BASF Group’s EBIT before special items in line with analysts’ consensus in third quarter 2023; outlook for 2023 unchanged

BASF Group’s sales in the third quarter of 2023 amounted to €15.7bn, down by €6.2bn compared with the prior-year period. The decline was mainly due to considerably lower prices, primarily in the Materials, Chemicals and Surface Technologies segments. Higher prices in the Agricultural Solutions segment had a positive effect. In addition, sales performance was weighed down by considerably lower volumes in all segments.

“Sales volumes were considerably lower than in the prior-year quarter across all customer industries – with the exception of automotive,” said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF, presenting the quarterly figures together with Chief Financial Officer Dr. Dirk Elvermann.

Compared with the prior-year quarter, income from operations (EBIT) before special items declined by €772M to €575M. This is in line with the average analyst estimates of €601M compiled by the analysis service provider Vara Research on behalf of BASF in October 2023. Earnings development resulted primarily from the considerably lower EBIT before special items of the Chemicals, Nutrition & Care, Industrial Solutions and Materials segments. Earnings also declined significantly in Other. The Agricultural Solutions segment increased EBIT before special items considerably, while the Surface Technologies segment slightly increased earnings.

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Special items in EBIT amounted to minus €181M in the third quarter of 2023, mainly due to restructuring measures. At €394M, EBIT was considerably below the prior-year quarter (€1.3bn).

Compared with the third quarter of 2022, income from operations before depreciation, amortisation and special items (EBITDA before special items) decreased by €780M to €1.5bn and EBITDA declined by €892M to €1.4bn.

Net income amounted to minus €249M, compared with €909M in the prior-year quarter. Besides the lower EBIT, this decline was driven by the overall negative earnings of Wintershall Dea due to special items.

Total assets amounted to €82.6bn as of September 30, 2023, €1.9bn below the 2022 year-end figure. On September 30, 2023, net debt amounted to €18.9bn. This was an increase of €2.6bn compared with year-end 2022, but a decrease of €1.4bn compared with June 30, 2023. The equity ratio at the end of the third quarter of 2023 was slightly higher than at the end of the year 2022 and stood at 48.8%. “Overall, this demonstrates BASF’s financial strength with a strong balance sheet and good credit ratings,” said Dr. Dirk Elvermann.

Cash flows from operating activities were €2.7bn in the third quarter of 2023, above the €2.3bn reported in the prior-year quarter. “This is a remarkable improvement in view of the significantly lower net income,” said Elvermann. Cash released from net working capital improved considerably by €1.2bn compared with the third quarter of 2022, amounting to €1.9bn. The improvement was primarily due to the reduction in inventories. Free cash flow totaled €1.5bn in the third quarter of 2023, after €1.3bn in the prior-year period.

Read the full report here.