BASF SE (PNK:BASFY) Q4 2023 Earnings Call Transcript
BASF SE (PNK:BASFY) Q4 2023 Earnings Call Transcript February 23, 2024
BASF SE isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Stefanie Wettberg: Good morning, ladies and gentlemen. Welcome to BASF’s Conference Call on the Fourth Quarter and Full Year 2023 Results. Today’s presentation is being recorded. [Operator Instructions] Today’s presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors. They involve various risks and uncertainties and they are based on assumptions that may not prove to be accurate. Such risk factors include those – particularly those discussed in opportunities and risks of the BASF report 2023.
BASF does not assume any obligation to update the forward-looking statements above and beyond the legal requirements. With this, let us move on. With me on the call today are Martin Brudermuller, Chairman of the Board of Executive Directors; and Dirk Elvermann, Chief Financial Officer. Please be aware that we have just posted the speech on our website at basf.com/fullyear2023. And now, I would like to hand over to Martin Brudermuller.
Martin Brudermuller: Good morning, ladies and gentlemen. Dear gentlemen, I would like to welcome you to our analyst conference call. On January 19, BASF released preliminary figures for the full year of 2023. Today, we will provide you with further details. Let’s start with the development of chemical production by region. The orange bar in the middle shows the growth for the full year 2023. Based on the available data, global chemical production grew by 1.7% in 2023 on account of growth in China. In 2023, chemical production in China increased considerably compared with the COVID-related low baseline of the prior year. The development there was driven by recovering domestic demand and exports, but was associated with low sales prices.
A scientist in a lab coat mixing the chemicals for the Liposomal Bcl-2 drug development.
All other regions recorded a decline. In Europe and in Asia, excluding China, chemical production decreased substantially due to lower demand resulting from high inflation, frontloading of durable goods consumption during the COVID years as well as structurally higher natural gas prices. In 2023, natural gas prices in Europe were still around double the average between 2019 and 2021 and 5x higher than the Henry Hub quotation. In North America, chemical production declined slightly compared with 2022 in an environment of weak domestic demand from industries and end consumers. In Q4 2023, global chemical production rose by 6.9%. This was a considerable increase mainly stemming from strong contribution from China. However, North America, Europe and Asia, excluding China, also grew slightly compared with the very weak prior year quarter.
We now move on to BASF’s performance in the fourth quarter. Overall, BASF group sales declined by 18% to around €16 billion in Q4 2023. This was mainly due to lower prices, which decreased across all segments because of subdued demand and in line with lower raw material prices. Currency headwinds also had a negative impact on sales. Sales volumes, however, remained almost stable. Excluding precious metals, BASF sales volumes increased by 2.6% compared with the prior year quarter. This confirms the bottoming out of the volume decline, which we had predicted in our analyst conference calls in the second half of 2023. EBIT before special items declined by €81 million and amounted to €292 million in Q4 2023. Higher earnings in the Industrial Solutions, Nutrition & Care, Surface Technologies and Materials segments could only partially compensate for lower contributions from Agricultural Solutions, Chemicals and other.
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