(Bloomberg) -- Lanxess AG is slashing its dividend and earnings outlook as high energy prices and a slump in global demand hit the German chemical giant.

The company proposed cutting its 2023 dividend to 10 cents per share from €1.05 ($1.13) in 2022. Lanxess also warned 2023 adjusted earnings before interest and taxes could be as low as €500 million, below a previous forecast of as low as €600 million.

The warning “does not bode well for management’s expectations on 2024 cash generation,” said Oliver Schwarz, senior analyst at Warburg research. “On top of that, it really puts a question mark to the company’s portfolio quality as a lot of Lanxess’s specialty operations do currently experience a major drop in profitability.” 

The stock tumbled as much as 8.2% on Monday, and has fallen 44% this year.

Lanxess last month said it will cut 7% of its workforce, joining other energy-intensive German companies in scaling back production after Russia’s invasion of Ukraine cemented in place higher energy costs. 

Weakening demand from China, a shortage of workers and high interest rates are also hurting factories in Germany, where the economy may shrink in 2023, according to five institutes that advise the government. 

BASF SE, Europe’s biggest chemical producer, is cutting 2,600 jobs and reducing output in Germany as it adapts to a future without cheap Russian gas. The company is closing a number of energy-intensive factories, including two ammonia plants and related fertilizer facilities. 

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