BASF, a leading chemical company headquartered in Germany, recently released its first-quarter statement for the 2023 business year, reporting sales of €20.0 billion, which is down by €3.1 billion compared to the prior-year quarter. Despite a challenging economic environment, the company’s EBIT before special items of €1.9 billion were significantly above average analyst estimates.
Sales Performance in Q1 2023
BASF Group’s sales in the first quarter of 2023 declined by 13.4% year-over-year (YoY) to €20.0 billion. The decrease was primarily due to weaker demand, resulting in lower volumes across almost all segments. Additionally, slightly lower prices dampened sales performance, as price increases in some segments were unable to fully offset the lower prices in others. Negative portfolio effects from the sale of the kaolin minerals business in the Industrial Solutions segment also slightly weighed down sales. However, slightly positive currency effects, mainly relating to the U.S. dollar, had an offsetting effect.
EBIT Performance in Q1 2023
BASF Group’s income from operations (EBIT) before special items decreased by 31.5% YoY to €1.9 billion in the first quarter of 2023. The decline was mainly due to significant drops in earnings contributions from the Chemicals and Materials segments. EBIT before special items in the Nutrition & Care and Industrial Solutions segments also decreased considerably, while the Surface Technologies segment recorded a slight decline. In contrast, the Agricultural Solutions segment significantly increased earnings and achieved EBIT before special items of around €1.3 billion, compared with €868 million in the prior-year quarter. Other segments also significantly improved EBIT before special items.
EBIT declined by €918 million compared with the first quarter of 2022 to €1.9 billion. Income from operations before depreciation, amortization, and special items (EBITDA before special items) decreased by €878 million to €2.9 billion, and EBITDA decreased by €898 million to €2.8 billion in the same period.
Net Income Performance in Q1 2023
Net income of €1.6 billion was €340 million higher than in the same period of the previous year. In the prior-year quarter, impairments on the shareholding in Wintershall Dea AG had burdened net income. Earnings per share in the first quarter of the year were €1.75, compared with €1.34 in the first quarter of 2022.
Dividend Proposal for the 2022 Business Year
The Board of Executive Directors and the Supervisory Board of BASF SE are proposing a dividend matching the prior-year level of €3.40 per share for the 2022 business year at the Annual Shareholders Meeting. Based on the year-end share price for 2022, the BASF share offers a high dividend yield of 7.3%. All shareholders who hold BASF shares as of April 27, 2023, the date of the Annual Shareholders Meeting, are entitled to receive the dividend. If the Annual Shareholders’ Meeting approves the dividend proposal, the dividend will be paid out on May 3, 2023. In total, BASF will pay €3.0 billion to its shareholders on this day.
Outlook for 2023
BASF maintains its outlook for the 2023 business year, as presented in the BASF Report 2022. The company expects sales of between €84 billion and €87 billion, EBIT before special items of between €4.8 billion and €5.4 billion, and a return on capital employed (ROCE) of between 7.2 percent and 8.0 percent. The company also expects CO2 emissions of between 18.1 million metric tons and 19.1 million metric tons. The assumptions regarding the global economic environment from the BASF Report 2022 remain unchanged. These include growth in gross domestic product of 1.6 percent, growth in industrial production of 1.8 percent, and growth in chemical production of 2.0 percent. The company expects the average euro/dollar exchange rate to be $1.05 per euro and the average annual oil price (Brent crude) to be $90 per barrel.