BASF has released preliminary figures for the second quarter of 2023 which show sales declined by an expected 25 per cent to €17.305 billion (Q2 2022: €22.974 billion). The company said this was mainly driven by considerably lower prices and volumes, though negative currency effects also contributed to the decline. Sales were lower than average analyst estimates for the second quarter of 2023 (Vara: €19.355 billion).
EBIT before special items amounted to an expected €1.007 billion, a decline of 57 per cent compared with the strong prior-year quarter (Q2 2022: €2.339 billion) but in line with analyst consensus for the second quarter of 2023 (Vara: €1.018 billion). 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 billion) and almost at the level of analyst consensus (Vara: €1.003 billion).
Net income reached an expected €499 million, below the figure in the prior-year quarter (Q2 2022: €2.090 billion) and below average analyst estimates for the second quarter of 2023 (Vara: €729 million).
According to current estimates, global gross domestic product in the first half of 2023 grew stronger than previously expected – up 2.4 per cent instead of 1.6 per cent – solely driven by a global increase in the service sector. However, growth in global industrial production continued to slow. Consequently, the company said global chemical production declined perceptibly in the first half of the year.
For the second half of 2023, BASF said it 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, the company is assuming only a tentative recovery because it believes global demand for consumer goods will be lower than previously surmised. As a result, margins will remain under pressure.
Against this background, BASF adjusted its assumptions regarding the global economic environment in 2023 (previous assumptions from the BASF Report 2022 in parentheses; current assumptions rounded):
- Growth in gross domestic product: 2.0 per cent (1.6 per cent)
- Growth in industrial production: 1.0 per cent (1.8 per cent)
- Growth in chemical production: 0.0 per cent (2.0 per cent)
- Average euro/US dollar exchange rate of US$1.10 per euro (US$1.05 per euro)
- Average annual oil price (Brent crude) of US$80 per barrel (US$90 per barrel)
With this, BASF also expects a weaker sales and earnings development than previously forecast and adjusted 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: €79.81 billion; full year 2022: €87.327 billion). 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 billion; full year 2022: €6.878 billion).