BASF Group’s sales in the first quarter of 2020 increased by 7 percent compared with the prior-year quarter to €16.8 billion. This was mainly driven by a 4 percent increase in volumes. Income from operations (EBIT) before special items was €1.6 billion, down by 6 percent compared with the first quarter of 2019. The decline in EBIT before special items was mainly attributable to significantly lower contributions from the Chemicals and Materials segments and from Other.
“The first quarter of 2020 was not a normal quarter. The same will be true for the second quarter and likely for the entire year,” said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the results for the first quarter of 2020. “The coronavirus has turned the world upside down.” Owing to the very challenging macroeconomic environment, there is great uncertainty in the markets, making reliable planning nearly impossible at the moment. For this reason, concrete statements on the development of sales and earnings in 2020 cannot be made at present.
Advantages of BASF Group’s diversified portfolio
“BASF’s diversified portfolio offers advantages, especially in difficult times,” said Brudermüller. “Not all of our customer industries are equally affected by the pandemic. They show different degrees of resilience in this environment. For example, pharma, detergents and cleaners, or food. At the moment, they are even experiencing additional demand.” At BASF, this is clearly evident in the incoming orders in the Nutrition & Care segment. Demand in the agricultural industry is also not really affected.
Other customer industries, however, are intensely experiencing the consequences of the pandemic. They are hampered by the low demand from final customers. Moreover, there are production shutdowns and supply chain disruptions. The transportation and automotive sector is seeing the strongest declines right now. Brudermüller: “This decline in demand from our most important customer industry is currently hitting us hardest.”
Earnings development of BASF’s segments in the first quarter 2020
Compared with the prior-year quarter, EBIT before special items in the Chemicals and Materials segments declined by €246 million to a total of €383 million. Lower margins year on year in the ethylene and propylene value chain as well as for isocyanates and polyamide precursors had a considerable negative impact on earnings in these segments. In addition, fixed costs were higher. In the Materials segment, considerable earnings growth in the Performance Materials division could only partially compensate for the decline in the Monomers division.
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SOURCE: BASF Group
