BASF Reduces its Expectations for 2015
In a weaker than expected market environment, BASF sales in the third quarter of 2015 were EUR 17.4 billion, 5% below the level of the previous third quarter. EBITDA increased by EUR 358 million to EUR 2.9 billion, mainly due to higher depreciation. In contrast, income from operations (EBIT) before special items declined by EUR 171 million to EUR 1.6 billion. In the Chemicals segment, EBIT before special items rose slightly, while it increased sharply in the Functional Materials & Solutions segment. In the remaining segments, earnings declined significantly.
“We experienced a pronounced summer lull and no volume momentum in September. Major markets like Brazil are in a recession or face lower growth rates, such as China,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE.
The sharp drop in the price of oil led to lower prices (minus 8%), primarily in the Chemicals and Oil & Gas segments. Sales volumes were slightly lower (minus 1%) than in the previous third quarter. Volumes in the chemicals business, which comprises the Chemicals, Performance Products and Functional Materials & Solutions segments, were below the level of the prior-year quarter, but they rose in the Agricultural Solutions and Oil & Gas segments. Currency effects were positive (plus 4%) in every division except Crop Protection.
In the Functional Materials & Solutions segment, sales matched the level of the third quarter of 2014 and were EUR 4.5 billion. Positive currency effects counterbalanced lower prices and a slight decline in volumes. Continuing high demand from the automotive and construction industry was not able to fully offset lower sales volumes in precious metal trading. EBIT before special items grew by EUR 61 million to EUR 371 million, mainly thanks to an earnings increase in the Performance Materials division.
In the first nine months of 2015, sales of BASF Group were around EUR 56.6 billion, 1% higher than in the same period of the previous year. EBIT before special items declined by EUR 182 million to EUR 5.7 billion. At EUR 5.9 billion, EBIT in the first nine months of 2015 reached the same level as in the same period of the previous year.
It is unlikely that the BASF Group will achieve the slight sales growth forecast for 2015. BASF now expects sales to decline slightly. This assumption is based on the divestiture of the natural gas trading and storage business concluded in the third quarter of 2015 as well as on the lower price of oil. The company continues to aim to raise sales volumes, excluding the effects of acquisitions and divestitures. Contrary to expectations, EBIT before special items in 2015 will probably not match the previous year’s level but will instead see a slight decrease.
Would you like to subscribe to our Newsletters on plastics technology and profit from the latest information?
Looking for a new challenge? Check out our jobs market!
Patents encourage innovation: Stay on the ball with the latest innovations in the plastics industry in our patents section.