BASF, the European chemicals giant, reported disappointing results for 2023 due to impairments and lower margins. Despite cost-cutting efforts, the company's key profit figure, earnings before interest, taxes, and special items, decreased to 3.81 billion euros ($4.14 billion) from the previous year's 6.88 billion euros. This fell below the expected range of 4 billion to 4.4 billion euros and the analyst consensus estimate of 3.93 billion euros.

Net profit also fell short of expectations, amounting to only 225 million euros, significantly lower than analysts' forecast of 2.25 billion euros. The lower profit was partly attributed to impairments totaling 1.1 billion euros in BASF's surface technologies, agricultural, and materials segments. In the previous year, the company reported a loss of 627 million euros.

The challenges facing BASF's incoming Chief Executive, Markus Kamieth, are evident in these results. He is set to succeed Martin Brudermueller in April.

BASF, like many other companies in the industry, faced a difficult operating environment in 2023 characterized by weaker demand and high energy prices amidst slowing global economic growth.

To address these challenges, BASF announced an overhaul focused on improving profitability in its battery-materials and agricultural units. Additionally, the company agreed to sell its shareholding in oil-and-gas producer Wintershall Dea to London-based energy company Harbour Energy. However, the German government is reviewing the deal to ensure it does not compromise national security.

BASF's sales dropped by 21% to 68.90 billion euros, below the previously guided range of 73 billion to 76 billion euros. Analysts had expected sales to reach 70.58 billion euros. Free cash flow is expected to amount to 2.7 billion euros, down from the previous year's 3.33 billion euros.

The full 2023 report from BASF will be published on February 23.

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