BASF Group reported its second quarter 2024 results.
Sales of the BASF Group amounted to €16.1 billion, €1.2 billion below the figure of the prior-year period (€17.3 billion). Lower prices in all segments, but particularly in Surface Technologies, were the main driver of this development. Negative currency effects and minor portfolio effects contributed to the decline in sales.
Slightly higher volumes had a positive impact on sales. Volume growth in the Industrial Solutions, Chemicals, Nutrition & Care and Materials segments more than compensated for the lower volumes in the Surface Technologies and Agricultural Solutions segments.
“Overall, the development of EBITDA before special items in the second quarter of 2024 was in line with our expectations and the analyst consensus. We saw a continuation of the dynamics of the first quarter, marked by positive volume momentum across most of our businesses. There was still pressure on prices,” said Dr. Markus Kamieth, chairman of the Board of Executive Directors of BASF SE, when presenting the figures for the second quarter of 2024 together with CFO Dr. Dirk Elvermann.
At €2.0 billion, income from operations before depreciation, amortization and special items (EBITDA before special items) was at the level of the second quarter of 2023. This was primarily attributable to the considerable increase in earnings in the Industrial Solutions, Chemicals and Nutrition & Care segments, mainly the result of a higher contribution margin.
This contrasted with a considerable decline in earnings in the Agricultural Solutions segment, mainly due to a decrease in volumes and lower prices for glufosinate-ammonium. EBITDA before special items decreased slightly in the Materials and Surface Technologies segments. EBITDA before special items attributable to Other improved considerably, mainly as a result of the release of bonus provisions. The EBITDA margin before special items was 12.1%, compared with 11.2% in the prior-year quarter.
EBITDA amounted to €1.6 billion following €1.9 billion in the prior-year period. EBITDA included special items in the amount of minus €394 million. At €516 million, EBIT was €458 million below the figure of the prior-year quarter.
Cash flows from operating activities amounted to €2 billion in the second quarter, €228 million below the figure of the prior-year quarter. Free cash flow, which remains after deducting payments made for intangible assets and property, plant and equipment from cash flows from operating activities, was €471 million in the second quarter of 2024 following €905 million in the prior-year period.
The €207 million increase in payments made for intangible assets and property, plant and equipment related mainly to investments in the new Verbund site in China.
In the first half of 2024, cash flows from operating activities amounted to €1.4 billion, €275 million above the prior-year period. Free cash flow was minus €986 million, compared with minus €977 million in the first half of 2023. Here it should be noted that the development of BASF’s free cash flow has a strong seasonality due to the Agricultural Solutions segment.
Status of the cost savings programs announced in 2023 and 2024.
Elvermann provided an update on the cost savings programs currently being implemented. “We are on track to achieve the targeted €2.1 billion annual cost savings by the end of 2026,” Elvermann said.
BASF is implementing the measures announced in February 2023. By the end of this year, the company expects an annual cost reduction of around €800 million with associated one-time costs of around €550 million.
BASF is also making good progress with the program focused on the Ludwigshafen site that was announced in February 2024. On top of the programs started in 2023, the additional measures in Ludwigshafen will deliver annual cost savings of around €1 billion by the end of 2026. The related one-time costs are expected to be around €1 billion.
Sales in the Chemicals segment rose by 6% compared with the prior-year quarter to reach €2.8 billion. Compared with the prior-year period, the segment’s EBITDA before special items increased considerably to €444 million.
The Coatings division slightly increased EBITDA before special items. In this division, a higher contribution margin was able to offset the inflation-driven increase in fixed costs. The segment’s EBITDA margin before special items was 11.3%, following 8.8% in the prior-year quarter.
