BASF registers stable sales, core business growth amid operational challenges in Q3

GERMANY – In the third quarter of 2024, BASF Group, one of the largest chemical producers worldwide, maintained steady sales at €15.7 (US$17) billion, equaling its revenue from the same period in 2023. 

The group achieved an EBITDA before special items of €1.6 (US$1.74) billion, a notable increase from €1.5 (US$1.62) billion in the prior-year quarter, thanks to stronger performance across core businesses like Chemicals, Materials, Industrial Solutions, and Nutrition & Care. 

This growth helped offset declines in standalone segments, Surface Technologies and Agricultural Solutions.

Strategic restructuring and segment focus

In September, BASF introduced a new strategy to distinguish its core operations from standalone businesses that target specific industries. 

The company’s new segment structure reflects this focus, with standalone businesses now encompassing Surface Technologies and Agricultural Solutions. 

BASF reported positive volume growth across almost all segments, contributing to its revenue stability, though the Surface Technologies segment saw volume declines, largely due to weaker demand in the automotive market. 

Additionally, currency fluctuations and lower commodity prices dampened sales performance.

Despite the operational hurdles, BASF’s core businesses experienced a substantial EBITDA margin improvement, increasing by 3.6 percentage points to 13.4% compared to 9.8% in the previous year.

BASF recently delayed restarting vitamin and carotenoid production at its Ludwigshafen plant, which was damaged by a fire in July. 

Production of these key ingredients, essential to the company’s Nutrition & Care segment, is expected to resume incrementally from April 2025. Vitamin A is expected to restart in April 2025, while production of vitamin E and carotenoids is projected to resume in July 2025. 

In the meantime, production of certain aroma ingredients, such as pyranol, Methylionone 70, and DL-Menthol FG, is scheduled to resume by the last week of October 2024. 

However, BASF cautioned that it will take several additional months after production restarts to restore inventory levels and return to normal business operations.

Additionally, significant restructuring efforts continued to impact BASF’s Agricultural Solutions segment. The planned shutdown of glufosinate-ammonium production facilities at sites in Germany contributed to special charges totalling €345 (US$374) million. 

This adjustment aligns with BASF’s shift to sourcing glufosinate-ammonium from third-party suppliers, affecting around 300 employees. 

Financial Adjustments and Future Outlook

The third quarter saw BASF’s net income rise to €287 (US$311) million from a net loss of €249 (US$270) million in the prior-year period, primarily due to income from shareholdings, including the transfer of Wintershall Dea assets to Harbour Energy. 

However, BASF’s EBIT for the quarter was €250 (US$271) million, down €144 (US$156) million year-over-year, mainly impacted by special charges and heightened depreciation costs.

Looking ahead, BASF reiterated its 2024 forecast, projecting EBITDA before special items to fall between €8.0 (US$8.7) billion and €8.6 (US$9.3) billion, with free cash flow expected between €0.1 (US$0.11) billion and €0.6 (US$0.65) billion. 

The company anticipates reaching the lower end of its earnings forecast, citing potential risks like declining prices and reduced demand growth.

Sustainability reporting and operational streamlining

In alignment with the EU’s Corporate Sustainability Reporting Directive (CSRD), BASF will introduce dual reporting dates starting in 2025 to ensure compliance with enhanced sustainability disclosure requirements. 

This move underscores BASF’s commitment to transparency and sustainability. The company is also progressing with cost-saving programs initiated in February 2023, targeting €2.1 (US$2.27) billion in annual cost reductions by the end of 2026.

These ongoing cost adjustments include a special focus on streamlining operations at the Ludwigshafen site, with closures affecting facilities producing cyclododecanone and adipic acid. 

These initiatives are expected to improve the site’s competitiveness and are part of BASF’s broader strategy to streamline its global footprint.

With Dr Markus Kamieth at the helm since April, BASF continues implementing its transformative vision of speed, simplified management, and green innovation to secure its position in a changing chemical industry landscape.

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