Chemical industry profits are evaporating in Europe

Chemical industry profits are evaporating in Europe

Several of Europe’s largest chemicals producers – including German companies BASF, Covestro, Evonik Industries and Lanxess – reported lower sales and net losses during the third quarter. Now the chemical sector in Europe is in cost-cutting mode, and some companies have begun closing their plants due to continued weak demand for their products.

Third quarter results Sales and profits declined for many leading chemical companies.

Table of third-quarter financial results for chemical companies in Europe and the United States.

source: C&EN tables based on company documents.

BASF, which remains the world’s largest chemical company, reported a loss of $264 million for the third quarter, compared with profits of $962 million in the same period a year earlier, and sales of $16.2 billion, down 28%. The German major reports a significant drop in prices for products sold by materials, chemicals and surface technologies companies and a decline in sales volumes across the board.
BASF announced cost-cutting measures of about $215 million annually, in addition to plans to reduce costs by more than $750 million annually by 2027. The company plans to reduce its capital investments over the next five years by about $4.3 billion, to $26.5 billion. “We have more projects than money,” Martin Brudermüller, the company’s CEO, said at a press conference.
Lanxess also lost money in the third quarter. “We see no signs of recovery for the rest of the year,” CEO Matthias Zachert said in a press release. The company plans one-time savings of $107 million in 2023 and annual savings of $160 million starting in 2025. The cuts will eliminate 870 jobs, including 460 in Germany. The company says it has begun selling its urethane chemical division and will use the funds to help pay down debt.
“Germany’s chemical industry continues to face a very challenging business environment,” Anna Wolf, an industry expert at the Ifo Institute, a German economic research group, says in a press release. In October, 48% of German chemical companies told Ifo that their order situation “remains tense,” the institute said. One problem, she says, is that electricity prices in Germany are still higher than in many other countries.
Chemical companies elsewhere in Europe are also suffering. Belgium’s Solvay reported a 24% drop in third-quarter sales to $2.9 billion. Its profits fell 33% to $360 million. Fragrance chemicals company Solvay, which sells its products to the food and fragrance markets, had its worst performance ever, reporting a 41% decline in sales.
Weak demand for chemicals is causing companies across Europe to close their plants. Trinseo says it will close its ethylbenzene and styrene production plant in Terneuzen, Netherlands. Celanese plans to close its nylon 6,6 plant in Unitrup, Germany. Published reports indicate that Chem One has halted its chlor-alkali plants in La Vera and Foss, France, and that SABIC will close its polycarbonate production line in Cartagena, Spain.
The US chemical sector has outperformed its European counterpart financially over the past two years, according to data from investment firm Jefferies. However, American chemical companies were also affected by weak demand for their products. Dow, Eastman Chemical and Huntsman reported declines in third-quarter sales and profits.

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