A billion-dollar write-down due to the stopped Nord Stream 2 gas pipeline caused the chemical company BASF to slump in profits in the first quarter.

The bottom line is that profits fell by almost 29 percent to 1.22 billion euros, as the Ludwigshafen company announced on Monday evening.

The reason for this are value adjustments at the joint venture Wintershall Dea, which BASF accounted for in its investment result with around 1.1 billion euros.

The oil and gas group Wintershall Dea, in which BASF still holds 67 percent and the Letter One investor group of Russian billionaire Mikhail Fridman 33 percent, had written off Nord Stream 2 completely in March.

Brudermüller warns

After Russia invaded Ukraine, the controversial Baltic Sea pipeline was put on hold.

The pipeline, which costs around 9.5 billion euros, belongs to the Russian gas company Gazprom, but Wintershall Dea, the supplier Uniper, the Austrian OMV, the French Engie and Shell took over half of the financing.

In day-to-day business, BASF fared much better in the first quarter than analysts had expected.

Sales increased by 19 percent to 23.1 billion euros, mainly thanks to higher prices, but also thanks to positive currency effects.

The operating result (EBIT) before special items increased by 21 percent to 2.82 billion euros.

According to Vara Research, analysts had expected an average of 2.43 billion.

All business areas contributed to the positive development.

BASF intends to publish the full quarterly figures on the day of its Annual General Meeting on April 29.

The war in Ukraine casts a dark shadow over future business developments.

CEO Martin Brudermüller recently warned that an embargo on Russian gas could plunge the German economy into the “worst crisis since the end of the Second World War”.

A reduction in the natural gas supply to less than half of today's requirements would lead to a complete cessation of operations at the largest site in Ludwigshafen.

After a strong increase in sales and earnings last year, BASF has already prepared for a decline in 2022: Adjusted operating profit is likely to fall by up to 15 percent to between 6.6 and 7.2 billion euros.