BASF operating profit slips on forex effects, pressure from rivals
Quarterly Earnings and Market Impact
FRANKFURT, April 30 (Reuters) - BASF said on Thursday that its quarterly operating earnings slipped 5.6%, citing negative currency effects and competitive pressures, and warned of high uncertainty about the fallout from the Iran war.
Financial Performance Overview
First-quarter earnings before interest, tax, depreciation and amortisation (EBITDA), adjusted for special items, declined to 2.36 billion euros ($2.75 billion), but surpassed an average analyst forecast of 2.19 billion euros.
Sector Dependence and Risk Mitigation
The German group, which like its peers in the global industrial chemicals sector depends on economic growth to drive earnings, said it would mitigate risks from the Iran war, which has disrupted global energy markets, but also "leverage opportunities".
Uncertainty from Global Events
"Given the rapidly changing situation - especially with regard to energy and raw material prices as well as potential disruptions to global supply chains - it is currently impossible to reliably quantify or assess the resulting effects," it said.
Guidance and Market Assumptions
Still, the chemicals company reaffirmed its full-year guidance that adjusted EBITDA would likely reach 6.2 billion to 7.0 billion euros, compared with 6.6 billion euros in 2025.
It was also still projecting an average oil price of $65 per barrel of Brent crude in 2026, unchanged from its February assumptions and little over half of current levels.
Impact of Middle East Conflict
But it added this was because of the "high level of uncertainty about how the conflict in the Middle East will play out".
"The assumptions made in February regarding growth in global GDP, industrial production and chemical production may prove to be too optimistic. The oil price may be higher than our existing assumption," it added.
Brent Crude Price Surge
Brent crude futures jumped over 6% on Thursday to a four-year high of $125 a barrel following a report that the U.S. is considering additional military action against Iran.
Strategic Investments and Regional Performance
Last month, BASF underscored the need to boost its China presence with the single largest investment project in the company's 161-year history, even as global markets cooled down.
BASF's new chemical complex in the southern Chinese city of Zhanjiang is expected to cost the company about 9 billion euros to complete by 2028.
Challenges in the Home Market
BASF has struggled particularly in its home market - where it cut costs and shuttered production lines - and where the economic cycle shows no sign of turning a corner. Last week, the German government cut its growth forecasts for 2026 and 2027 and raised its inflation projections, as the U.S.-Israeli war on Iran drives up oil and gas prices.
German Economic Forecasts
The government now expects 0.5% growth for 2026, down from an earlier projection of 1.0%.
($1 = 0.8578 euros)
(Reporting by Ludwig Burger and Patricia Weiss, Editing by Friederike Heine and Thomas Derpinghaus)
