The German chemical giant BASF has announced a drastic tightening of its savings program in response to the prolonged crisis in the sector and structural problems in European industry. The conglomerate, the world's largest chemical producer, has already confirmed the reduction of 4,800 jobs and announced further cost cuts and a reduction in planned investments. This decision stems from pessimistic profit forecasts for 2026 and the need to adapt to high energy costs and weak global demand.
Drastic Cost Cuts
BASF is tightening its savings program in response to weak profit forecasts for 2026 and the crisis in the chemical industry.
Job Reduction
The conglomerate has confirmed the elimination of 4,800 jobs, which is part of a broader employment restructuring strategy.
Investment Reduction
The company plans significant cuts in investment expenditures, reviewing its previous key development projects.
Structural Problems
Analysts point to persistent profitability problems for production in Europe resulting from high energy costs.
BASF, serving as the global leader in the chemical sector, is facing unprecedented challenges that have forced its management to take radical restructuring steps. The latest reports from the Frankfurt stock exchange and analyst reports point to a deepening structural crisis. The company's strategy is now based on aggressive saving, which is reflected not only in job reductions but also in the review of all planned investment projects. Actions taken so far have already led to the elimination of 4,800 positions, but the company's CFO suggests this may not be enough to regain profitability in the face of an economic slowdown. The market reacted to these announcements with great uncertainty, fearing for the long-term competitiveness of German industry on the international stage. The market context for BASF is exceptionally difficult due to persistently high energy raw material prices in Europe, which puts local plants at a disadvantage compared to competitors from Asia and North America. Analysts emphasize that the projected profit decline for 2026 is a warning signal for the entire German DAX index. In addition to problems within the conglomerate, investor sentiment is also influenced by the results of other market players. While Deutsche Telekom is posting gains, companies such as Siemens Healthineers and E.ON started the session in the red, illustrating a mixed picture of the German economy's health. However, the most attention is drawn to the huge drop in Delivery Hero's share price, which further burdens stock market sentiment in the region. The BASF conglomerate, founded in 1865 as Badische Anilin- und Sodafabrik, is a historical pillar of German industry. For decades, the company has been a barometer of the global economy's condition, supplying intermediates for almost every manufacturing sector.In response to the deteriorating situation, BASF's management plans to redirect part of its capital towards markets with lower operating costs, raising justified concerns about the deindustrialization of Germany. This process, known as deindustrialization, is becoming a real threat for the Rhineland-Palatinate region, where the company's main headquarters in Ludwigshafen is located. Analysts' voices point to the necessity of deep structural reform that goes beyond ordinary budget cuts. The company must face the fact that the traditional business model based on cheap energy and stable supply chains has been irreversibly destroyed as a result of geopolitical tensions. Despite drastic savings, the conglomerate is trying to maintain its position as an innovator, although the reduction of funds for research and development may slow down the transformation towards green chemistry. Investors are closely monitoring every communication regarding CapEx, seeing it as the only way to stop margin erosion. The BASF situation is currently treated by economists as the most important resilience test for the European manufacturing sector this decade. The ultimate success of the remedial actions will depend on the ability to quickly adapt production capacity to the new pricing realities.