Wintershall DEA Focuses on Reorientation

Wintershall DEA, a majority holding of BASF, continues to stand strong despite its withdrawal from business in Russia. CEO Mario Mehren emphasized that the company has always focused on a diversified portfolio. While the withdrawal from Russia does cost 50% of the business, the other half remains in Europe, North Africa, and Latin America.

Mehren defended the company's cost-cutting program, introduced in the wake of the withdrawal from Russia. The conflict between Russia and Ukraine has not only significantly impacted energy markets but also Wintershall DEA. The company lost half of its production and 60% of its reserves due to the withdrawal, while production costs have increased by 35%. Administrative costs are even 50% higher than those of competitors.

To reduce costs, the company plans to cut its administrative expenses and adjust internal workflows. Starting next year, Wintershall DEA will have only one headquarters in Kassel. Upper and middle management will be reduced by about 40%. Mehren estimates that these measures can save around 200 million euros per year, about half of which will be achieved through job cuts.

Worldwide, 500 positions will be eliminated, about 300 of which are in Germany. Talks with employee representatives have already begun. For the restructuring, the company expects a provision of 225 million euros in the third quarter.

Furthermore, Wintershall DEA plans to completely divest itself of all Russian holdings. Mehren stated that the Russian government keeps erecting new barriers that make it difficult for foreign companies to leave the country. Therefore, a legal separation is now being carried out. Everything not related to Russia will be separated from Russian holdings and consolidated into a new holding company.

Regarding a possible sale of the stake in the pipeline operator holding Wiga, Mehren did not want to comment. However, he emphasized that the onshore pipeline business is fundamentally under review and no longer represents a strategic investment for Wintershall DEA.

The BASF stock ultimately lost 0.17% to 45.81 euros. Despite the challenges, Wintershall DEA remains optimistic and believes it is well-positioned for the future.