BASF sales declined by 5% in the Q3 FY 2020
Due to non-cash-effective impairments and provisions for restructuring, below analyst consensus
BASF has released preliminary figures for the third quarter of 2020. Sales declined by 5% in the third quarter of 2020 to €13,812 million (Q3 2019: €14,556 million). This was mainly driven by negative currency effects.
The BASF Group’s operating business performed better than expected in the third quarter of 2020. EBIT before special items amounted to an expected €581 million, above analyst consensus but below the figure for the prior-year quarter (Q3 2019: €1,056 million). Compared with the second quarter of 2020, EBIT before special items rose by €355 million in the third quarter of 2020 (Q2 2020: €226 million).
The Surface Technologies, Materials, Industrial Solutions and Chemicals segments exceeded average analyst estimates for EBIT before special items in the third quarter of 2020. EBIT before special items was on a level with analyst estimates in the Agricultural Solutions segment, but fell short of analyst estimates in the Nutrition & Care segment. The EBIT before special items of other was more negative than analysts expected.
The year-on-year decrease in the BASF Group’s EBIT before special items was primarily due to the continued weak earnings contributions from the upstream Chemicals and Materials segments due to ongoing high pressure on margins. The Nutrition & Care, Agricultural Solutions and Industrial Solutions segments and other also recorded lower earnings compared with the prior-year quarter. EBIT before special items in the Surface Technologies segment was almost on a level with the prior-year period.
The BASF Group’s EBIT amounted to an expected minus €2,637 million in the third quarter of 2020 due to non-cash-effective impairments and provisions for restructuring, below analyst consensus and the figure for the prior-year quarter (Q3 2019: €1,336 million). Impairment tests identified fixed asset impairments of €2.8 billion due to considerably weaker macroeconomic developments as a consequence of the coronavirus pandemic. The impairments were largely the result of weaker demand from the automotive and aviation industries, which impacted the Surface Technologies segment in particular, and a continued oversupply of basic chemicals, which put pressure on margins in the Chemicals and Materials segments. In addition, impairments were recognized in the Agricultural Solutions segment as part of measures to streamline the production network.