BASF Achieves Strong Earnings Growth in 2021

BASF Group significantly increased sales and earnings in the 2021 business year. BASF Group’s sales amounted to €78.6 billion in 2021, 33% higher than in the previous year.

EBITDA before special items of €11.3 billion in 2021 was higher by €3.9 billion and EBITDA of €11.4 billion exceeded the prior-year figure by €4.9 billion.

“It was a strong and successful year for BASF,” said Dr. Martin Brudermüller, chairman of the Board of Executive Directors, who presented the BASF Report 2021 together with CFO Dr. Hans-Ulrich Engel. “We increased sales prices by 25% and volumes by 11%. All segments achieved price and volume growth in 2021.”

At €7.8 billion, income from operations (EBIT) before special items more than doubled compared with 2020. This represented an increase of 67% compared with the pre-pandemic level in 2019.

BASF’s positive earnings development was mainly driven by the Chemicals and Materials segments. The Surface Technologies and Industrial Solutions segments also contributed considerably to the strong recovery.

BASF’s automotive-related businesses continued to be negatively impacted by the semiconductor shortage. In 2021 and particularly in the fourth quarter, higher raw materials prices and increased energy and logistics costs also burdened the earnings development in all segments.

For BASF’s European sites, the additional costs due to further increased natural gas prices in 2021 amounted to around €1.5 billion. The fourth quarter of 2021 alone accounted for €0.8 billion of this amount.

“We will implement further substantial price increases in the coming months to pass on the significantly higher costs and improve our margins in the downstream businesses,” Brudermüller reported.

Cash flows from operating activities in 2021 amounted to €7.2 billion, compared with €5.4 billion in the previous year. The considerable increase was primarily due to the improvement in net income, which came in at €5.5 billion. Free cash flow increased to €3.7 billion in 2021 from €2.3 billion in the previous year.

In the fourth quarter of 2021, cash flows from operating activities increased by €1.2 billion to €3.3 billion. Free cash flow came in at €1.8 billion, an increase of 84% compared with the fourth quarter of 2020.

BASF Group’s sales in the fourth quarter of 2021 rose by 24% versus the prior-year quarter to reach €19.8 billion.

“Despite the comparison with the strong prior-year quarter, BASF was able to increase volumes in all segments except for Materials in the fourth quarter of 2021,” said Engel. EBITDA amounted to €2.3 billion, compared with €2.0 billion in the fourth quarter of 2020.

BASF Group Outlook for 2022

“We have had a very strong start to the year, with January 2022 figures above the prior-year month,” said Brudermüller looking ahead to the current business year.

BASF expects global economic growth of 3.8% to be somewhat more moderate in 2022 following the very strong recovery in 2021.

“As order backlogs in industry are high, we expect global industrial production to grow by 3.8% and chemical production by 3.5%,” Brudermüller said.

BASF anticipates an average oil price of $75 for a barrel of Brent crude and an exchange rate of $1.15 per euro. Based on these assumptions, BASF is forecasting sales of between €74 billion and €77 billion for 2022.