BASF Predicts A Drop In Earnings Due To A Slower Business Cycle And Supply Chain Concerns

Due to weaker economic growth, BASF anticipates reduced operational profitability in 2022, putting the German chemicals giant’s supply chain at risk.

Earnings before interest, taxes, and special items are expected to be between 6.6 billion and 7.2 billion euros this year, down from 7.77 billion euros in 2021, according to the business.

Despite a good start to the year, “BASF anticipates global economic growth of 3.8 percent in 2022 to be somewhat more modest after the extremely robust rebound in 2021,” according to the company.

According to BASF, the projection considers the possibility of supply chain interruptions, increased pandemic headwinds, and potentially higher energy prices.

In its earnings report, the German conglomerate made no mention of preparations for an initial public offering of shares in the Wintershall Dea joint venture. Russian extraction sites account for about half of the joint venture’s oil and gas production.

A “politically driven” shutdown of Gazprom’s Nord Stream 2 gas pipeline, which Wintershall co-funded, would allow the pipeline’s operator to file compensation claims, Wintershall said on Thursday. find out more

Following a first round of sanctions against Russia, where Wintershall has been involved for more than three decades, Germany has practically halted a ramp-up in pipeline preparations. Moscow launched a land, sea, and air assault on Ukraine on Thursday, the worst strike on a European country since World War Two, prompting worldwide condemnation.

The impact of BASF’s investment in Wintershall is not factored into the company’s adjusted profits forecast, according to the German company.

BASF owns 67 per cent of the ordinary voting shares of Wintershall, or 72.7 per cent when non-voting preference shares are included. The rest is owned by Russian billionaire Mikhail Fridman’s investment business LetterOne, which used to control Wintershall.

In the three months through December, BASF’s group EBIT increased by more than 10 per cent to 1.23 billion euros, missing a company-compiled projection of 1.35 billion euros.

The German corporation recommended a 3.40 euro annual dividend per share, which was marginally higher than the 3.39 euro consensus.

(Adapted from USNews.com)

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