BASF Group releases preliminary figures for third quarter of 2020 and publishes outlook for full year 2020

BASF has released preliminary figures for the third quarter of 2020.

Sales declined by 5% in the third quarter of 2020 to €13,812M (Q3 2019: €14,556M).

This was mainly driven by negative currency effects.

The BASF Group’s operating business performed better than expected in the third quarter of 2020.

The Surface Technologies, Materials, Industrial Solutions and Chemicals segments exceeded average analyst estimates for EBIT before special items in the third quarter of 2020.

EBIT before special items was on a level with analyst estimates in the Agricultural Solutions segment but fell short of analyst estimates in the Nutrition & Care segment.

The EBIT before special items of Other was more negative than analysts expected.

The year-on-year decrease in the BASF Group’s EBIT before special items was primarily due to the continued weak earnings contributions from the upstream Chemicals and Materials segments, due to ongoing high pressure on margins.

The Nutrition & Care, Agricultural Solutions and Industrial Solutions segments and Other also recorded lower earnings compared with the prior-year quarter.

EBIT before special items in the Surface Technologies segment was almost on a level with the prior-year period.

The BASF Group’s net income amounted to an expected minus €2,121M due to the impairments, below current analyst estimates and lower than the figure for the prior-year quarter (Q3 2019: €911M).

The sale of the assets and liabilities of the construction chemicals business and the related disposal gain will only be reflected in BASF’s reporting on the fourth quarter of 2020.

Payments received until September 30, 2020, in connection with this divestiture are, however, included in the statement of cash flows for the third quarter of 2020 under cash flows from investing activities.

Outlook 2020

For the fourth quarter of 2020, BASF now expects a further improvement in the BASF Group’s EBIT before special items compared with the third quarter of 2020.

This would also exceed current average analyst estimates for the fourth quarter of 2020.

For the full year 2020, the BASF Group expects sales of €57bn to €58bn, mainly due to weaker demand as a consequence of the coronavirus pandemic (2019: €59,316M).

The BASF Group anticipates EBIT before special items of between €3bn and €3.3bn for 2020 (2019: €4,643M).

As well as weaker demand, the company expects pressure on margins to continue, especially for basic chemicals, which will be partially offset by fixed cost savings.

This outlook is based on the following assumptions regarding the global economic environment in 2020:

  • Growth in gross domestic product: –5.0%
  • Growth in industrial production: –5.0%
  • Growth in chemical production: –2.5%
  • Average euro/dollar exchange rate of $1.15 per euro
  • Average annual oil price (Brent crude) of $40 per barrel

BASF’s forecast assumes that severe restrictions on economic activity to contain the coronavirus pandemic, such as lockdowns, are not re-introduced.

As usual, the company will provide a forecast for the full year 2021 with the publication of the BASF Report 2020 on February 26, 2021.

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