Homepage  Homepage     Search on site  Search on site     To write the letter  To write the letter     Site map  Site map
Agro Perspectiva
We are on: 



Home > News

BASF Groups sales in the first quarter of 2020 increased to 16.8 billion

02.05.2020 14:05 "Agro Perspectiva" (Kyiv) BASF Groups sales in the first quarter of 2020 increased by 7 percent compared with the prior-year quarter to 16.8 billion. This was mainly driven by a 4 percent increase in volumes. Income from operations (EBIT) before special items was 1.6 billion, down by 6 percent compared with the first quarter of 2019. The decline in EBIT before special items was mainly attributable to significantly lower contributions from the Chemicals and Materials segments and from Other.

«The first quarter of 2020 was not a normal quarter. The same will be true for the second quarter and likely for the entire year,» said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the results for the first quarter of 2020. «The coronavirus has turned the world upside down.» Owing to the very challenging macroeconomic environment, there is great uncertainty in the markets, making reliable planning nearly impossible at the moment. For this reason, concrete statements on the development of sales and earnings in 2020 cannot be made at present.

Advantages of BASF Groups diversified portfolio

«BASFs diversified portfolio offers advantages, especially in difficult times,» said Brudermüller. «Not all of our customer industries are equally affected by the pandemic. They show different degrees of resilience in this environment. For example, pharma, detergents and cleaners, or food. At the moment, they are even experiencing additional demand.» At BASF, this is clearly evident in the incoming orders in the Nutrition & Care segment. Demand in the agricultural industry is also not really affected.

Other customer industries, however, are intensely experiencing the consequences of the pandemic. They are hampered by the low demand from final customers. Moreover, there are production shutdowns and supply chain disruptions. The transportation and automotive sector is seeing the strongest declines right now. Brudermüller: «This decline in demand from our most important customer industry is currently hitting us hardest.»

Earnings development of BASFs segments in the first quarter 2020

Compared with the prior-year quarter, EBIT before special items in the Chemicals and Materials segments declined by 246 million to a total of 383 million. Lower margins year on year in the ethylene and propylene value chain as well as for isocyanates and polyamide precursors had a considerable negative impact on earnings in these segments. In addition, fixed costs were higher. In the Materials segment, considerable earnings growth in the Performance Materials division could only partially compensate for the decline in the Monomers division.

«Even in a difficult market environment, we saw considerable improvements in our downstream segments,» said Dr. Hans-Ulrich Engel, BASFs Chief Financial Officer. «EBIT before special items in these four segments increased in the first quarter of 2020 by 13 percent to 1.6 billion. The strongest growth was seen in the Surface Technologies and Agricultural Solutions segments.»

In the Industrial Solutions segment, EBIT before special items increased by 3 percent to 273 million. Here, the Dispersions & Pigments division posted significantly higher earnings, mainly as a result of lower fixed costs. This more than offset the slight earnings decline in the Performance Chemicals division. The transfer of our paper and water chemicals business to the Solenis group as of January 31, 2019, was the main reason for the decline in earnings in the Performance Chemicals division.

The Surface Technologies segment increased EBIT before special items by 46 percent in the first quarter of 2020 to 220 million. The Catalysts division posted considerably higher earnings as a result of valuation effects in precious metal trading. In the Coatings division, earnings declined considerably because of lower demand from the automotive industry. This decrease in earnings could be partially offset by lower raw materials prices and lower fixed costs.

In the Nutrition & Care segment, EBIT before special items increased compared with the prior-year quarter by 14 percent to 254 million. This was primarily due to significantly higher earnings in the Nutrition & Health division. Engel: «This division supplies customer industries which in some cases have increased demand during the crisis. We were able to meet this demand thanks to higher product availability in comparison to the same quarter of the previous year.» Earnings in the Care Chemicals division rose slightly due to lower fixed costs.

The Agricultural Solutions segment increased EBIT before special items by 9 percent in the first quarter of 2020 to 809 million. This was largely the result of higher sales, mainly due to earlier demand as a consequence of the corona pandemic, and lower fixed costs.

BASF Group earnings development in the first quarter 2020

Compared with the same quarter of the previous year, EBITDA before special items declined by 2 percent to 2.6 billion. EBITDA amounted to 2.4 billion, compared with 2.8 billion in the prior-year quarter. EBIT before special items was 1.6 billion, down by 6 percent compared with the first quarter of 2019. Special items in EBIT amounted to minus 184 million, compared with plus 29 million in the first quarter of 2019. Special charges were related mainly to the integration of the polyamide business acquired from Solvay. In the first quarter of 2019, income from divestitures led to net positive special items. EBIT therefore declined by 18 percent in the first quarter of 2020 to 1.5 billion.

The tax rate was 26.6 percent, compared with 25.3 percent in the prior-year quarter. Net income amounted to 885 million. This compared to 1.4 billion in the first quarter of 2019. Consequently, earnings per share decreased to 0.96 in the first quarter of 2020, as compared to 1.53. Adjusted earnings per share were 1.36, compared with 1.70 in the prior-year quarter.

Development of cash flows in first quarter 2020

Cash flows from operating activities amounted to minus 1 billion, compared with 373 million in the prior-year quarter. Alongside the considerable decline in net income, this was primarily attributable to the 1.2 billion increase in cash tied up in net working capital.

Cash flows from investing activities amounted to minus 1.8 billion, around 1 billion below the figure for the prior-year quarter. This was mainly attributable to the payment of the purchase price for the polyamide business acquired from Solvay. By contrast, payments made for intangible assets and property, plant and equipment were 172 million lower year on year.

The significant increase in cash flows from financing activities, from 620 million in the first quarter of 2019 to 4.3 billion, was primarily due to the creation of additional liquidity as a precautionary measure.

Free cash flow declined from minus 368 million in the prior-year quarter to minus 1.6 billion as a result of lower cash flows from operating activities.

BASF Group outlook for 2020

The sales and earnings forecast for the 2020 business year provided by BASF on February 28, 2020, will not be able to be met. The company is therefore withdrawing its outlook for 2020. It is currently impossible to reliably estimate both the length and the further spread of the coronavirus pandemic, as well as future measures to contain it. Consequently, concrete statements on the future development of sales and earnings cannot be made at present.

BASF expects to be severely impacted by the economic consequences of the global weakness in demand and drop in production, in particular as a result of the ongoing production stoppages in the automotive industry. The effects of the coronavirus pandemic will also impact other customer industries. As a result, the company anticipates a considerable decline in sales volumes in the second quarter of 2020. BASF currently expects a slow recovery for the third and fourth quarters of 2020; how the situation develops is, however, extremely uncertain and not predictable at this point in time.

BASF will quantify its expectations for the future development of sales and earnings as soon as it is again possible to make a reliable forecast.

Under these circumstances, the members of BASFs Supervisory Board have decided to forego 20 percent of their fixed compensation from April 1 until the end of 2020. Members of BASFs Board of Executive Directors will voluntarily waive 20 percent of their fixed salaries for the second quarter of 2020. Depending on how things develop over the course of the year, further steps will be considered.

Agro Perspectiva

< Kazakhstan: First and Second Stage 2020 Meat TRQs for Kazakhstan All news for
Deficit of Ukraine's consolidated balance of payment totals $1.8 bln in March >

09:00 Philippine Imports of Milling Wheat Surge While Duties Implemented on Turkish Flour
17:15 BASF Group: operating result in the second quarter of 2020 above market expectations
13:25 In the 2019/2020 port NIKA-TERA handled 6.4 million tons of agricultural cargo
10:00 FAO and Rabobank's new partnership focuses on helping make food systems more sustainable, including through innovative investments
18:25 Director-General proposes new structure to make FAO agile and efficient
17:40 FAO welcomes additional 15 million from the European Union to fight Desert Locusts and their impacts on food security
17:25 Economy ministry estimates Ukraine's GDP fall at 5.9% in Jan-May
13:15 Economy ministry signs memo with grain market players for agreeing on export volumes, not for limiting exports minister
22:40 Refinancing rate could fall lower than inflation rate economy minister
12:10 BASF invests in next-generation farming for livestock producers with Cloudfarms digital platform solution
17:30 Rada with 286 votes backs resignation of NBU governor Smolii
16:45 Rada with 226 votes dismisses head of Antimonopoly Committee Yuriy Terentyev
11:30 Burger King, Cargill and World Wildlife Fund work to mitigate effects of climate change with new grassland restoration project
14:10 Record global cereal production to boost stocks
13:45 Global food commodity prices rebound in June
13:30 EBRD providing 7 million to Grain Alliance group
23:40 More Alcohol at Wholesale Prices for British Columbia Restaurants and Bars
22:45 Burger King, Cargill and World Wildlife Fund work to mitigate effects of climate change with new grassland restoration project
11:30 European Investment Bank provides a 200 million loan to KWS SAAT
14:00 World Bank approves $350 mln loan to support reforms for economic recovery in Ukraine
13:45 Japan Recognizes US HACCP System for Meat and Poultry
21:00 Thailand. Rice export prices remain high
20:00 Food Portion of the New Saudi Higher Import Tariffs Concentrates on Dairy Products
16:45 World coffee production for 2020/21 is forecast 9.1 million bags (60 kg) higher than the previous year to a record 176.1 million
16:00 Cargill launches first chocolate manufacturing operation in Asia, with growth plans across region
12:50 Bayer announces agreements to resolve major legacy Monsanto litigation
21:05 Decline of industrial production in Ukraine slows to 12.2% in May statistics
10:51 Ukraines parliament passes EBRD-supported derivatives law
15:59 EBRD and EU update tourism roadmap for Ukraine
11:12 Statistics Service improves assessment of Ukraine's GDP fall in Q1 2020 from 1.5% to 1.3%
09:15 IFC will issue $35 mln loan to Galnaftogaz
10:50 Cargill strengthens gourmet chocolate offerings with 3.5 million-euro investment
12:35 Ukraine's Economy ministry predicts grain harvest of over 68 mln tonnes in 2020
12:15 EU wheat production in 2020/2021 is projected down by 13.8 million tons
13:30 Rice Prices Remain High on Constrained Supplies and Robust Demand
13:00 Canada. Chicken Meat Production Falls on Reduced Demand
12:01 BASF Quarterly Statement Q1 2020. Sales of 16.8 billion
21:00 Capital investment in Ukraine decreases by 35.5% in Q1 2020 statistics
20:45 Inflation in Ukraine slows to 0.1% in May, to 1.7% y-o-y
16:30 Wheat and barley malt syrup added to Cargills label-friendly sweetener options for European food manufacturers
17:20 McDonald's to open five restaurants in Ukraine in 2020, to accelerate network development in 2021
16:30 Ukraine's intl reserves 1.3% down in May, to $25.372 bln
12:50 FAO Food Price Index falls to 17-month low
12:20 FAO Director-General appeals to donors to scale up response and ease plight of farmers and fishers in Yemen
11:25 Väderstad continues to invest in the manufacture of genuine parts
12:15 Ukraine ready to discuss expansion of range of food export to Japan Economy minister
11:11 MHP SE. Unaudited Financial Results for the First Quarter ended 31 March 2020
15:00 Brazil. Sugar production is estimated at 39,5 MT in 2020/2021
20:20 Govt backs separation of ecology ministry from Energy and Environmental Protection Ministry
10:22 EBRD provides EUR3 million loan to Ukrainian cereal producer

Also available: 

Agrarian Week in digital


NewsNews - News - News - News - News - News
BriefWeekly Reports - Free article
SubscriptionTariff - News&Reports
AdvertisingMagazine - Site
ConferencesForum AGRO-2013 - DAIRY WORLD-2008 - FERTILIZERS-2010
For our clientsAgroNewsDaily - Ukrainian Grain&Oilseed Market - Fertilizers - Milk Monthly - Milk Weekly
About usAbout project - Contact
2002 -2020 © Agrarika, ltd.
tel.: +38 (044) 486-9171, 486-8119
fax: +38 (044) 486-8830, 494-4889
e-mail: info@agroperspectiva.com