Dark year with bleak prospects




Dark year with bleak prospects


15 December 2022 | Pressemitteilung

The chemical-pharmaceutical industry has presented its results for 2022.

Prospects remain bleak also for 2023. © by-studio/
Prospects remain bleak also for 2023. © by-studio/
  • Production drop by 6 percent against the previous year
  • Energy and raw material costs put a strain on earnings
  • Forecast 2023: Production and sales on the decline
  • Urgent need for corrections to energy price brakes

The chemical-pharmaceutical industry is looking back on a particularly difficult year that was marked by Russia’s war of aggression on Ukraine and the resulting energy crisis. Prospects remain bleak also for 2023. At the annual press conference of the German chemical industry association VCI in Frankfurt, President Markus Steilemann says: “The situation is dramatic. Enormous energy prices and price increases for raw materials and inputs are making matters hard indeed for industry in our country. Moreover, the implementation of the electricity and gas price brake diverges strongly from the Gas Commission’s proposal and is likely to bring very little or no relief for our companies. Especially our small and medium-sized enterprises are fighting for their future.”

Every fourth company is making losses

It is true that the immense pressure of energy and raw material costs came with a strong rise in product prices. In consequence, chemical products were 22 percent more expensive in the overall year 2022 than back in 2021. However, costs went up more sharply than sales prices, so that – according to a recent VCI member survey – meanwhile profits are falling at roughly 80 percent of businesses. Every fourth company is already making losses, with SMEs being particularly affected.

Two-thirds of member companies suffered under the lack of orders in November. More than 25 percent of businesses even saw their commercial activities severely impacted by this. The industry’s turnover has been falling for several months. All the same, sales of Germany’s third largest industry in the whole year 2022 totalled 266.5 billion euros and were thus still ca. 17.5 percent higher than in 2021. But it is worth noting that the sales increase is only price-driven, while sales volumes took a downturn.

With a view to avoiding major losses and to saving energy (especially gas), many companies cut back their production. 40 percent of businesses state that they have already done so or are intending to take this step soon. Part of the production has been moved to sites abroad. Relocation is concretely planned or has already been implemented by nearly every fourth company. Moreover, every fifth company had to refuse orders due to the energy crisis.

Chemical production drops by 10 percent

“As the chemical industry has to produce with the proverbial handbrake on, individual basic materials are already becoming scarce”, so VCI President Markus Steilemann. Around 50 percent of member companies reported supply problems in November. There are shortages, for example, of pigments, carbon and glass fibres, hydrochloric acid, caustic soda, technical CO₂, organic silicon compounds or ferric chloride. The list is getting ever longer, and first value chains are breaking. Steilemann continues: “Chemistry is in almost all objects of daily use. Economic distress for the industry would cause supply shortages in all areas of life.” Production dropped by 6 percent against the previous year. When excluding the pharmaceutical business, the decline was even around 10 percent. The last comparable slump in production was in 2009 in the wake of the global economic crisis.

Producer prices are coming under increasing pressure irrespective of rising costs. Orders and sales revenue are falling. Petrochemicals are hit particularly hard with a production drop by 15.5 percent for 2022 overall. Manufacturers of inorganic basic chemicals, polymers and specialty chemicals had to reduce their production by almost 10 percent. The decline was 1.5 percent for soaps, detergents and cleaning agents close to consumers and cosmetic products. Only the pharmaceutical sector improved in the current year with a production increase by 3 percent. The number of employed in the chemical-pharmaceutical industry was stable at 475,500 in 2022 as a whole.

Outlook 2023: no improvement of the situation

At present, the VCI is not expecting things to improve in 2023, as high uncertainty persists. The energy crisis is forcing the German and European economies into recession. Markus Steilemann explains: “The earnings situation of the entire industry has deteriorated rapidly in the course of the year – and the signs for 2023 are as bad as they can be. The decline in industry production in Germany will accelerate further, import pressure will continue to increase.”

Therefore, the challenges for the industry remain enormous next year: lack of orders, disrupted supply chains and high energy costs. As matters stand at the moment, the VCI is expecting for 2023 a further major drop in production in the chemical-pharmaceutical industry. In all likelihood, sales will develop negatively too. The association anticipates domestic business to decline significantly because of the industrial recession. Due to the extremely volatile situation, no quantitative forecast is given beyond this assessment.

Corrections to the energy and gas price brakes

The VCI appreciates that politicians have recognised the urgent need for action. However, the German federal government’s support programme does not bring the announced relief. This is attributable to the large number of restrictions under EU state aid law and, beyond that, even further tightening in the legislative procedure.

Essentially, the VCI sees four problem areas:

  • The upper ceilings for support are set far too low, especially for large consumers.
  • Companies are forced to build reserves unless the EBITDA falls by at least 40 percent.
  • Tightened rules on bonus and dividend pay-outs.
  • Companies need to guarantee a number of staff of 90 percent of today’s workforce level until April 2025.

VCI President Steilemann emphasizes: “The federal government has failed to ensure the success of the energy price brakes at EU level. The obstacles for claiming help are brutal for our companies. It is all the more important now to renegotiate in Brussels.” The EU’s regulatory frenzy is a cause for concern, anyway. For the coming year, the Commission is planning to launch 51 new pieces of legislation; 116 proposals from previous years are still pending. “Speaking in metaphors, a veritable tornado of regulation and bureaucracy awaits the already struggling companies.” According to Steilemann, there is legislative micro-management – instead of providing incentives for innovation and investment, taking measures for fast planning and approval procedures, and driving forward the massive expansion of renewable energies.

But this is not only about crisis prevention. The chemical industry also makes a decisive contribution to the transformation towards climate neutrality. Steilemann says: “Without a strong and internationally competitive chemical industry, there will be no future-proof and sustainable economy. The industry is irreplaceable for the prosperity of our country.”

The VCI and its sector associations represent the interests of around 1,900 companies from the chemical-pharmaceutical industry and related sectors vis-à-vis politicians, public authorities, other industries, science and media. In 2022, the VCI member companies realised sales of ca. 260 billion euros and employed nearly 550,000 staff.

Contact: VCI Press Department, phone: +49 69 2556-1496, e-mail:
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 Josefin Altrichter

Josefin Altrichter

Pressesprecherin Chemikalienstrategie, Wirtschaft, Digitalisierung