Basf, preliminary results worse than forecast: Ebit halved in 2023
The chemicals sector in Europe is losing competitiveness and the German giant is increasingly in crisis. Despite cost cutting - with plant shutdowns and redundancies on the Old Continent, balanced by maxi investments in China - the preliminary balance sheet disappoints the guidance
2' min read
2' min read
The crisis of Basf, the European giant in a sector - that of chemicals - that is suffering severe difficulties throughout the Old Continent, due to the excessively high costs of energy and raw materials, global overproduction (especially of plastics) and increasingly fierce competition, particularly from China and the United States, is worsening.
The German group has anticipated that it will close its 2023 financial year with results that are worse than analysts' expectations and weaker even than its own forecasts: the net operating margin (EBIT) will be EUR 3.8 billion, almost halved in comparison to the EUR 6.9 billion of an already difficult 2022, despite a cost squeeze that has already begun, as well as lower than the guidance of EUR 4-4.4 billion that Basf only confirmed in October, merely warning that it would remain 'at the lower end of the range'.
Expectations were also disappointed by the estimates for turnover - EUR 68.9 billion (-21.1%) for the year, well below the EUR 73-76 billion the group had forecast - and those for net profit, indicated at EUR 225 million, still a positive return after the EUR 627 million red of the previous year. However, the picture is clouded by extraordinary items.
In 2022, Basf had made write-downs of no less than EUR 6.5 billion, mainly related to its subsidiary Wintershall Dea, which is active in the oil and gas sector and suffered from strong ties with Russia (it was among other things a partner of Gazprom in the now 'defunct' South Stream gas pipeline). Wintershall itself could now bring in cash: Basf in December 2023 reached an agreement to sell the bulk of its assets to the British Harbour Energy But the deal is however under scrutiny by the German government, which could stop it for reasons of national interest.
Basf - which will publish its final financial statements on 23 February - indicated further write-downs in 2023, related to the fertiliser division, of 1.1 billion. The only positive aspect highlighted by the preliminary figures according to analysts is the free cash flow, which rose to EUR 2.7 billion and was deemed sufficient to guarantee the payment of dividends. Even this was not enough for the stock market: in Frankfurt the share price lost about 1% on Friday 19, bringing the decline since the beginning of the year to almost 12%.
