German chemical firm BASF's sales climb 16.3% in Q2 FY22

EBIT rose by €34 million to €2.4 billion in the second quarter of fiscal 2022. Income from operations before depreciation, amortisation and special items (EBITDA before special items) rose by €76 million to €3.3 billion and EBITDA increased by €197 million to €3.4 billion in the second quarter of 2022.

Sales in the Chemicals segment rose considerably by 27.2 per cent compared with the second quarter of 2021 to reach €4.3 billion. Both operating divisions contributed to the increase. Sales growth was primarily driven by significantly higher prices in both divisions, mainly due to the passing on of increased prices for raw materials and energy amid continued strong demand. EBIT before special items of €853 million remained at a high level but was considerably below the exceptionally strong earnings in the prior-year quarter. This was primarily due to considerably lower earnings in the Petrochemicals division, mainly from higher fixed costs as a result of the increase in energy prices and currency effects, the company said in a press release.

“Despite the continued high raw materials and energy prices, we again achieved strong earnings in the second quarter,” said Dr Martin Brudermüller, chairman of the board of executive directors of BASF SE, presenting the results for the second quarter of 2022 together with chief financial officer Dr Hans-Ulrich Engel. BASF had already released preliminary figures on July 11.

For the second half of the year, BASF has anticipated a gradual cooling of economic development globally, but much more pronounced in Europe. This assumes that there are no severe restrictions resulting from new lockdowns in China and that natural gas shortages do not lead to production shutdowns in Europe.

For 2022, the company expects sales growth to between €86 billion and €89 billion and EBIT before special items to be between €6.8 billion and €7.2 billion. Current developments, mainly driven by the war in Ukraine and its impact on energy and raw materials prices and the availability of raw materials, especially in Europe, may lead to additional headwinds, deviating from the assumptions presented above. In particular, risks could arise from production stoppages at major European sites as a result of further restrictions to European gas supplies from Russia. In this case, the loss of European capacities could be partially compensated for by higher plant capacity utilisation at sites outside of Europe. Further risks could arise from the future course of the COVID-19 pandemic and new measures to contain the number of infections. Opportunities could arise from continued high margins, even in the case of an economic slowdown. BASF is responding to the economic slowdown with cost reduction measures.

Fibre2Fashion News Desk (RR)