BASF Q2 2024: Stability despite challenges

Negative currency effects and minor portfolio changes also contributed to the revenue decline. Slightly increased volumes partially offset this decrease, particularly through growth in the Industrial Solutions, Chemicals, Nutrition & Care, and Materials segments.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) before special items remained at the same level as the previous year’s quarter, totaling €2.0 billion. While the Industrial Solutions, Chemicals, and Nutrition & Care segments saw significant increases in earnings, the Agricultural Solutions segment experienced a substantial decline. This decline was mainly due to lower volumes and prices for glufosinate-ammonium. The EBITDA before special items also decreased slightly in the Materials and Surface Technologies segments. However, the “Other” category improved significantly due to the release of bonus provisions. The EBITDA margin before special items increased from 11.2 percent in the prior-year quarter to 12.1 percent.

2nd quarter: decline of 228 million euros

BASF Group’s EBITDA decreased from €1.9 billion in the previous year to €1.6 billion. Special items amounting to minus €394 million, mainly due to the out-of-court settlement of a multidistrict litigation case and restructuring measures, impacted the EBITDA. EBIT stood at €516 million, €458 million below the prior-year quarter. Earnings per share amounted to €0.48 (prior-year quarter: €0.56), while earnings per share adjusted for special items increased to €0.93 (prior-year quarter: €0.72).

Cash flow from operating activities was €2.0 billion in the second quarter, down €228 million compared to the same period last year. Free cash flow stood at €471 million, compared to €905 million in the previous year. Higher payments for intangible assets and property, plant, and equipment, particularly due to investments in the new Verbund site in China, contributed to this decline.

1st half-year: increase of 275 million euros

In the first half of 2024, cash flow from operating activities amounted to €1.4 billion, an increase of €275 million compared to the same period last year. Free cash flow was minus €986 million, nearly unchanged from the first half of 2023. The development of BASF’s free cash flow shows strong seasonality due to the Agricultural Solutions segment.

Regarding the cost-saving programs announced in 2023 and 2024, CFO Dr. Dirk Elvermann reported that BASF is on track to achieve the targeted annual savings of €2.1 billion by the end of 2026. By the end of this year, annual savings of around €800 million are expected, with one-time costs of approximately €550 million.

The individual segments of BASF performed differently in the second quarter of 2024:

• Chemicals: Sales increased by 6.0 percent to €2.8 billion, EBITDA before special items rose to €444 million.
• Materials: Sales decreased by 5.3 percent to €3.4 billion, EBITDA before special items stood at €448 million.
• Industrial Solutions: Sales grew by 4.8 percent to €2.1 billion, EBITDA before special items increased to €320 million.
• Surface Technologies: Sales declined by 23.4 percent to €3.2 billion, slightly lower EBITDA before special items at €366 million.
• Nutrition & Care: Sales decreased by 2.7 percent to €1.7 billion, EBITDA before special items rose to €183 million.
• Agricultural Solutions: Sales dropped by 13.2 percent to €1.9 billion, significantly lower EBITDA before special items at €135 million.
• Other: Sales increased by 8.9 percent to €870 million, EBITDA before special items improved to €62 million.

The outlook for 2024 remains unchanged, with expected EBITDA before special items between €8.0 billion and €8.6 billion and free cash flow between €0.1 billion and €0.6 billion. The forecasts for GDP growth, industrial production, and chemical production also remain steady.