BASF Group: EBIT before special items declines in second quarter due to weaker demand as a result of the corona pandemic

Q2 2020:

  • Sales of €12.7bn (minus 12%), mainly due to lower sales volumes resulting from lockdowns
  • EBIT before special items of €226M (minus 77%)
  • Net income of minus €878M due to a non-cash-effective impairment of the shareholding in Wintershall Dea
  • Cash flows from operating activities of €2.2bn (plus €296M compared with prior-year quarter); Free cash flow of €1.5bn (plus €551M compared with prior-year quarter)
  • Concrete statements on the development of sales and earnings in 2020 still not possible

As expected, the economic effects of the corona pandemic had a much stronger impact in the second quarter of 2020 than in the first quarter of this year.

Customer industries were affected to varying degrees: BASF was particularly negatively impacted by the collapse in demand from the automotive industry, while demand from the detergent and cleaner industry and the food industry was stable.

BASF was able to continue production at all important sites worldwide.

“The corona pandemic is still a huge challenge for all of us,” said Dr Martin Brudermüller, Chairman of the Board of Executive Directors of BASF, who presented the second-quarter figures together with Chief Financial Officer Dr Hans-Ulrich Engel.

Brudermüller also sees opportunities: “This situation is a catalyst for change and a chance to do many things differently.

"At BASF, we have quickly adapted to new processes.

"Everyone is very open to virtual communication, internally and with our customers.”

According to the CEO, BASF is able in times like these to build on its many strengths: flexible and motivated employees, a diversified portfolio and the company’s solid financials.

Given the continued high level of uncertainty and low visibility surrounding economic developments, BASF still does not make any concrete statements on the development of sales and earnings for the full year 2020.

For the third quarter, BASF does not expect EBIT before special items to improve significantly compared with the second quarter of 2020, in part due to the generally lower demand in August and the seasonality of the Agricultural Solutions business.

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