Chemical company
After a strong quarter, BASF is raising its annual targets again
View of the BASF plant in Ludwigshafen. Photo: Uwe Anspach / dpa
© dpa-infocom GmbH
Due to the recovery from the corona crisis, the chemicals business is also booming. But the world’s largest manufacturer, BASF, is also struggling with rising costs.
Business of the world’s largest chemical company, BASF, is running smoothly thanks to strong demand and higher prices. The company is therefore becoming more optimistic for the year as a whole.
For 2021 it expects sales between 76 billion and 78 billion euros, as the Dax group announced on Wednesday. BASF had previously assumed revenues between 74 billion and 77 billion euros. The company is also becoming more confident on the profit side.
However, BASF expects the supply bottlenecks to affect the overall economic recovery in the fourth quarter as well. The Ludwigshafen-based company is assuming growth in industrial and chemical production of 6 percent each for the year as a whole. The management had previously calculated at 6.5 percent.
Stable demand
The demand for BASF products remained stable over the summer months, said CEO Martin Brudermüller. Compared to the third quarter of the previous year, BASF increased prices by 36 percent and volumes by 6 percent. With strong earnings contributions from the basic chemicals and plastics divisions, the earnings mix was comparable to that of the previous quarter.
The so-called downstream businesses, on the other hand, are faced with rising raw material, energy and freight costs, said Brudermüller. BASF was only able to partially offset these higher costs with price increases. The downstream business includes the Nutrition & Care division, which supplies food and feed manufacturers as well as the pharmaceutical, cosmetics, detergent and cleaning agent industries.
The auto business was negatively impacted by reduced vehicle production due to the semiconductor shortage. The Surface Technologies division, which sells automotive paints and catalytic converters, was particularly hard hit. The shortage of semiconductors will continue at least in the first half of the coming year.
Group-wide, sales in the third quarter increased by 42 percent to around 19.7 billion euros compared to the corona-tainted period of the previous year. This was due to higher volumes and, above all, significantly higher prices. The operating result (EBIT) before special items rose to just under 1.9 billion euros. In the business with seeds and weed killers, the result was negative despite higher sales due to significantly higher fixed costs, higher raw material prices and logistics costs.
The bottom line is that BASF posted a profit of 1.25 billion euros. In the previous year there was a loss of a good 2.1 billion euros due to depreciation.