

�

Analysts polled by Reuters had forecast for second-quarter operating profit between 756 million and 880 million.

Sales for the quarter fell 7.1 percent to 8.3 billion.

The Ludwigshafen, Germany-based company said it took a charge of 450 million in the second quarter to cover the cost of closing factories and cutting jobs. Of the charge, 126 million is associated with the site in Birkenhead, England, which will not be rebuilt following a fire.

BASF, which plans to cut its capital expenditure programme by a fifth and expects cost savings of about 400 million ($340 million), said it expects to save an additional 160 million by the end of 2002 as it continues to restructure its business worldwide.

The company expects to save 190 million from the closure of plants. The 4,000 job losses will come over the next 18 months.

BASF said it is committed to increasing operating profit by 10 percent for the years 2000 to 2002, but this would require "extraordinary efforts" and a "significant upturn in the majority of OECD countries by no later than the turn of the year."

"Under current market conditions of volatility we have to accept that the good full-year results we achieved in 2000 will not be achieved," Chief Executive Juergen Strube said.

The German company said its chemical business was hit hard by "weak demand and the volatile prices for raw materials. Contrary to previous estimates that the year's average price for Brent crude oil would be around $25 per barrel, BASF was confronted with prices that were up to $5 per barrel higher in the first half of the year. As a result, "the prices for naptha and other important raw materials were very high."

Note: Search results will open in a new browser window