BASF Group Releases Preliminary Figures for 3Q 2020

BASF has released preliminary figures for the third quarter of 2020. Sales declined by 5% in the third quarter of 2020 to €13,812 million (Q3 2019: €14,556 million). This was mainly driven by negative currency effects.

The BASF Group’s operating business performed better than expected in the third quarter of 2020. EBIT before special items amounted to an expected €581 million, above analyst consensus but below the figure for the prior-year quarter (Q3 2019: €1,056 million). Compared with the second quarter of 2020, EBIT before special items rose by €355 million in the third quarter of 2020 (Q2 2020: €226 million).

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

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.

The BASF Group’s EBIT amounted to an expected minus €2,637 million in the third quarter of 2020 due to non-cash-effective impairments and provisions for restructuring, below analyst consensus and the figure for the prior-year quarter (Q3 2019: €1,336 million).

Impairment tests identified fixed asset impairments of €2.8 billion due to considerably weaker macroeconomic developments as a consequence of the coronavirus pandemic. The impairments were largely the result of weaker demand from the automotive and aviation industries, which impacted the Surface Technologies segment in particular, and a continued oversupply of basic chemicals, which put pressure on margins in the Chemicals and Materials segments. In addition, impairments were recognized in the Agricultural Solutions segment as part of measures to streamline the production network.

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

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 €57 billion to €58 billion, mainly due to weaker demand as a consequence of the coronavirus pandemic (2019: €59,316 million). The BASF Group anticipates EBIT before special items of between €3.0 billion and €3.3 billion for 2020 (2019: €4,643 million). 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.