Good start to the year
Despite the crises, BASF is not shaking its forecast
4/29/2022 8:43 am
The chemical giant BASF speaks of exceptionally high uncertainties. For example, cutting gas supplies by more than 50 percent would shut down the Ludwigshafen site. However, because this is not foreseeable, the company is sticking to its annual targets.
Despite the economic consequences of the war in Ukraine, BASF is sticking to its targets for the year. However, the market environment remains characterized by an exceptionally high level of uncertainty, above all the further development of the war in Ukraine and its effects on the prices and availability of energy and raw materials are unpredictable, said the world’s largest chemical group.
For 2022, the Ludwigshafen chemical group still expects sales of between 74 billion and 77 billion euros and an adjusted operating result (EBIT) of between 6.6 billion and 7.2 billion euros. Last year, the sales of the world’s largest chemical group climbed by a third to 78.6 billion euros thanks to significantly higher prices and quantities. Adjusted earnings jumped to 7.8 billion euros.
BASF CEO Martin Brudermüller has already warned of the consequences of an embargo on Russian gas. The German economy could bring the “worst crisis since the end of the Second World War”. BASF would also be hit hard: A reduction in the natural gas supply to less than half of today’s requirements would lead to a complete cessation of operations at the largest site in Ludwigshafen.
Brudermüller also sees additional risks from the further course of the corona pandemic, above all from lockdowns in China, and rising raw material prices. The first quarter was already characterized by significantly increased energy and raw material prices and disruptions to supply chains. “Nevertheless, we got off to a very good start in 2022,” said Brudermüller. BASF had already published preliminary figures for the first quarter in mid-April and has now confirmed them.
Thanks to higher prices, sales rose by a good fifth to 23.1 billion euros, adjusted earnings by more than a fifth to 2.8 billion euros. The bottom line is that profits fell by around 29 percent to 1.2 billion euros due to billions in value adjustments at the Wintershall Dea stake in the stopped Nord Stream 2 gas pipeline.