Sales drop was primarily caused by decreased prices, mainly in the Chemicals, Surface Technologies, and Materials segments.
BASF, the world’s largest chemical producer, released its latest financial report today, with sales of €17.3 billion ($19 billion), down 24.7% year-on-year, and projected to be in the range of €73 billion ($80 billion) to €76 billion ($83.3 billion) in 2023.
Sales drop was primarily caused by decreased prices, mainly in the Chemicals, Surface Technologies, and Materials segments, while the Agricultural Solutions segment was able to raise prices. Weaker demand led to lower sales volumes across all segments, which negatively affected sales performance. Furthermore, currency fluctuations also had an adverse impact on sales.
In terms of segments, in Q2 2023, sales in the Chemicals segment dropped by 38.4% to €2.7 billion ($2.96 billion) due to lower raw material prices and weaker demand, resulting in a 76.3% decline in EBIT before special items to €202 million ($221.4 million). Sales in the Materials segment declined by 25.8% to €3.6 billion ($3.9 billion), mainly due to lower prices and weak demand, leading to a 60.4% drop in EBIT before special items to €265 million ($290.4 million).
The Industrial Solutions segment saw a 22.5% decline in sales to €2.1 billion ($2.3 billion), with a 61.6% decrease in EBIT before special items to €124 million ($135.9 million). Sales in the Surface Technologies segment were 22.4% lower at €4.2 billion ($4.6 billion) due to lower precious metal prices, but EBIT before special items increased by 1.5% to €230 million ($252 million). Sales in the Nutrition & Care segment dropped 17.4% to €1.7 billion ($1.86 billion) due to lower demand, resulting in an 84.8% decrease in EBIT before special items to €33 million ($36.2 million).
In addition, BASF is taking several measures to enhance its competitiveness, including executing a cost savings program in Europe and adapting its Verbund structures in Germany. By the end of 2026, the company aims to reduce fixed costs by approximately €1 billion annually, with expected annual savings of over €300 million ($328.7 million) achieved by the end of 2023.
Moreover, BASF is focusing on cash management, reducing inventory levels and avoiding discretionary costs wherever possible. While the inventories of chemical raw materials have decreased in customer industries, the company remains cautious about a possible slow recovery in global demand for consumer goods, which may lead to continued pressure on margins.
BASF has adjusted its forecast for the 2023 business year based on the adjusted expectations for the second half of the year. The new forecast predicts sales of between €73 billion and €76 billion ($83.3 billion), significantly lower than the previous forecast of between €84 billion ($92 billion) and €87 billion ($95.3 billion). The EBIT before special items is expected to be between €4 billion ($4.4 billion) and €4.4 billion ($4.8 billion), down from the previous forecast of between €4.8 billion ($5.3 billion) and €5.4 billion ($5.9 billion).
However, the company aims to reduce CO2 emissions to between 17.0 million metric tons and 17.6 million metric tons, lower than the previous forecast of between 18.1 million metric tons and 19.1 million metric tons. Despite the challenging market conditions, BASF remains committed to driving growth and innovation across its diverse portfolio of products and services to ensure long-term success.
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