BASF SE (BASFY) Q4 2024 Earnings Call Transcript

Feb. 28, 2025 8:46 AM ETBASF SE (BASFY) Stock, BFFAF StockBASFY, BFFAF

BASF SE (OTCQX:BASFY) Q4 2024 Earnings Conference Call February 28, 2025 3:30 AM ET

Company Participants

Stefanie Wettberg – Senior Vice President, Investor Relations
Markus Kamieth – Chief Executive Officer
Dirk Elvermann – Chief Financial Officer

Markus Kamieth

Yes. Thank you, Stefanie. Good morning, everyone. Welcome to our first conference call in 2025. In a challenging market environment, BASF has performed well, thanks to the strong performance of our core businesses, where we leveraged our strong market positions to grow EBITDA before special items by 18% compared with 2023. Overall, EBITDA before special items of BASF Group increased by 2%.

Lower-than-projected capital expenditures and our continued strong focus on net working capital led to a free cash flow of around €750 million, exceeding our forecast range of €100 million to €600 million. We are also making good progress in terms of portfolio management. The signing of the agreement to sell BASF’s Decorative Paints business to Sherwin-Williams marks an important step in unlocking the value of our standalone businesses.

So let’s begin with an overview of BASF’s performance in the fourth quarter. The €15.9 billion sales matched the level of prior year quarter. Volumes of BASF Group, excluding precious and base metals increased by 3%, thanks to the Agriculture Solutions segment in particular. The Chemicals & Industrial Solutions segment also increased volumes in the last quarter of the year. Prices excluding precious and base metals were slightly positive. Overall prices steadily recovered throughout 2024 compared with the respective quarter of the previous year.

Currency headwinds slightly dampened sales growth and were mainly related to the Brazilian real.

In an overall stable market environment, the Materials segment recorded slightly lower volumes in both divisions. In the Monomers division, volumes declined particularly in the PA6.6 and PA6, while in the Performance Materials division, volumes decreased mainly in engineering plastics. Specific margins improved in both divisions with the highest contribution from the MDI value chain.

Nonetheless, EBITDA before special items in the Materials segment declined slightly. Higher earnings in the Monomers division could not fully compensate for lower earnings in the Performance Materials division.

Thomas Wrigglesworth

Thanks very much, Stefanie. Good morning everybody and thank you for the presentation. Two questions, if I may. Firstly, can you talk a little bit about the kind of China recovery story that you’ve been talking to in 2024? Clearly, the latest data point in chemicals at a headline level looks a bit weaker in the fourth quarter. And then on the other side, we’ve also had some of your peers talk more positively about MDI in China as well.

So keen to get your thoughts on how China is progressing? And the second question is, any comments on kind of near-term trading and how you’re thinking about 1Q noting that obviously the Ag Solutions business is very important to that first quarter performance? Thank you.

Markus Kamieth

Yes. Thanks, Tom. Markus here. I will take the first question, and I’ll hand over for current trading to Dirk. On China, your observation is correct. We were also based on — or after a rather solid and good development in the third quarter, a little bit disappointed on the dynamics, business dynamics overall in China in the fourth quarter. Towards November-December, we saw some cooling off also on the volume side and in particular, the upstream markets have cooled off in the last weeks of the year. So that dynamic was clearly there.

Overall, I have to say the year 2024 for us in China was a good one. We had volume growth in overall, if you discount the precious metal related businesses, if you look at the chemicals businesses, so to say, of roughly 5% in 2024, which is roughly in line with market also in China. So volumes overall in China were not the biggest challenge. The biggest challenge remain low margins because everything is long, and in the fourth quarter, it was a bit compounded overall because the year-end finished rather weak on the volume side.

You asked about MDI. I don’t want to now specifically get into individual products and pricing dynamics. But overall, I would say, our feeling is that across the board, I don’t want to call it a good pricing environment in China because, as I said everything stays long, but the first attempts to raise prices now in certain commodity areas are successful.

And I think overall, the start of the year is giving us some indications that also the volume growth holds up. So overall dynamics towards the end of the year were not favorable, but overall, China stays on track. Dirk?

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