BASF Group Posts 3Q 2022 Results

BASF reported its 3Q 2022 fiscal results.

At €21.9 billion, sales were 12% higher than in the prior-year quarter. The sales increase was mainly driven by much higher prices in almost all segments. Only the Surface Technologies segment recorded lower price levels as a result of lower precious metal prices. Currency effects had a positive impact in all segments. Sales growth was also boosted by portfolio effects. Sales development was significantly dampened by lower volumes in all segments except for Agricultural Solutions.

“Despite the continued high raw materials and energy prices, BASF achieved solid earnings in the third quarter,” said Dr. Martin Brudermüller, chairman of the Board of Executive Directors of BASF SE, presenting the results for the third quarter of 2022 together with CFO Dr. Hans-Ulrich Engel.

Income from operations (EBIT) before special items declined by €517 million compared with the third quarter of 2021 to €1.3 billion.

“Our downstream segments Surface Technologies, Agricultural Solutions, Nutrition & Care and Industrial Solutions increased their earnings considerably,” said Brudermüller. However, earnings in the Chemicals and Materials segments declined significantly compared with the very high levels of the prior-year quarter.

At €1.3 billion, EBIT was considerably below the prior-year quarter (€1.8 billion). This figure includes income from integral companies accounted for using the equity method, which declined by €124 million to €76 million, mainly due to the lower earnings contribution from BASF-YPC Company Ltd., Nanjing, China.

Compared with the third quarter of 2021, income from operations before depreciation, amortization and special items (EBITDA before special items) decreased by €446 million to €2.3 billion and EBITDA declined by €474 million to €2.3 billion.

Cash flows from operating activities amounted to €2.3 billion in the third quarter of 2022, €405 million better than in the prior-year quarter. Free cash flow amounted to €1.3 billion in the third quarter of 2022, €218 million higher than in the prior-year quarter.

When releasing its preliminary figures on October 12, 2022, BASF also announced a cost savings program. The cost reduction measures will be implemented until the end of 2024. When completed, the program is expected to generate annual cost savings of €500 million.

Brudermüller described the program as a response to deteriorating earnings development in Europe and Germany as well as challenging framework conditions:

“First, the European chemical market has been growing only weakly for about a decade,” said Brudermüller. “Second, the significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains.”

In the first nine months of 2022, the additional costs for natural gas at BASF’s European sites amounted to around €2.2 billion compared with the same period in 2021.

“Moreover, uncertainties due to the enormous number of regulations planned by the E.U. are weighing on the chemical industry,” Brudermüller added.