The chemical giant’s sales fell significantly in the first quarter.
(Photo: dpa)
Frankfurt Ludwigshafen-based chemical giant BASF posted a sharp decline in its operating profit (EBIT) in the first quarter. EBIT before special items fell by almost a third compared to the same period of the previous year to 1.93 billion euros – in 2022 it was 2.82 billion euros.
The slump in operating earnings was less severe than feared by most analysts. On average, the experts at the banks had expected an adjusted operating result of only around 1.6 billion euros for the group.
The BASF share price reacted with gains. After the surprising announcement of the preliminary figures for the first quarter on Wednesday afternoon, the titles of the chemical company made up for initial losses. They were up around 0.8 percent at the close of trading.
In particular, the agricultural business was significantly better than expected, while the food division performed weaker than expected, said BASF. According to the chemicals group, the chemicals, plastics and surface technologies sectors have also exceeded analyst estimates.
The same applies to earnings after taxes, which increased by 28 percent year-on-year to just under 1.6 billion euros. This is more than 40 percent above analyst estimates.
Wintershall Dea fully written off – BASF sales miss analysts’ expectations
In the previous year, the BASF result was still burdened by high write-downs on the majority stake in the oil and gas producer Wintershall Dea. Their involvement in Russia has now been fully written off, so that no further impairments were necessary in the first quarter of 2023.
The chemical group’s sales fell by 13 percent in the first quarter to almost 20 billion euros and again clearly missed the analysts’ forecasts. BASF intends to publish detailed figures on April 27th.
For the Ludwigshafen-based group, the economic environment had deteriorated noticeably from the second half of 2022. In addition to significantly increased energy costs, an economic slowdown and declining sales volumes are also contributing factors.
Analysts are therefore expecting significantly declining margins for 2023, especially in the area of basic chemicals and plastics. BASF boss Martin Brudermüller also warned of difficult times when presenting the annual balance sheet.
In response to the unfavorable cost trend and weak growth in European business, the group is planning an austerity program that will cut 2,600 jobs across Europe and shut down several plants at the main plant in Ludwigshafen, including a large and relatively new plant for the plastics precursor TDI.
For the full year 2023, BASF has so far announced an operating result before special items of 4.8 to 5.4 billion euros. That would correspond to a decrease of 22 to 30 percent compared to the previous year. Analysts have so far assumed an average operating profit decline of around 26 percent to almost 5.1 billion euros.
More: “Dismantling plants and cutting jobs is not yet a concept” – Sharp criticism of BASF’s savings plan