Profits have plummeted! BASF intends to cut costs by €500 million

On October 12, 2022, BASF released preliminary figures
for the third quarter of 2022.
Sales, EBIT before special items, and EBIT were slightly above analysts' average forecasts
.

The BASF Group's net income for the third quarter is expected to be €909 million
.
This is significantly lower than the prior-year period (Q3 2021: EUR 1,253 million) and analysts' average forecast for the third quarter of 2022 (Vara: EUR 1,105 million).

Net income includes a non-cash impairment of an equity investment in WintershallDea in the amount of approximately EUR 740 million
.
This result was mainly due to the impairment of WintershallDea's equity investment in Nord Stream AG, which operates Nord Stream 1
.

BASF Group sales rose by 12 percent in the third quarter to €21,946 million (Q3 2021: €19,669 million).

This is mainly due to rising prices, as well as positive currency factors
, mainly driven by the US dollar.
Sales volumes were lower
than in the same period last year.
Sales in the third quarter of 2022 were slightly above analysts' average forecasts (Vara: €21,076 million).

EBIT before special items is expected to be €1,348 million in the third quarter of 2022, significantly lower than in the prior-year quarter (Q3 2021: €1,865 million) and slightly above the analyst consensus (Vara: €1,313 million).

The increase in raw material and energy prices can only be partially passed on
through higher selling prices.

EBIT for the third quarter of 2022 is expected to be €1,294 million, significantly lower than in the prior-year quarter (Q3 2021: €1,822 million) and slightly above the analyst consensus (Vara: €1,285 million).

The BASF Group's outlook for the 2022 fiscal year announced in July remains unchanged
.
EBIT before special items is expected to be between
€6.
8 billion and €7.
2 billion.

The cost savings program will save 500 million euros per year

Due to the significant weakness in earnings in Europe, BASF launched a cost-saving program for Europe, especially Germany, to cope with losses in Germany in the third quarter of 2022 and the deterioration of framework conditions in
Europe.
The plan will be implemented
from 2023 to 2024.
Projects that save costs in the short term will be implemented
immediately.
When the overall plan is implemented, it is expected to save 500 million euros per year in non-production areas, more than half of which will be implemented
at the Ludwigshafen Verbund site.
Operations, service and R&D, as well as corporate centers, will be streamlined
.

Medium- and long-term structural adjustment measures are currently being planned for BASF's Verbund production site in Europe and will be announced
in the first quarter of 2023.