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BASF sees 2024 profit at lower end of range on weaker auto, agriculture demand
Published by Uma Rajagopal
Posted on October 30, 2024
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Published by Uma Rajagopal
Posted on October 30, 2024
By Ludwig Burger and Patricia Weiss
FRANKFURT (Reuters) -BASF on Wednesday predicted full-year earnings growth at the lower end of its target range on weaker demand for its chemicals and plastics, making it the latest German industrial heavyweight to come under pressure from the country’s weak economy.
The chemicals maker said 2024 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, would be near the bottom of a forecast range of 8 billion euros ($8.7 billion) to 8.6 billion euros, up from 7.67 billion last year.
“Compared to our expectations at the beginning of the year, the business development in the automotive industry and the agricultural sector is weaker,” BASF CEO Markus Kamieth said in a statement posted on the group’s website.
The more downbeat view comes after Kamieth earlier this year continued his predecessor’s push to cut more than 2 billion euros in annual costs in Europe, as the industrial outlook for Germany worsens.
This week, plans emerged at German car giant Volkswagen to shut three plants in Germany and a worsening business outlook in Europe’s largest economy has piled pressure on Chancellor Olaf Scholz’s coalition government.
BASF also posted a 5% increase in third-quarter operating earnings as gains in precursor chemicals for plastics and ammonia outweighed a slump at its agriculture unit, underscoring mixed fortunes for businesses that the CEO plans to separate.
Quarterly adjusted EBITDA came in at 1.62 billion euros ($1.75 billion), slightly below the average analyst estimate of 1.67 billion posted on the company’s website.
Kamieth, at the helm since April, is preparing a partial listing of the agricultural chemicals business and is considering new ownership options for the coatings division.
As part of the revamp, BASF is also separating its battery chemicals and catalytic converter businesses from the rest of the organisation so that they can be managed more autonomously.
Kamieth has dubbed the remaining divisions, which are highly integrated thanks to a shared technical infrastructure, BASF’s “core businesses” and he said on Wednesday that they had a positive earnings momentum in the quarter.
($1 = 0.9240 euros)
(Reporting by Ludwig BurgerEditing by Friederike Heine, Miranda Murray and Jane Merriman)