BASF's sales in 2021 will be 78.6 billion euros, up 33% year-on-year

German chemical giant BASF responded on February 25 after major oil-producing country Russia launched a military operation in Ukraine, and global stock markets and commodity markets were in turmoil

Naphtha supplies are easily substituted

According to ICIS, BASF Chief Financial Officer Hans-Ulrich Engel said on February 25 that about 20-30% of BASF's naphtha supply comes from Russia, and (if) there is a supply disruption, it will be "easy" Find alternative suppliers quickly

Naphtha is a key chemical feedstock in several petrochemical downstream markets, feeding steam crackers in the production of olefins (ethylene, propylene, butadiene) and aromatics (benzene, toluene, xylenes)

"We have a supply of naphtha from Russia .

However, Germany is one of the EU countries most affected by Russian gas supplies and a key feedstock for electricity production in the country

Engel acknowledged that finding alternatives to Russian gas was not as easy as BASF's replacement of naphtha supplies

"BASF doesn't receive any oil and gas directly from (Russia)

　　"In Northwest Europe, about one-third of gas supplies come from Russia, and it is difficult to find alternative countries to replace Russian supplies with LNG," Engel said

　　However, the worsening situation in Ukraine will indirectly affect BASF through higher gas prices – just as it affects every consumer in Europe

　　Strong demand and supply shortages pushed gas prices in Europe to record highs in the first few months of 2021, moderating the upward trend in January this year, but in February and especially last week, prices were high again

　　In fact, BASF disclosed on the same day that it suffered a hit of 800 million euros in the fourth quarter due to high natural gas prices

　　Strong profit growth for full year 2021

　　The German chemical giant's 2021 fiscal year report released on the same day showed that BASF Group's sales and earnings increased significantly in the 2021 fiscal year

　　The BASF Group's sales in 2021 were 78.

　　BASF's earnings growth was mainly driven by the Chemicals and Materials segment, with Surface Technologies and Industrial Solutions also contributing significantly to the strong recovery

　　However, BASF's automotive-related business continued to be negatively impacted by semiconductor shortages

　　"We will significantly increase our prices further in the coming months to cope with the sharp increase in costs and thus improve the profitability of the downstream business," Brummeller announced

　　In addition, cash flow from operating activities was EUR 7.
2 billion in 2021 and EUR 5.
4 billion in 2020
.
This substantial increase was mainly due to an improvement in net income, which amounted to EUR 5.
5 billion
.

　　In 2021, BASF's annual carbon dioxide emissions will be 20.
2 million tons, down from 20.
8 million tons in 2020
.

　　Profits and sales forecast to fall in 2022

　　BASF expects global economic growth of 3.
8 percent in 2022 to be more modest, following a strong recovery in 2021
.
"Due to the high backlog of industrial orders, we expect global industrial production to increase by 3.
8 percent and chemical production by 3.
5 percent," Brummeller said
.

　　BASF expects Brent to average $75 a barrel at an exchange rate of $1.
15 per euro
.

　　Based on these assumptions, BASF expects sales in 2022 to be between EUR 74 billion and EUR 77 billion, and earnings before interest and taxes (EBIT) before special items to be between EUR 6.
6 billion and EUR 7.
2 billion
.

　　BASF's planned capital expenditure for the period 2022 to 2026 is 25.
6 billion euros, which is 2.
7 billion euros higher than in the previous planning cycle between 2021 and 2025
.
Engel said: "The main reason is the investment in the new Zhanjiang integrated base and the two key growth projects of the battery materials business
.
They are very important to promote the future development of BASF
.
"

　　BASF's investment in existing businesses has stabilized at an average of 2.
6 billion euros per year
.
Engel said that BASF will be very cautious about investments to maintain and achieve profitable growth in existing businesses
.
BASF's planned capital expenditure in 2022 will reach 4.
6 billion euros, compared to 3.
4 billion euros in 2021
.
The annual budget for R&D activities is approximately EUR 2.
1 billion
.