BASF sees profit declining this year as global growth moderates

[FRANKFURT] BASF sees sales and earnings slipping this year as global growth slows and rising logistics and energy costs weigh on profits.

The German chemicals giant said it expects earnings before interest and tax excluding special items between 6.6 billion to 7.2 billion euros (S$10.9 billion) this year, BASF said on Friday (Feb 25). That's below earnings of 7.8 billion euros it reported for 2021.

BASF, one of Europe's biggest corporate energy users, is increasingly feeling the pinch from surging natural gas, oil and electricity prices. Russia's invasion of Ukraine has triggered fears of further disruption to already tight supplies.

During the fourth quarter alone, additional costs from higher gas prices amounted to 800 million euros at European sites, BASF said.

Some of BASF's main product lines like petrochemicals and polyamides used in textiles are benefiting from demand that has soared during the pandemic.

That's helped offset some of the energy-price gains and declining business from automotive clients that have seen output disruptions because of a semiconductor shortage.

The company will make "substantial" price rises over the coming months in a bid to offset soaring energy costs, it said.

BASF's sales during 2021 rose to 78.6 billion euros, exceeding the company's guidance.

Oil surged above $105 a barrel for the first time since 2014 on Thursday after Russia attacked sites across Ukraine.

BASF unit Wintershall Dea, an oil and gas producer which derived a fifth of its revenue from Russia in 2020, led losses in the euro high-grade corporate bond market. BLOOMBERG