BASF starts 2023 better than expected in a stagnating environment

“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. BASF Group had already announced its key sales and earnings figures in an advance notice on April 12.

Sales and earnings development in the first quarter of 2023

BASF Group’s sales in the first quarter of 2023 amounted to €20.0bn, down by €3.1bn compared with the prior-year quarter. This was primarily the result of lower volumes in almost all segments due to weaker demand. Slightly lower prices additionally dampened sales performance. Price increases in the Agricultural Solutions, Nutrition & Care and Industrial Solutions segments were unable to fully offset the lower prices in the remaining segments. Negative portfolio effects from the sale of the kaolin minerals business in the Industrial Solutions segment also slightly weighed down sales. Slightly positive currency effects, mainly relating to the US dollar, had an offsetting effect.

Income from operations (EBIT) before special items decreased to €1.9bn, corresponding to a decline of €887M compared with the strong prior-year quarter. This earnings development of the BASF Group was mainly due to the significant decline in earnings contributions in the Chemicals and Materials segments. In the Nutrition & Care and Industrial Solutions segments, EBIT before special items also decreased considerably, while the Surface Technologies segment recorded a slight decline. By contrast, the Agricultural Solutions segment significantly increased earnings and achieved EBIT before special items of around €1.3bn, compared with €868M in the prior-year quarter. Other also significantly improved EBIT before special items.

EBIT declined by €918M compared with the first quarter of 2022 to €1.9 billion. Income from operations before depreciation, amortisation and special items (EBITDA before special items) decreased by €878M to €2.9bn and EBITDA decreased by €898M to €2.8bn in the same period.

Net income of €1.6bn was €340M higher than in the same period of the previous year. In the prior-year quarter, impairments on the shareholding in Wintershall Dea AG had burdened net income. Earnings per share in the first quarter of the year were €1.75, compared with €1.34 in the first quarter of 2022.

Proposed dividend of €3.40 per share for the 2022 business year

The Board of Executive Directors and the Supervisory Board of BASF SE are proposing to today’s Annual Shareholders’ Meeting a dividend matching the prior-year level of €3.40 per share for the 2022 business year. Based on the year-end share price for 2022, the BASF share thus offers a high dividend yield of 7.3%. All shareholders who hold BASF shares as of April 27, 2023, the date of the Annual Shareholders’ Meeting, are entitled to receive the dividend. If the Annual Shareholders’ Meeting approves the dividend proposal, the dividend will be paid out on May 3, 2023. In total, BASF will pay €3.0bn to its shareholders on this day. “This amount is more than covered by our free cash flow of €3.3bn in 2022,” said Brudermüller.

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 €84bn and €87bn
• EBIT before special items of between €4.8bn and €5.4bn
• Return on capital employed (ROCE) of between 7.2% and 8.0%
• CO₂ emissions of between 18.1Mt and 19.1Mt

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

• Growth in gross domestic product: 1.6%
• Growth in industrial production: 1.8%
• Growth in chemical production: 2.0%
• Average euro/dollar exchange rate of US$1.05 per euro
• Average annual oil price (Brent crude) of US$90 per barrel

The development of the global economy is still subject to great uncertainty. Momentum in global industrial and chemical production remains subdued.