Homepage  Homepage     Search on site  Search on site     To write the letter  To write the letter     Site map  Site map
Agro Perspectiva
We are on: 

Home > News

BASF Groups sales in the first quarter of 2020 increased to 16.8 billion

02.05.2020 14:05 "Agro Perspectiva" (Kyiv) BASF Groups 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 Groups diversified portfolio

«BASFs 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 BASFs 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.

«Even in a difficult market environment, we saw considerable improvements in our downstream segments,» said Dr. Hans-Ulrich Engel, BASFs Chief Financial Officer. «EBIT before special items in these four segments increased in the first quarter of 2020 by 13 percent to 1.6 billion. The strongest growth was seen in the Surface Technologies and Agricultural Solutions segments.»

In the Industrial Solutions segment, EBIT before special items increased by 3 percent to 273 million. Here, the Dispersions & Pigments division posted significantly higher earnings, mainly as a result of lower fixed costs. This more than offset the slight earnings decline in the Performance Chemicals division. The transfer of our paper and water chemicals business to the Solenis group as of January 31, 2019, was the main reason for the decline in earnings in the Performance Chemicals division.

The Surface Technologies segment increased EBIT before special items by 46 percent in the first quarter of 2020 to 220 million. The Catalysts division posted considerably higher earnings as a result of valuation effects in precious metal trading. In the Coatings division, earnings declined considerably because of lower demand from the automotive industry. This decrease in earnings could be partially offset by lower raw materials prices and lower fixed costs.

In the Nutrition & Care segment, EBIT before special items increased compared with the prior-year quarter by 14 percent to 254 million. This was primarily due to significantly higher earnings in the Nutrition & Health division. Engel: «This division supplies customer industries which in some cases have increased demand during the crisis. We were able to meet this demand thanks to higher product availability in comparison to the same quarter of the previous year.» Earnings in the Care Chemicals division rose slightly due to lower fixed costs.

The Agricultural Solutions segment increased EBIT before special items by 9 percent in the first quarter of 2020 to 809 million. This was largely the result of higher sales, mainly due to earlier demand as a consequence of the corona pandemic, and lower fixed costs.

BASF Group earnings development in the first quarter 2020

Compared with the same quarter of the previous year, EBITDA before special items declined by 2 percent to 2.6 billion. EBITDA amounted to 2.4 billion, compared with 2.8 billion in the prior-year quarter. EBIT before special items was 1.6 billion, down by 6 percent compared with the first quarter of 2019. Special items in EBIT amounted to minus 184 million, compared with plus 29 million in the first quarter of 2019. Special charges were related mainly to the integration of the polyamide business acquired from Solvay. In the first quarter of 2019, income from divestitures led to net positive special items. EBIT therefore declined by 18 percent in the first quarter of 2020 to 1.5 billion.

The tax rate was 26.6 percent, compared with 25.3 percent in the prior-year quarter. Net income amounted to 885 million. This compared to 1.4 billion in the first quarter of 2019. Consequently, earnings per share decreased to 0.96 in the first quarter of 2020, as compared to 1.53. Adjusted earnings per share were 1.36, compared with 1.70 in the prior-year quarter.

Development of cash flows in first quarter 2020

Cash flows from operating activities amounted to minus 1 billion, compared with 373 million in the prior-year quarter. Alongside the considerable decline in net income, this was primarily attributable to the 1.2 billion increase in cash tied up in net working capital.

Cash flows from investing activities amounted to minus 1.8 billion, around 1 billion below the figure for the prior-year quarter. This was mainly attributable to the payment of the purchase price for the polyamide business acquired from Solvay. By contrast, payments made for intangible assets and property, plant and equipment were 172 million lower year on year.

The significant increase in cash flows from financing activities, from 620 million in the first quarter of 2019 to 4.3 billion, was primarily due to the creation of additional liquidity as a precautionary measure.

Free cash flow declined from minus 368 million in the prior-year quarter to minus 1.6 billion as a result of lower cash flows from operating activities.

BASF Group outlook for 2020

The sales and earnings forecast for the 2020 business year provided by BASF on February 28, 2020, will not be able to be met. The company is therefore withdrawing its outlook for 2020. It is currently impossible to reliably estimate both the length and the further spread of the coronavirus pandemic, as well as future measures to contain it. Consequently, concrete statements on the future development of sales and earnings cannot be made at present.

BASF expects to be severely impacted by the economic consequences of the global weakness in demand and drop in production, in particular as a result of the ongoing production stoppages in the automotive industry. The effects of the coronavirus pandemic will also impact other customer industries. As a result, the company anticipates a considerable decline in sales volumes in the second quarter of 2020. BASF currently expects a slow recovery for the third and fourth quarters of 2020; how the situation develops is, however, extremely uncertain and not predictable at this point in time.

BASF will quantify its expectations for the future development of sales and earnings as soon as it is again possible to make a reliable forecast.

Under these circumstances, the members of BASFs Supervisory Board have decided to forego 20 percent of their fixed compensation from April 1 until the end of 2020. Members of BASFs Board of Executive Directors will voluntarily waive 20 percent of their fixed salaries for the second quarter of 2020. Depending on how things develop over the course of the year, further steps will be considered.

Agro Perspectiva

< Kazakhstan: First and Second Stage 2020 Meat TRQs for Kazakhstan All news for
Deficit of Ukraine's consolidated balance of payment totals $1.8 bln in March >

13:55 Ukraine will sue Poland, Hungary and Slovakia over agricultural bans
21:02 Following the expiry of the restrictive measures on Ukrainian exports of grain and other foodstuff to the EU, Ukraine agrees to introduce measures to avoid a renewed surge in EU imports
17:54 Biodel AG Secures Series A Investment from Pangaea Ventures to Advance Novel Regenerative Agriculture Technologies
07:25 Rice Export Prices Highest in 15 Years as India Restricts Trade
17:54 Export Bans, Black Sea Tensions, Affecting Food Markets - WTO Agriculture and Commodities Division
18:36 Global cereal production forecast to match past record - FAO
13:22 EBRD provides EUR60 million guarantee to support lending by Ukraines PrivatBank
13:18 Supporting small business in the west of Ukraine via Bank Lviv
18:35 Russia Withdraws from Black Sea Grain Initiative
19:32 Falling international maize and sugar prices partly offset notable jumps in wheat and vegetable oil quotations
19:25 Cargill and partners announce first Gold Standard-approved methane emissions reduction methodology for beef producers
19:21 FAO welcomes European Union contribution of 25 million to advance wildlife conservation and food security
18:55 BASFs earnings in tough market environment significantly below strong prior-year quarter
00:45 Brazil continues to make export gains and set new records for beef, pork, and chicken meat
22:25 122 million more people pushed into hunger since 2019 due to multiple crises, reveals UN report
08:17 U.S. dairy exports to Southeast Asia have been weak to start 2023
07:00 Russia Exports Record Wheat Volumes; Ukraine Exports Plummet
09:00 FAO Food Price Index continued declining in June
20:10 Global agricultural and food production are projected to continue to increase over the next ten years
19:54 EBRD supports Ukrainian city of Dnipro with EUR25 million loan
09:03 Nibulon invests EUR 27 mln in construction of granary, flour mill in Izmail
08:57 World coffee production for 2023/24 is forecast 4.3 million bags higher than the previous year to 174.3 million
08:55 Mexicos Production Recovering from Coffee Leaf Rust
04:05 EBRD and Ukraine government to mobilise 600 million for Ukraine energy security
20:26 EBRD and Ukraine government to mobilise EUR600 million for Ukraine energy security
15:55 Argentina ramps up soybean imports from Paraguay and Brazil
04:35 World Oceans Day must be Humans Day: FAO Fisheries chief
11:24 EU extends trade benefits for Ukraine
11:25 2023/24 Grain Production Exceeds Consumption
11:45 Rebound seen for global cereal output, with worldwide stocks set to hit record levels
11:35 Significant drops in international quotations for wheat, maize, vegetable oils and cheese, while prices of rice, sugar and meat rise
11:56 Conflict Drives Acute Hunger in the Democratic Republic of Congo - UN agencies warn
12:29 Three New Foods and Their Applicable Food Safety Standards
11:55 Haiti: Nearly half of the population is facing acute hunger
11:34 Increasing risk of hunger set to spread in hotspot areas as the Sudan crisis spills over into subregion and el Niño looms - warns new UN report
12:51 Black Sea Grain Initiative not fully resumed UN
15:52 Ukrainian FM urges African Union to demand that Russia stop obstructing work of grain corridor
11:49 Grain initiative talks continue considering proposal of UN Secretary General Dpty Minister of Restoration
14:45 The FAO Food Price Index rebounded slightly in April
09:15 Yara . 1Q results impacted by falling prices, but tighter nitrogen market into 2Q
22:10 Ukraine sees no reason to ban Ukrainian grain imports by EU countries - Solsky
21:45 $5 million from FAO-China South-South Cooperation Programme will assist in building more resilient agrifood systems
21:05 China Becomes Worlds Largest Wheat Importer in 2022/23
09:52 EBRD and Spain join forces to support Ukraines food security and municipal sector
13:10 Astarta starts 2023 planting season
00:27 War in Ukraine continues to impact EU farmers
22:17 Ukraine sends 150,000 tonnes of wheat to Asia
12:00 Global onion prices are at record-high levels due to a global shortage of onions
06:17 It will enrich Egypt if a kilo of onions costs HUF 1,000
11:03 Plummeting Argentina Soybean Production Impacts Global Soybean and Products Trade

Also available: 

NewsNews - News - News - News - News - News
BriefWeekly Reports - Free article
SubscriptionTariff - News&Reports
AdvertisingMagazine - Site
ConferencesForum AGRO-2013 - DAIRY WORLD-2008 - FERTILIZERS-2010
For our clientsAgroNewsDaily - Ukrainian Grain&Oilseed Market - Fertilizers - Milk Monthly - Milk Weekly
About usAbout project - Contact
2002 -2023 © Agrarika, ltd.
tel.: +380 67 4473802; +380 67 5964652
e-mail: client@agroperspectiva.com