Pandemic weighs on the group: BASF does not deliver the hoped-for outlook

Because of the high level of uncertainty and the lack of transparency in economic developments, BASF does not yet have any prospects for 2020 as a whole. The slump in demand from the automotive industry in particular has recently burdened the chemical giant. The Group does not expect any improvement in the third quarter either.

After a quarter of losses, the chemical giant BASF is unable to make a forecast for the full year due to the economic consequences of the corona pandemic. For the third quarter, the Group also does not expect any significant improvement in operating earnings (EBIT before special items) compared to the previous quarter.

"The corona pandemic is still a major challenge for all of us," said BASF CEO Martin Brudermüller. BASF is suffering the most from the lower demand from the automotive industry, for which the company expects a decline in production of at least 20 percent this year. In other areas, on the other hand, the pandemic is generating additional demand, such as for food supplements, cleaning agents or disinfectants.

The chemical industry and with it the industry leader BASF are considered an important economic indicator, since the products are required in practically all major branches of industry. "In view of the continuing high level of uncertainty and lack of transparency in the economic development, BASF continues to make no concrete statements regarding the development of sales and earnings for the full year 2020," it said in the press release. The group had overturned its original forecast in late April.

"We expect high levels of uncertainty in the second half of 2020 due to the continuing corona pandemic," it said. Because of the generally low demand from customers in August, among other things, BASF does not expect any significant improvement in EBIT before special items in the third quarter compared to the second quarter. In the second quarter this was 226 million euros – around 77 percent below the previous year's value.

Overall, BASF slipped deep into the red in the second quarter due to the deteriorating expectations of the oil and gas producer Wintershall DEA and the lack of demand in the auto industry. After third-party shares, the loss was EUR 878 million, confirmed BASF's preliminary figures already presented on July 10. The reason for the minus is an 819 million euro write-down on the stake in Wintershall DEA. From April to June, sales fell by twelve percent to EUR 12.7 billion.