BASF has pledged to wind down its remaining businesses in Russia and Belarus, becoming one of the last big German groups to make such a move following the invasion of Ukraine.
The world’s largest chemicals company by revenue, which last month froze all new projects in Russia, said on Wednesday it would close its existing businesses in the two countries by the start of July.
“Exempt from this decision is business to support food production, as the war risks triggering a global food crisis,” said BASF, which also produces fertilisers, herbicides and seed treatments.
“This decision is driven by the recent developments of the war and in international law, including the fifth EU sanctions package,” it added. A spokesperson declined to elaborate on which specific developments had prompted the move.
BASF’s 684 employees in Russia and Belarus would be “supported” until the end of the year, the company said. Its operations in Russia include a car-coatings plant 60km east of Moscow.
However, while BASF built its first non-German site near Moscow in 1877, neither Russia nor Belarus is a big market for the company. The two countries accounted for about 1 per cent of global sales last year, with the region largely served by local chemical groups such as Uralkali.
BASF has already been burnt by its exposure to Russia. Wintershall Dea, an oil and gas company in which it holds a majority stake, said last month it would be forced to write off the €1.1bn it had lent to the Nord Stream 2 pipeline project, which was in effect cancelled by the German government soon after the war began.
As a result, BASF warned that net income for the first three months of 2022 would be €1.2bn, considerably below average analyst estimates of €1.8bn for the period. Full quarterly results are expected on Friday.
Aside from its investments in Russia, BASF has been embroiled in the political debate over whether Germany should heed Ukraine’s calls to stop buying natural gas from Russian suppliers.
The company remains one of the most vocal opponents of an embargo on Russian gas, with boss Martin Brudermüller warning that such a move would plunge Europe’s largest economy into its greatest crisis since the second world war.
Under German law, companies such as BASF would be forced to curtail gas consumption in the event of acute shortages, with supplies reserved for households and critical infrastructure.