The German chemical giant BASF announced on Tuesday a net loss of 1.37 billion euros for 2022 due to impairments on the activities of its Russian subsidiary. “Wintershall Dea intends to withdraw completely from Russia,” the group said in a preliminary results statement explaining that this cessation of activities led to an impairment valued at 7.3 billion euros, which reduced the result of the band.
Wintershall Dea had been active for many years in oil and gas exploration and production in Russia. The BASF subsidiary is one-third owned by Russian oligarch Mikhail Fridman, now under Western sanctions because of the Russian invasion of Ukraine.
The effects of Nord Stream 1 and 2
The company was also one of the players in the Nord Stream 2 gas pipeline project between Russia and Germany, abandoned in the wake of Russian aggression, and is one of the owners of the Nord Stream 1 gas pipeline, now in the stop. The group had already passed a depreciation of 1.1 billion euros in the spring linked to Nord Stream 2.
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BASF notes in its press release “the significant loss of real influence and the economic expropriation” of Wintershall Dea in Russia which will lead to the cessation of the activities of its subsidiary in this country.
Revenue up to 87.3 billion euros
BASF’s operating profit reaches 6.5 billion euros in 2022, down from last year (7.6 billion euros) while the group is also weighed down by the rise in its related production costs to soaring energy prices.
BASF also reports a turnover of 87.3 billion euros over the year, up 11% compared to 2021.
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Germany’s largest gas consumer, largely dependent on the resource delivered from Russia, BASF has seen its energy bill soar this year. The chemist had already announced this fall a savings plan of 1 billion euros for 2023 and 2024 but that will not be enough and production relocations are envisaged, his boss had indicated.
The group’s full results will be released on February 24.