Basf: decline in sales in 2023, cautious forecast for growth in 2024

(Picture Basf SE)

In a market environment shaped by economic uncertainty, Basf Group reported sales of 68.9 billion euros in the 2023 business year, compared with 87.3 billion euros in the previous year. This sales development was mainly driven by considerably lower prices and volumes.

Lower raw materials prices in particular led to lower prices in almost all segments. Sales volumes fell in all segments as a result of weak demand from many customer industries. Nevertheless, Basf demonstrated economic strength with cash flows from operating activities rising 5.2% year on year to reach 8.1 billion euros.

Martin Brudermüller (picture below), Chairman of the Board of Executive Directors of Basf, and Dirk Elvermann, Chief Financial Officer, presented the 2023 business development in detail and announced a further program for the Ludwigshafen site with additional annual cost savings of 1 billion euros by the end of 2026. This is in addition to the existing cost savings program in non-production units with a focus on Europe and the adaptation of production structures in Ludwigshafen.

Income from operations (Ebit) before special items in the 2023 business year amounted to 3.8 billion euros; the decline of 3.1 billion euros compared with the prior-year figure was primarily due to a considerably lower earnings contribution from the Chemicals and Materials segments. Ebitda before special items in 2023 was 7.7 billion euros, 3.1 billion euros below the 2022 figure. Net income increased by 852 million to 225 million euros, compared with minus 627 million euros in 2022.

As for the outlook, Basf expects the weakness in global economic momentum from 2023 to continue in 2024. Global economic growth is only expected to accelerate somewhat later in the year, meaning that Basf expects the global economy to grow by 2.3% overall in 2024. Ebitda before special items is expected between 8 and 8.6 billion euros.