Sales prices under pressure - Sales at BASF chemicals decline - Targets confirmed
BASF, the world's largest chemistry company, experienced decreased sales prices and significantly worse business with agrochemicals in the second quarter. Negative currency effects also added to the burden, which could not be offset by increased sales volumes. The revenue shrank by 6.9% to 16.1 billion Euro in the first half of the year compared to the previous year, as the Dax company announced in Ludwigshafen on Friday. The stock lost more than three percent in early trading and was therefore the last in the Dax.
The operational profit before special items, interest, taxes, and depreciation (operating EBITDA) remained nearly flat at around 1.9 billion Euro, thanks to the Sparkurses. While BASF made more money in half of its segments, the operational profit in the agricultural chemicals business plummeted. BASF attributed this to significantly lower prices for the pesticide Glufosinat-Ammonium.
BASF had previously announced that it would stop producing the active ingredient at the Knapsack and Frankfurt sites by the end of the year. The closure of the production and formulation plants in Frankfurt is expected to result in additional special charges in the amount of a low-three-digit million Euros in the third quarter, according to CFO Dirk Elvermann in a conference call with analysts.
The shareholders received a net income of 430 million Euro in the second quarter - compared to 499 million Euro the previous year.
BASF confirmed its targets for 2024. The company still aims for an EBITDA result, including special items, between 8.0 and 8.6 billion Euro for the year, compared to nearly 7.7 billion Euro the previous year.
BASF has had losses in Germany since the end of 2020. The largest production site in Ludwigshafen is to be restructured. "We are on a good path to achieve the targeted annual savings of 2.1 billion Euro by the end of 2026," said CFO Dirk Elvermann. The board is currently implementing the measures announced in early 2023. By the end of this year, the company expects savings of around 800 million Euro annually. The goal is ultimately 1.1 billion Euro. The company is also making good progress with the program announced in February, with a focus on the Ludwigshafen site, according to the manager.
Concretely, the savings of an additional billion Euro per year are expected to be achieved at the Dax company's headquarters by the end of 2026. It is unclear how many jobs in Ludwigshafen will be cut.
- Despite the challenges, BASF's chemical corporation continued selling its products at various prices, with the selling price of agrochemicals witnessing a decrease.
- Martin Brudermüller, a key figure in BASF, acknowledged that the Ludwigshafen-based chemical corporation faced difficulties in the German market, prompting the need for restructuring.
- BASF's Frankfurt site, which contributes to the corporation's chemical operations, will experience special charges as the production of a specific active ingredient is set to cease by the end of the year.
- In the quest to improve its financial performance, BASF, a prominent chemical corporation based in Germany, plans to increase its annual savings to 1.1 billion Euro by 2026.
- As a part of its strategy to save costs, BASF aims to achieve additional savings of a billion Euro per year at its headquarters in Ludwigshafen, Germany, though the exact number of potential job cuts remains unknown.
