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BASF earnings, sales soar on higher volumes, prices

March 02/2021

MOSCOW (MRC) -- BASF has posted a strong rise in its fourth-quarter earnings and sales, beating consensus and in line with preliminary figures released earlier this month, and is forecasting a significant rebound in annual earnings and sales for 2021, said Chemweek.

Net profit soared in the quarter to EUR1.06 billion (USD1.29 billion) from ˆ150 million in the prior-year period, with sales rising 8% year on year (YOY) to EUR15.91 billion. EBIT before special items was EURE1.11 billion, up 32% YOY and also beating analysts’ consensus estimates, with the rise due primarily to significantly increased earnings in the materials, chemicals, and industrial solutions segments on higher volumes and prices, it says. EBIT before special items in BASF’s materials segment rose to ˆ489 million from EUR80 million a year earlier, chemicals segment EBIT increased 97% YOY to EUR227 million, and industrial solutions EBIT grew 85% YOY to EUR200 million.

For 2021, BASF says it expects full-year sales to grow to between EUR61.0-64.0 billion, up from EUR59.15 billion in 2020, with EBIT before special items for the year forecast at between EUR4.1-5.0 billion, increasing from ˆ3.56 billion in 2020. The year-ahead earnings outlook is lower than consensus of EUR5.0 billion but “potentially conservative,” according to Bernstein Research (London, UK). The sales outlook is slightly ahead of consensus, it says. “Encouragingly, January volume development also looks to be positive,” it adds.

“BASF was able to close out the year on a strong note,” says BASF chairman Martin Brudermuller. The company’s overall sales volumes rose 7% YOY in the fourth quarter, with growth seen in all regions. “In Greater China, we continued to see double-digit volumes growth. Sales volumes rose in almost all segments in the final quarter of the year,” he says. For some commodity product lines, such as isocyanates, BASF was able to significantly expand margins, he adds. Prices increased by 7%, driven mainly by the surface technologies, agricultural solutions, and materials segments, according to Brudermuller.

BASF says it expects the global economy to recover in 2021 but that “uncertainty about future developments remains exceptionally high.” The company’s outlook for this year assumes growth in customer industries, “especially the automotive industry,” says Brudermuller. The global economy is expected to see significant growth of 4.3% compared with 2020, with worldwide chemical production expected to grow 4.4% in 2021, “well above the prior-year level,” he says. Global chemical production declined 0.4% in 2020, according to BASF.

For the period 2021-2025, BASF says it plans capital expenditure (capex) of EUR22.9 billion in total, with APAC accounting for 41% of the investments, mostly in China, and Europe 39%. BASF plans capex of EUR3.6 billion overall in 2021, a rise of 15% over 2020, it says.

BASF's carbon dioxide (CO2) emissions are expected to stabilize at between 20.5-21.5 million metric tons in 2021, according to the company.

As MRC wrote before, late last week, BASF said it was restarting one of its steam crackers at its Ludwigshafen complex in Germany after operations were halted last Wednesday due to a technical issue. The naphtha cracker produces ethylene and propylene, and is one of two crackers on the site. One has a production capacity of 420,000 metric tons/year, with the other’s capacity at 240,000 metric tons/year, according to IHS Markit data.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
Author:Anna Larionova
Tags:PP, PE, LDPE, HDPE, BASF, Germany.
Category:General News
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