BASF raises forecast after overcoming supply bottlenecks in Q3 – Update

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By Ed Frankl


BASF SE raised its forecast for 2021 on Wednesday after saying it generated strong sales growth in the third quarter, despite persistent supply chain constraints.

The German chemicals conglomerate said that despite supply bottlenecks it expects continued strong demand, expecting annual sales to reach between € 76 billion and € 78 billion, rising from 74 to 77 billion euros according to previous forecasts published this summer.

The Ludwigshafen-based company posted revenue of € 19.67 billion in the three months ended September, up 42% year-on-year and above analysts’ expectations of € 17.83 billion according to the estimates provided by the company.

“The growth in sales was mainly due to significantly higher prices resulting from high demand, low product availability and rising raw material prices,” BASF said.

Demand remained strong during the summer months, and compared to 3Q 2020, the company increased prices by 36% and volumes by 6%, BASF said.

“The basic demand on the consumer side is good,” Managing Director Martin Brudermueller told a press conference, adding that there was no sign that customers are ordering less, he said. .

But growth momentum has slowed from the second quarter of 2021 due to supply chain issues, which the company says will continue to hamper the global economic recovery in the fourth quarter, BASF said. Hurricanes in the United States and shortages of raw materials have negatively impacted the availability of products in the market, the company added.

The company’s auto business has been particularly affected by persistent chip shortages, he said, and BASF reported that power outages in China were negatively impacting production.

The pandemic-related disruptions in production and logistics in Asia have intensified the scarcity of precursors globally, he added.

In its results, BASF recorded a net profit of 1.25 billion euros ($ 1.45 billion) for the third quarter, compared to a net loss of 2.12 billion euros a year earlier which had been heavily affected by the coronavirus pandemic.

Earnings before interest and taxes before special items were € 1.87 billion, about € 1.28 billion more year-on-year, mainly due to its chemicals segment, BASF said.

Higher profits from the company’s materials and industrial solutions business also boosted profits. But its agricultural solutions, automotive-centric surface technology unit, and nutrition and care business have shrunk significantly.

This profit mix was comparable to the second quarter, Brudermueller said.

“Our downstream activities are still facing a further increase in the costs of raw materials, energy and freight. Price increases in most downstream activities could only partially offset these higher costs,” a- he declared.

However, the company raised its guidance for 2021 EBIT before special items to between € 7.5 billion and € 8.0 billion, from € 7.0 billion to € 7.5 billion. previously.

The company is also now recording a full-year return on capital employed of 13.2% to 14.1%, compared to 12.1% to 12.9% previously, and an increase in sales of its accelerator business to between 21 , 5 billion euros and 22.5 billion euros, against 21 billion euros. , 0 billion – 22.0 billion euros previously.


Olaf Ridder contributed to this article


Write to Ed Frankl at edward.frankl@dowjones.com


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