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BASF in Ludwigshafen: Forecasts not met

Photo: via / IMAGO / UJ Alexander

It wasn't a good year for BASF.

Due to weak demand worldwide, the chemical company missed its own targets for 2023.

Earnings before interest and taxes (EBIT) and special items in 2023 are expected to be 3.8 billion euros, below the 4.0 to 4.4 billion euros forecast by BASF, as the group surprisingly announced on Friday in Ludwigshafen.

Although the analysts were less optimistic, their forecasts were also higher than the achieved result.

EBIT before special items in 2022 was almost 6.9 billion euros.

The decline compared to the previous year can be attributed to lower margins due to sales.

The reduction in fixed costs achieved so far has not been able to compensate for this, it said.

Before the trading session, the shares lost 2.5 percent compared to the Xetra close.

Bad mood

With its figures, BASF is unlikely to be the only chemical manufacturer with bad news.

And looking ahead is not exactly optimistic either.

The German chemical industry is facing another difficult year.

The business climate measured by the Munich Ifo Institute had deteriorated further before the turn of the year: to minus 15.2 points, after minus 13.0 points in November.

“Although the bottom in the chemical industry appears to have been reached, there is no immediate upward trend in sight,” said Ifo industry expert Anna Wolf, commenting on the development.

Companies rated their current business situation less negatively in December than in the previous month.

However, business expectations for the next six months have deteriorated significantly: This indicator fell to minus 14.6 points, from minus 6.5 points in November.

Orders are a long time coming

The chemical industry, which is suffering from high energy costs, now considers its order backlog to be very low.

Most recently, the companies had focused on export business, which was supposed to provide new momentum.

“But these hopes have apparently been dashed, as expectations regarding orders from abroad have deteriorated,” says the institute.

The companies' pessimism is now also reflected in their personnel planning.

Expectations here have slipped to their lowest level since the financial crisis of 2008/2009.

“The chemical industry is threatened with even greater job losses,” said industry expert Wolf.

The business climate has also deteriorated in other energy-intensive sectors: in metal production and processing, the indicator fell to minus 44.9 points, after plus 2.6 points.

The Munich researchers found that the business climate barometer fell significantly in the paper industry, coking industry and mineral oil processing as well as in the glass and ceramics industry and the processing of stones and earths.

mik/dpa AFX