BASF Group has posted third quarter 2023 sales of €15.7 billion, down €6.2 billion compared with the prior-year period. The decline was due mainly to considerably lower prices, primarily in the Materials, Chemicals and Surface Technologies segments, and considerably lower volumes in all segments except automotive.
Compared with the prior-year quarter, EBIT before special items declined €772 million to €575 million, while EBITDA before special items decreased €780 million to €1.5 billion and EBITDA declined by €892 million to €1.4 billion. Net income amounted to negative €249 million, compared with €909 million in the prior-year quarter.
Cash flows from operating activities were €2.7 billion in the third quarter of 2023, above the €2.3 billion reported in the prior-year quarter. “This is a remarkable improvement in view of the significantly lower net income,” said Dr Dirk Elvermann, Chief Financial Officer of BASF Group. Cash released from net working capital improved considerably by €1.2 billion compared with the third quarter of 2022, amounting to €1.9 billion, mainly due to the reduction in inventories. Free cash flow totalled €1.5 billion in the quarter compared to €1.3 billion in the prior-year period.
BASF said savings programmes will contribute a total of €1.1 billion annually by 2026. The company expects annual cost savings in non-production areas to reach more than €600 million by the end of 2024 and more than €700 million by the end of 2026. This includes measures related to Europe in the Global Business Services and Global Digital Services units. Additional measures in these two service units in other regions will contribute a further €200 million.
Total assets amounted to €82.6 billion as of 30 September 2023, €1.9 billion below the 2022 year-end figure. Net debt amounted to €18.9 billion, an increase of €2.6 billion compared with year-end 2022, but a decrease of €1.4 billion compared with 30 June 2023. The equity ratio at the end of Q3 2023 was slightly higher than at the end of 2022, standing at 48.8 per cent. “Overall, this demonstrates BASF’s financial strength with a strong balance sheet and good credit ratings,” said Elvermann.
In the fourth quarter of 2023, BASF expects production in the global chemical industry to further stabilise, but the company added that the macroeconomic outlook remains “extremely uncertain” in the current interest rate policy environment and in view of increasing geopolitical risks. Rising raw materials prices in particular could weigh on demand and margins.
Against this background, BASF has maintained its assessment of the global economic environment in 2023 and its forecast for the 2023 business year remains unchanged. The company predicts sales of between €73 billion and €76 billion, EBIT before special items of between €4.0 billion and €4.4 billion, and return on capital employed of between 6.5 percent and 7.1 per cent, expecting sales and EBIT before special items at the lower end of the respective ranges. If chemical production does not stabilise, there are risks from a further decline in volumes and a stronger price reduction than expected.