BASF Q1 net income drops, maintains full-year guidance

LONDON (ICIS)–Lower pricing across most business divisions drove a 12.4% drop in BASF’s first-quarter net income year on year, with the chemicals major maintaining full-year guidance as sector demand shows early signs of recovery.

in € million	Q1 2024	Q1 2023	% Change
Sales	17,553	19,991	-12.2
Income from operations before depreciation and amortization (EBITDA)	2,655	2,811	-5.6
Income from operations (EBIT)	1,689	1,867	-9.5
Net income	1,368	1,562	-12.4

The decline in sales was mainly driven by “considerably reduced prices” as a result of lower raw materials and energy prices in almost all segments as well as lower precious metal prices in the Surface Technologies segment, the company said in a statement.

Despite across the board sales drops, earnings before interest, taxes, depreciation and amortisation (EBITDA) firmed for most units other than surface technologies, which posted an 11.5% decline year on year to €327 million.

The company saw strongest profitability increases for the materials and nutrition and care divisions, which saw EBITDA increase 21.8% and 37% respectively during the quarter, to €549 million and €261 million.

Negative currency effects contributed to the sales decrease in all segments.

Q1 EBITDA, adjusted for one-off items, fell by 5.3% year on year to €2.7 billion.

Despite the decline in sales, the Germany-based producer projects that EBITDA before special items for 2024 will be between €8.0 billion and €8.6 billion this year, up from €7.67 billion in 2023 and in line with earlier forecasts.

Chemicals demand growth in the first three months of 2024 was stronger than levels for the wider industrial sector due to customer restocking, after an extended period of low reserves.

“The global chemical industry recovered slightly in the first quarter of 2024. It grew considerably faster than overall industrial production because the customer industries somewhat restocked their very low inventories,” BASF said.

The announcement comes as Martin Kamieth steps into the role of BASF CEO, succeeding Martin Brudermuller.

A 36-year veteran of the company, Kamieth steps into the CEO role at a point where the company is preparing to cut costs by €1 billion at its Ludwigshafen headquarters, with the form of those cuts and any closures to ensue yet to be announced.

Speaking at today’s shareholders’ meeting outgoing CEO Brudemuller acknowledged the challenges facing BASF and Europe’s chemical sector.

He spoke about the difficult choices which will have to be taken at the company’s flagship Ludwigshafen Verbund site, adding: “Ludwigshafen will remain BASF’s largest site and should be the leading chemical site in Europe.”

The company expects global GDP growth of 2.3%, substantially below IMF forecasts this month of 3.2%.

The trend of chemicals demand slightly outpacing general industrial output growth is also expected to continue, according to the company, which forecasts industrial production increases of 2.2% compared to 2.7% for the sector.

Despite recent volatility in crude oil pricing on the back of escalated tensions between Israel and Iran, which pushed Brent costs above $90/barrel, the company continues to project average values of $80/barrel for the year.

Additional reporting by Nurluqman Suratman and Will Beacham
Thumbnail photo: BASF’s Ludwigshafen, Germany headquarters (Source: BASF)

(Update releads, adds detail throughout)