BASF starts 2023 better than expected in a stagnating environment

Date:04-28-2023

″BASF started off 2023 better than analysts had expected – and in a stagnating and difficult economic environment,″ said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE. The BASF businesses with customers in the agricultural and automotive sectors made a substantial contribution to this.

Agricultural Solutions Segment Business Review

Q1 2023

Sales in the Agricultural Solutions segment rose considerably compared with the first quarter of 2022. Prices were above the prior-year quarter in all regions and indications; volumes increased in all regions except Europe. Slightly negative currency effects had an offsetting effect.

 

Sales in Europe rose significantly as a result of higher prices. Sales volumes declined; this was mainly attributable to extraordinarily high demand in the prior-year quarter before the start of the war in Ukraine. Negative currency effects, primarily from the Turkish lira, also lowered sales.

Sales in North America increased considerably due to higher prices compared with the prior-year quarter. Increased volumes, especially of herbicides, and positive currency effects, largely relating to the U.S. dollar, supported the sales development.

In Asia, sales rose slightly as a result of increased prices and slightly higher volumes, especially of fungicides and insecticides. Negative currency effects had an offsetting effect.

In the region South America, Africa, Middle East, sales rose considerably. This was mainly driven by higher price levels as well as increased volumes, especially for field crops seeds. Currency effects, mainly from the Brazilian real, also positively impacted sales.

The segment increased income from operations (EBIT) before special items significantly compared with the first quarter of 2022 as a result of the sales growth. This more than compensated for continued high raw material and energy costs.

BASF Group outlook for 2023

The forecasts for sales, earnings, ROCE, and CO2 emissions, as presented in the BASF Report 2022, continue to apply:

• Sales of between €84 billion and €87 billion

• EBIT before special items of between €4.8 billion and €5.4 billion

• Return on capital employed (ROCE) of between 7.2 percent and 8.0 percent

• CO₂ emissions of between 18.1 million metric tons and 19.1 million metric tons

The assumptions regarding the global economic environment from the BASF Report 2022 remain unchanged:

• Growth in gross domestic product: 1.6 percent

• Growth in industrial production: 1.8 percent

• Growth in chemical production: 2.0 percent

• Average euro/dollar exchange rate of $1.05 per euro

• Average annual oil price (Brent crude) of $90 per barrel

The development of the global economy is still subject to great uncertainty. Momentum in global industrial and chemical production remains subdued. Forecast risks in terms of volume growth and margins for 2023 have partially materialized and led to a considerable decline in earnings in the first quarter of 2023, compared with the prior-year quarter. Opportunities that arose, particularly in the Agricultural Solutions segment due to higher prices, supported earnings. Market-related opportunities and risks continue to exist.

Likewise for the remaining opportunity and risk factors, the statements made in the BASF Report 2022 mainly continue to apply. According to the company’s assessment, neither existing individual risks nor the sum of individual risks pose a threat to the continued existence of the BASF Group.