BASF raises profit forecast amid industry pressures

Global chemical giant BASF has unexpectedly increased its profit forecast after a strong third quarter. The German company now anticipates an adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of between 7.4 billion and 7.8 billion euros for 2026. This is an upgrade from the previous projection of 6.9 billion to 7.7 billion euros, according to BASF's latest announcement.

BASF's recent decision to adjust its profit outlook comes in the wake of the conflict in Iran, which has affected competitors significantly reliant on energy supplies from Asia. This conflict has led to a shift in customer demand towards European firms, allowing BASF to increase prices in certain areas.

Despite this positive financial outlook, BASF faces continued challenges, such as high energy prices, which exert significant pressure on the chemical industry. In response, BASF is undergoing a comprehensive corporate restructuring, implementing cost-cutting measures, and reducing its workforce. Dirk Elvermann, BASF's Chief Financial Officer, noted that the company has reduced its global workforce by 8,600 since early 2024. This reduction more than doubles the number of jobs cut throughout 2023, and the company now employs approximately 93,000 people worldwide.

In the third quarter, BASF achieved an operating profit of 1.64 billion euros, surpassing analysts' expectations and outperforming the same period last year when it reported 1.43 billion euros. Revenue increased by 14.2% to 16.36 billion euros, driven by higher prices and sales volumes. However, net income attributable to shareholders decreased by nearly 10% to 155 million euros, influenced by restructuring costs.

BASF is also exploring strategic opportunities to strengthen its competitive position globally. This includes plans to acquire specialty chemicals firm Evonik, a move described by BASF officials as a potential robust response to international competition. BASF recently increased its offer for Evonik to 24 euros per share, totaling over 11 billion euros, as reported by a financial news agency.

However, the potential acquisition has drawn criticism from some political circles. Dennis Radtke, head of the Christian Democratic Workers’ Association (CDA), expressed concerns regarding the possible loss of thousands of jobs following such a merger. Radtke suggested abandoning the acquisition plan, questioning the benefits of BASF taking over Evonik.

Meanwhile, BASF's largest production site in Ludwigshafen is under scrutiny. Although it is the world's biggest contiguous chemical site, it has been reporting losses for several years, amidst growing concerns about industrial decline in Germany.

Source: spiegel.de