The first quarter of 2022 was characterized by a significant increase in energy and raw material prices, as well as supply chain problems. “Nevertheless, we have had a great start to 2022,” said Martin Brudermüller, Chairman of the Board of Directors of BASF SE, at this year’s virtual General Meeting of Shareholders. BASF already published preliminary data on April 11, 2022.
Sales grew by €3.7 billion compared to the first quarter of 2021 to €23.1 billion. This sales growth was mainly driven by price increases, especially in the Chemicals and Materials segments. The positive effects of the exchange rates in all segments supported the good performance of sales. This was offset by slightly lower total sales volumes. Volume growth in the Agricultural Solutions, Industrial Solutions, Materials, Nutrition & Care, and Chemicals segments failed to fully offset lower volumes in the Surface Technologies segment.
The Agricultural Solutions segment posted slight EBIT growth before special items. EBIT before special items in the Surface Technologies segment decreased considerably, mainly as a result of notably weaker demand from the automotive sector.
EBIT rose by €474 million compared to the first quarter of 2021 to €2.8 billion. Net income amounted to €1.2 billion, compared to €1.7 billion in the same quarter of the previous year. This is a consequence of the impairment charges recognized by Wintershall Dea, which BASF included in net income per share proportionally (72.7%), as special expenses of around 1,100 million euros. These devaluations were triggered by the war in Ukraine and the associated political consequences, and affected, in addition to the loan to the operator of the Nord Stream 2 gas pipeline, the assets in Russia and the gas transport business.
Improvement in operating cash flows in the first quarter of 2022
Cash flows from operating activities amounted to minus €290 million, an improvement of €235 million compared to the first quarter of 2021. This increase – despite higher cash tied up in net working capital as a result of higher input costs and a sharp increase in sales—was mainly attributable to improved operating performance. Free cash flow improved by €88 million to minus €893 million.
Proposed dividend of €3.40 per share
The Board of Directors and the Supervisory Board will propose the payment of a dividend of €3.40 per share for fiscal year 2021 at BASF’s Annual Shareholders’ Meeting today. Assuming shareholders adopt this resolution, BASF will pay a total of approximately €3.1 billion on May 4, 2022. “This payment is more than covered by the strong free cash flow of €3.7 billion generated in 2021,” Brudermüller pointed out. The ex-dividend date, i.e. the day on which BASF shares will be listed without the dividend amount reflected in the price per share, is May 2, 2022.
BASF Group Outlook for 2022
The global macroeconomic outlook is subject to a very high degree of uncertainty at the moment. In particular, it is impossible to predict the evolution of the war in Ukraine and its impact on the prices and availability of energy and raw materials.
Consequently, BASF maintains its macroeconomic forecasts for fiscal year 2022 for the time being:
Gross domestic product growth: 3.8%
· Growth of industrial production: 3.8%
· Growth of chemical production: 3.5%
Average euro/dollar exchange rate of 1.15 dollars per euro
Average annual price of a barrel of oil (Brent) of 75 dollars
The BASF Group’s sales and revenue projections for fiscal year 2022 are maintained, as published in the BASF report for 2021:
· Sales of between 74,000 million euros and 77,000 million euros
EBIT before special items between €6.6 billion and €7.2 billion
Return on Capital Employed (ROCE) of between 11.4% and 12.6%
CO2 emissions between 19.6 million metric tons and 20.6 million metric tons
The market environment continues to be dominated by an extraordinarily high level of uncertainty. New risks may arise due to further increases in commodity prices and new sanctions against Russia, such as a natural gas embargo, or the restriction of gas supplies from Russia in response to sanctions. Other possible risks may arise from the future evolution of the coronavirus pandemic and the prolongation or implementation of new measures to contain the number of infections, in particular in China. New opportunities may also appear as a result of maintaining high profit margins.