There are currently 684 employees in Russia and Belarus.
(Photo: dpa)
Frankfurt The chemical group BASF is tightening its course towards Russia and now wants to completely cease its activities in Russia and Belarus by the beginning of July because of the war in Ukraine. The Ludwigshafen-based group announced on Wednesday that the business to support food production was an exception.
At the beginning of March, BASF had already announced that it would no longer enter into any new transactions in these countries, but would continue to fulfill existing contractual obligations. Now follows the almost complete stop of the Russian business. “This decision was taken in response to recent developments in this war and in international law, including the fifth EU sanctions package,” the company said in a statement.
The impact on the operational business is limited. The chemical group has so far achieved around one percent of its total sales of 78 billion euros in Russia and, according to its own statements, still employs 684 people in both countries. In Russia, BASF operates at twelve locations and, in addition to agriculture, also supplies customers in the automotive and construction industries as well as manufacturers of health and care products and customers from heavy industry.
BASF is much more affected by its majority stake in Wintershall Dea than in the operative business in Russia. The oil and gas producer achieves almost 48 percent of its production in Russia and holds more than 60 percent of its oil and gas reserves there. BASF still holds a 72.7 percent stake in Wintershall Dea. Despite differences with the co-owner, the investment firm Letter One owned by Russian entrepreneur Mikhail Fridman, the group is sticking to its plans to take the energy company public.
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Due to the current constellation, however, this project is unlikely to be feasible in the foreseeable future. Wintershall Dea intends to publish quarterly figures on Thursday. At the beginning of March, the oil and gas company announced that it would stop all new oil and gas production projects in Russia, and payments to Russia were suspended. So far, however, the company is sticking to the existing natural gas production projects Yuzhno Russkoye and Achimov in Siberia. The financing of the Nord Stream 2 Baltic Sea pipeline, which was about to expire, in the amount of around one billion euros was written off.
Wintershall Dea is therefore likely to have closed the first quarter with a significant net loss. This in turn impacted BASF’s investment result by 1.1 billion euros. Despite a significant improvement in operating earnings, the chemicals group posted a decline in net profit from 1.7 to 1.2 billion euros in the first quarter.
More: “Hall of Shame”: Which companies are still active in Russia – and which are not