BASF adjusts outlook for 2023

BASF Group achieves Q2 2023 EBIT before special items in line with analyst consensus

13-Jul-2023 - Germany

BASF SE

BASF has released preliminary figures for the second quarter of 2023. Sales declined by an expected 25% in the second quarter of 2023 to €17,305 million (Q2 2022: €22,974 million). This was mainly driven by considerably lower prices and volumes; negative currency effects also contributed to the sales decline. Sales were thus lower than average analyst estimates for the second quarter of 2023 (Vara: €19,355 million).

EBIT before special items of BASF Group amounted to an expected €1,007 million, a decline of 57% compared with the strong prior-year quarter (Q2 2022: €2,339 million) but in line with analyst consensus for the second quarter of 2023 (Vara: €1,018 million). Compared with the prior-year quarter, the earnings contributions of the Chemicals and Materials segments were particularly weaker.

BASF Group’s EBIT amounted to an expected €974 million in the second quarter of 2023, below the figure for the prior-year quarter (Q2 2022: €2,350 million) and almost at the level of analyst consensus (Vara: €1,003 million).

Net income reached an expected €499 million, below the figure in the prior-year quarter (Q2 2022: €2,090 million) and below average analyst estimates for the second quarter of 2023 (Vara: €729 million).

Outlook for the full-year 2023

According to current estimates, global gross domestic product in the first half of 2023 grew stronger than previously expected (+2.4% instead of +1.6%). However, this development was solely driven by a global increase in the service sector. Growth in global industrial production, on the other hand, continued to slow. As a result, global chemical production declined perceptibly in the first half of 2023. For the second half of 2023, BASF does not expect any further weakening in demand at the global level, as inventories of chemical raw materials in customer industries have already been greatly reduced. However, BASF is assuming only a tentative recovery because global demand for consumer goods will be lower than previously assumed. With this, margins will also remain under pressure.

Against this background BASF adjusts its assumptions regarding the global economic environment in 2023 as follows (previous assumptions from the BASF Report 2022 in parentheses; current assumptions rounded):

Growth in gross domestic product: 2.0% (1.6%)
Growth in industrial production: 1.0% (1.8%)
Growth in chemical production: 0.0% (2.0%)
Average euro/dollar exchange rate of $1.10 per euro ($1.05 per euro)
Average annual oil price (Brent crude) of $80 per barrel ($90 per barrel)

With this, BASF also expects a weaker sales and earnings development than previously forecast and adjusts its outlook for the full-year 2023. The company now anticipates sales of between €73 billion and €76 billion in 2023 (previous outlook 2023: €84 billion to €87 billion; analyst consensus 2023: €79,810 million; full year 2022: €87,327 million). EBIT before special items is now expected to reach between €4.0 billion and €4.4 billion in 2023 (previous outlook 2023: €4.8 billion to €5.4 billion; analyst consensus 2023: €4,883 million; full year 2022: €6,878 million).

https://www.chemeurope.com/en/news/1181057/basf-adjusts-outlook-for-2023.html