BASF Group’s EBITDA Before Special Items is Up from Q3 2023

Thanks to significantly higher contributions from the core businesses, BASF Group’s EBITDA before special items (income from operations before depreciation, amortization and special items) increased in the third quarter by €77 million to €1.6 billion.

“The positive earnings momentum in our core businesses was already visible in the first half of 2024 and continued in the third quarter, driven by higher volumes and margins,” said Dr. Markus Kamieth, chairman of the Board of Executive Directors of BASF SE. This increase was partially offset by a considerable earnings decline in the standalone businesses as well as in Other.

Under its new strategy announced in late September 2024, BASF differentiates between its core businesses (Chemicals, Materials, Industrial Solutions and Nutrition & Care) and the standalone businesses that serve distinct industries. The standalone businesses are reported in the Surface Technologies and Agricultural Solutions segments.

At €15.7 billion, sales were on a level with the prior-year period. Volume growth in almost all segments compared with the third quarter of 2023 had a positive impact on sales performance. Volumes increased in the core businesses as well as in Agricultural Solutions. Only the Surface Technologies segment recorded a decline in volumes in the Catalysts division due to weak demand in the automotive market.

Negative currency effects, mainly relating to the Argentine peso and Brazilian real, burdened sales. Lower prices in nearly all segments, particularly for precious and base metals in the Surface Technologies segment, also hindered sales performance.

The EBITDA margin before special items was 10.3%, following 9.8% in the prior-year quarter. In the core businesses, the EBITDA margin before special items improved by 3.6% percentage points to 13.4% in the third quarter of 2024 versus 9.8% in the prior-year quarter. EBITDA amounted to €1.3 billion, following €1.4 billion in the prior-year period. EBITDA included special items in the amount of minus €345 million.

Net income was €287 million (prior-year quarter: minus €249 million). This significant increase resulted mainly from higher net income from shareholdings, primarily due to special income of €398 million in connection with the transfer of Wintershall Dea assets to Harbour Energy plc. In the prior-year quarter, special items in the amount of minus €291 million arose at Wintershall Dea.

Free cash flow amounted to €569 million in the third quarter of 2024, compared with €1.5 billion in the prior-year period.

CFO Dr. Dirk Elvermann provided an update on the cost savings programs currently underway.

“We are on track to achieve the targeted €2.1 billion annual cost savings by the end of 2026,” Dr. Elvermann said. “The implementation of the cost savings programs announced in February 2023 is in full swing.”

As of the end of September 2024, BASF has already achieved a cost reduction run rate of around €800 million. The associated one-time costs were around €500 million. By the end of this year, the company expects to achieve a cost reduction run rate of more than €800 million, with associated one-time costs of around €550 million.

BASF is also moving forward as planned with the additional cost savings program launched in 2024 that focuses on improving the competitiveness of the Ludwigshafen site. The units at the site have recently been informed about the contributions they are expected to deliver by the end of 2026.

BASF’s assumptions for the full year 2024 remain unchanged:
• Growth in gross domestic product: +2.3%
• Growth in industrial production: +2.2%
• Growth in chemical production: +2.7%
• Average euro/dollar exchange rate of $1.10 per euro
• Average annual oil price (Brent crude) of $80 per barrel
The BASF Group’s forecast for the 2024 business year published in the BASF Report 2023 also remains unchanged:
• EBITDA before special items of between €8.0 billion and €8.6 billion
• Free cash flow of between €0.1 billion and €0.6 billion
• CO2 emissions of between 16.7 million metric tons and 17.7 million metric tons

Based on current information, BASF expects to reach the low end of the EBITDA before special items forecast range for the full year 2024. For the fourth quarter of 2024, there are risks from potential declines in prices and lower volume growth than expected. Opportunities may arise from a positive development in demand and margins.