German chemical giant BASF slashed its full-year revenue and earnings forecast on July 12 due to weaker-than-expected demand. Earlier, Dow, LANXess, Cabot, Lyondell, and other chemical companies issued warnings that 2023 earnings will be lower than previously expected.
Basf expects sales and earnings development to be weaker than previously forecast and has adjusted its outlook for 2023. Sales in 2023 are expected to be between 73 billion and 76 billion euros (the previous outlook was 84 billion to 87 billion euros; Analysts were expecting 79.81 billion euros), well below 2022 sales of 87.327 billion euros.
Basf also lowered its full-year earnings forecast, with 2023 EBIT before special items expected to be 4 billion to 4.4 billion euros (the previous outlook was 4.8 billion to 5.4 billion euros; Analysts were expecting 4.883 billion euros), down significantly from 6.878 billion euros in 2022.
“Global chemical production declined significantly in the first half of 2023,” BASF said in a statement, citing slower growth in industrial output.
For the chemical industry trend in the second half of 2023, BASF does not expect further weakness in global demand, as chemical raw material inventories in downstream industries have been significantly reduced.
However, BASF said margins will remain under pressure as global demand for consumer goods is expected to be lower than previously expected, and only a temporary recovery is expected.
In addition, BASF revised its forecast for the global economic environment in 2023: it expects full-year global GDP growth of 2.0%, up from its previous forecast of 1.6%; But the forecast for industrial production growth was revised down to 1.0% from 1.8%; The forecast for global chemical production growth was cut from 2.0% to zero.
Although the market forecast is not optimistic, it is still in the first half of 2023. Basf will significantly increase its investment in China and accelerate cooperation with domestic enterprises.
A few days ago, the company signed a letter of intent with Zhejiang Guanghua Technology Co., Ltd. to supply neopentyl glycol (NPG) from BASF’s Zhanjiang integrated base. Guanghua, a representative polyester resin manufacturer in the domestic coatings industry, plans to build a polyester resin plant for high-end powder coatings with an annual production capacity of 100,000 tons in Donghai, Zhanjiang Economic and Technological Development Zone, where BASF is building a world-class NPG plant with an annual production capacity of 80,000 tons.
Not only that, since 2023, BASF has signed contracts with a number of domestic enterprises such as Guoxuan High-tech, Anhui Chiyu, Naer Shares, China Ship Power, Kalai Technology, Hawest, and Haiyuan Composites, and recently signed a letter of intent for cooperation with the National Development and Reform Commission in Europe.
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