BASF SE (BASFY) Q3 2024 Earnings Call Transcript

Oct. 30, 2024 11:33 AM ETBASF SE (BASFY) Stock, BFFAF Stock

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BASF SE (OTCQX:BASFY) Q3 2024 Earnings Conference Call October 30, 2024 8:00 AM ET

Company Participants

Stefanie Wettberg – SVP of IR
Markus Kamieth – CEO & Chairman of the Board of Executive Directors
Dirk Elvermann – Member of the Board of Executive Directors, CFO & Chief Digital Officer

Markus Kamieth

Good morning, everyone. Welcome to our Analyst Conference Call. Today, Dirk and I will provide you with details on our business development in the third quarter. It’s roughly one month since we presented BASF’s new strategy at our Capital Markets Day. Thanks again to those of you who were able to attend either in person or virtually. And overall, we all have the impression that our key messages were understood and also in general well received.

Let’s now start with an overview of BASF’s performance in Q3. With €15.7 billion, sales matched the level of the prior-year quarter. Volumes of BASF Group excluding precious and base metals increased by 7%. All segments achieved volume growth, with the exception of Surface Technologies. Here, volumes in the Catalysts division declined, while the Coatings division recorded higher volumes. Prices were slightly positive, excluding precious and base metals. The pressure on sales prices thus continued to ease. Currency headwinds dampened sales growth by 3%. Negative currency effects were mainly related to the Argentine Peso and the Brazilian Real.

EBITDA before special items improved by 5% and came in at €1.6 billion. The positive earnings momentum in our core businesses, which was already visible in the first half of 2024, continued in the third quarter, driven by higher volumes and higher margins. Considerably higher earnings in BASF’s core businesses more than offset lower contributions from the standalone businesses in Q3 2024.

Here you can see a snapshot of how the markets and our segments’ volumes and specific margins developed in the third quarter. In a slightly improving market environment for base chemicals, we achieved strong volume growth in the Chemicals segment. The Petrochemicals division increased specific margins, while margins in the Intermediates division remained stable. EBITDA before special items in the Chemicals segment increased considerably compared with the prior-year quarter. In an overall stable market environment, the Materials segment benefited from slightly higher volumes, particularly in the MDI, propylene oxide and ammonia value chains. The considerable increase in specific margins was largely driven by a few product lines in the Monomers division and led to a significant increase in the segment’s EBITDA before special items.

Chetan Udeshi

Yeah. Thank you. Morning all. I just wanted to follow up on the question on Q4 guidance because I’m sorry, but I really don’t understand why you expect Q4 to be better than Q3. So let’s try other way around. Can you maybe give us a bit more color by segments where you actually think Q3 will be better than — Q4 will be better than Q3 in terms of EBITDA, as you seem to suggest in your group guidance? And the second question I had was on Activision [ph]. Clearly the volumes are coming back very, very strongly, but I go back to the question I had asked on CMD as well. I’m just surprised that there is typically what we see with companies or specialty chemical companies where R&D spending is high. You usually have Euro based pricing. So when FX moves a lot against you sort of try to pass it on to your customers because you’ve got that differentiated products. But here in Ag chemicals business, what we see is the FX impact is very, very big and on top the price is also down. I mean, that just seems very unlike a specialty business. So, just any thoughts around that?

Markus Kamieth

Yeah, Chetan your question, I mean, I would not go now into individual segment guidances on Q4. In general, let me give you maybe some thoughts on this. I mean, what we see and you have seen this now throughout Q2-Q3, the overall earnings momentum in our chemicals businesses, so what we now call core businesses is actually quite favorable compared to last year. And we are seeing both volume growth in almost all divisions and margin expansion. The trend that certainly in Q4 will be more challenging is the volume picture in this area, but the margin is actually holding up quite well because when you look at raw material markets, most of them are actually walking sideways or actually receding. So the margin picture is actually quite positive and we are expecting also this momentum in most divisions to carry forward. So we are quite optimistic that despite, of course, always yearend challenges in buying behavior of customers, we can see a continued good momentum, especially margin wise in the chemicals businesses. And then Dirk has already alluded to some of the effects that we will also see in our P&L coming in the fourth quarter. And so, in our books, the 8 billion lower end of the guidance is achievable. We’re confident that we will be there at the end of the year.

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