April 27, 2023

Highlights from the BASF Earnings Call

Call Transcript

Apr. 27, 2023 6:12 AM ETBASF SE (BASFY), BFFAF

SA Transcripts

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BASF SE (OTCQX:BASFY) Q1 2023 Earnings Conference Call April 27, 2023 2:00 AM ET

Company Participants

Stefanie Wettberg – SVP, IR

Martin Brudermuller – Chairman & CEO

Hans Engel – CFO

Martin Brudermuller

Good morning, ladies and gentlemen. Hans Engel and I would like to welcome you to our analyst conference call on the first quarter 2023. 2 weeks ago, BASF released preliminary figures as we had a quite better start to the year than expected on average by analysts. Today, we will provide you with further details regarding our business development in the first 3 months of the year. Let’s start with the development of global chemical production. Based on currently available data, global chemical production stagnated in Q1 2023 compared with the prior year quarter. Compared with Q4 2022, chemical production recovered by around 2% globally, excluding seasonal effects.

From a regional perspective, chemical production grew only in China at almost 8%. However, this was due to a low baseline in Q1 2022. Chemical production declined in all other regions. The decline compared with Q1 2022 was most pronounced in Europe, followed by Asia, excluding China and North America. From the second quarter of 2022 onwards, high inflation and regulatory price levels reduced consumer demand, particularly in Europe.

Globally, demand from BASF’s key customer industry in the first quarter of 2023 was rather disappointing with 2 exemptions. Global light vehicle production grew by an expected 5.7% compared with Q1 2022. Global agriculture production also continued to grow moderately in the first quarter of 2023.

Moving on to BASF’s sales development. Sales decreased by 13.4% in Q1 2023 to around EUR 20 billion, mainly due to a decline in volume by 12.8%. All segments recorded lower volumes except for Agricultural Solutions where volumes will remain stable.

Sales prices decreased by 0.7% overall. While prices in the Chemicals, Surface Technologies and Materials segments declined, we increased prices, especially in the Agricultural Solutions segment but also in the Nutrition & Care and Industrial Solutions segment. Portfolio effects had a slightly negative impact on sales and were mainly due to the sales of the kaolin minerals business. Until the end of September 2022, this business had been part of the Performance Chemicals division. Currency effects were slightly positive and mainly related to the U.S. dollar.

Let’s move on to our earnings development by segment. The decline in BASF Group EBIT before special items largely resulted from considerably lower contribution from the Chemicals and Materials segment. In Q1 2023, these 2 segments contributed EUR 484 million to BASF Group EBIT before special items compared with EUR 1.6 billion in the prior year quarter. This decline was mainly due to considerably lower volumes and margins on the back of significantly lower demand overall.

The automotive-related business of BASF also developed well. As mentioned earlier, close light vehicle production increased by 5.7% in Q1 2023 according to IHS Markit. Volume growth was most pronounced in Europe and North America with 17% and 10%, respectively, while market in China declined by 8% due to weak demand.

In the first quarter of 2023, BASF’s sales in the automotive industry, excluding sales in precious metal trading and precious metal sales, in the mobile emissions catalyst business amounted to EUR 1.9 billion, again, an increase of 5.7%.

Matthew Yates

Just one question. Perhaps it will be a topic of conversation at the AGM later today, but I’d like to ask you about the restructuring that was announced with the full year results and the plan to reduce headcount by 2,600 jobs. I think that equates to just over 2% of your workforce. This week, I actually saw Dow announced a 2,000 headcount reduction, which is more like 5% of their workforce. So in the context of the challenges European Chemicals face to be competitive, does the Dow announcements suggest that BASF actually isn’t being radical enough in its restructuring? Your EUR 1 billion fixed cost target is not really so different to the EUR 1 billion target, and they’re obviously a much smaller company than you? So I’d appreciate any further thoughts on that.

Hans Engel

Thanks. Matthew. I think we explained our plans with respect to the restructuring that we intend to do. The EUR 1 billion is a figure that’s related to the program in itself. As always, ongoing cost reduction is part of land tackling. That’s something that you do on an ongoing basis. What we provided you with is really this restructuring package and related cost reductions that we’re expecting and the related headcount reductions. So from my perspective, I think, as mentioned, this is a program, but it is supported by a number of additional initiatives that you keep doing on an ongoing basis as an enterprise.

Markus Mayer

Two questions from my side. Firstly, again, on Q2, it’s a challenging Q2 ahead. Regarding the destocking we had in Q1, do you see that now this [indiscernible] has ended, and it’s basically the underlying demand has not yet started to recover? Or is it still going to be stocking you still see in Q2? That would be my first question.

And the second one is on the adoption of Verbund structure and will any kind of view on the timing of the plant closures. That’s all from my side.

Martin Brudermuller

Markus, the destocking, I mean, this is always difficult because you have to rely on that customer tells normally have to go into their shops and look how many pallets are in there.

As I mentioned already, I think on the chemicals raw material side, I don’t think that there’s so much as for destocking anymore into the customer industries. But I’m not so sure about the finished goods. And they have to flow also first before they are really the production. So I mean, I think in the consumer area, as I said earlier, I think it’s still a little bit above the normal average like is filled this is most probably also why it needs to really pick up again. And this is why we are a little bit cautious and have our question marks when it comes to Q2. It is not really super transparent in a moment that a little bit more prudent with my statements. What was the second?

Stefanie Wettberg

The of Ludwigshafen.

Martin Brudermuller

So I mean, I think we mentioned that basically, the last part will be in 2026, but there were some plants that are actually are down now. So CDI is down, ammonia is down, and that depends then on how you do that. But I would say the major contributions are basically down now.

https://seekingalpha.com/article/4597158-basf-se-basfy-q1-2023-earnings-call-transcript?mailingid=31297199&messageid=2800&serial=31297199.155

April 21, 2023

Urethane Sciences Partners with Sanitized AG

SANITIZED AG completes EPA registration for
BBIT in the US

Burgdorf, April 20, 2023: Swiss-based SANITIZED AG receives EPA registration for Butylbenzisothiazolinone (BBIT) offering local stock availability to support the domestic market. BBIT is a best-in-class antimicrobial that provides effective protection against microbial attack, being a solution to degradation, loss of physical properties, and unpleasant odors.

BBIT is a powerful, safe, and versatile antimicrobial that has been designed to control the growth of microorganisms in a wide range of applications. It is highly effective and extensively commercialized in various formulations, including plastic compositions such as PVC, polyurethanes, silicone, polyesters, polyolefin, acrylics, rubber, etc.

“We are thrilled to be able to supply BBIT to the US market,” said Eduardo Costa, Head of Business Unit Polymers Additives of SANITIZED AG. “Over the last years we have invested and developed infrastructure to ensure continuity supply to the growing demand in the US. Furthermore, BBIT offers a safe choice for controlling the growth of microorganisms. The EPA registration is proof of the safety and effectiveness of our product, and we are confident that it will meet the needs of customers across the country.”

Sanitized has partnered-up with Urethane Sciences to supply BBIT to the polyurethane foam industry in North America. BBIT is available for purchase through our authorized distributor Urethane Sciences, in Berlin, NJ. For more information about the product, contact them at orders@usci.net.

Urethane Sciences LLC is an innovation partner, providing research and development, technical service support, supply of chemicals, and testing capabilities for the polyurethane foam comfort space.  In our world class Berlin NJ facility, we work closely with our clients to design, create, prototype and support “top of the bed” products that create consumer value.  Our extensive experience in providing solutions to problems now includes capabilities to bring a fresh, new relationship approach to improving understanding and application knowledge to the complex anti-microbial world. www.urethanesciences.com

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April 18, 2023

Wanhua Q1 Results

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https://www.ccfgroup.com/newscenter/newsview.php?Class_ID=600000&Info_ID=2023041830002

April 18, 2023

Huntsman Opens CSR and more Hub in Costa Rica

On February 24, 2023, Huntsman held a ribbon-cutting ceremony.

“…It’s the best investment you could possibly make.” – Peter Huntsman

“We are excited to open our newest location in Costa Rica. We welcome talent, experience, and fresh ideas from employees at all stages of their careers, from interns to seasoned professionals. In return, we offer you the opportunity to become an integral part of a dynamic, industry-leading company, where safety and ethics always come first.”

“..Service-oriented jobs in accounting, human resources, purchasing, automation, continuous improvement, financial planning and analysis, treasury, credit and communications…” – Costa Rica site leader, Mauricio Gonzalez

April 16, 2023

Deindustrialization Concerns

Business deindustrialization

Covestro boss calls for master plan for Germany

As of: 12:59 a.m | Reading time: 2 minutes

High energy prices are a burden for chemical companies. Covestro boss Markus Steilemann, who is also president of the chemical industry, sees the industry as being unduly burdened. He is worried about job cuts in the manufacturing industry.

Dhe boss of the chemical company Covestro, Markus Steilemann, warns of Germany’s economic decline. “De-industrialization has already started,” Steilemann told WELT AM SONNTAG in an interview.

Steilemann, who is also President of the industry association VCI, cited the high energy prices as the main reason. “We need a master plan for Germany, and we need it urgently,” he demands. As a possible measure, Steilemann named a cheaper electricity price for industry.

Germany is still a leader in many research fields such as biotechnology. “But we are in the process of losing this lead to the USA, Great Britain and China.” The main culprits are the high energy prices, but also a real “law tsunami” with which the government is really slowing down companies.

There is no way around the government’s planned conversion to a climate-neutral future. “But instead of setting the right incentives for a country that is poor in raw materials but hungry for energy, the federal government loses itself in regulation mania,” says Steilemann.

At the same time, the industry is being unduly burdened by electricity prices, which are very high by international standards. “This puts Germany’s business model, as one of the leading export nations, at risk. There are already first signs: I’m watching with concern how massive jobs are currently being cut in Germany – and not just in the manufacturing industry,” he said.

Despite the difficult outlook this year, the CEO ruled out redundancies for Covestro: “Since we have made long-term provisions, we don’t need any quick-fix measures. I have made it clear that we will rule out redundancies for operational reasons, and that’s how it’s going to stay.”