BASF SE has indicated that its 2024 EBITDA before special items will likely reach the lower limit of its guidance range of €8.0 billion-€8.6 billion. The company's third-quarter EBITDA before special items rose 5% year-over-year to €1.62 billion, though it fell short of analysts' expectations of €1.67 billion.

The increase in EBITDA was primarily driven by “significantly” stronger performance from BASF's core business units, partially offset by a decline in standalone business earnings. Chairman Markus Kamieth attributed positive earnings momentum to higher volumes and margins within the core sectors, continuing a trend seen in the first half of 2024.

BASF’s new strategy, introduced in September, segments its portfolio into core businesses — chemicals, materials, industrial solutions, and nutrition and care — and standalone businesses — environmental catalysts and metal solutions, battery materials, coatings, and agricultural solutions. Third-quarter EBITDA margins before special items increased to 10.3%, with core business margins rising by 3.6 percentage points to 13.4%.

Sales remained steady year-over-year at €15.7 billion, supported by volume growth in most segments. However, weak demand in the automotive market led to a volume decline in the surface technologies segment, and unfavorable currency impacts alongside lower prices weighed on overall performance. Net profit reached €287 million, reversing a net loss of €249 million in Q3 2023, largely due to a one-time gain of €398 million from Wintershall Dea’s asset transfer to Harbour Energy PLC.

BASF’s cost-saving initiatives are progressing on schedule. CFO Dirk Elvermann reported that as of September 2024, BASF achieved a cost-reduction rate of €800 million, with associated costs of €500 million, aiming for a total cost-saving target of €2.1 billion by 2026. BASF is also advancing a supplementary cost-savings program targeting its Ludwigshafen site.

While the fourth quarter presents uncertainties, BASF sees potential from positive demand and margin trends but also anticipates risks of price declines and subdued volume growth. Kamieth noted that business development in the automotive and agricultural sectors has underperformed expectations, affecting earnings in the surface technologies and agricultural solutions segments. Additionally, foreign-exchange pressures are impacting margins, particularly in Brazil and Argentina. Furthermore, a force majeure event in BASF’s nutrition and health division is expected to reduce EBITDA by a low triple-digit million-euro amount in the second half of 2024, with a larger impact forecasted for Q4.

Source: BASF