GuruFocus -
- Sales: EUR15.7 billion, matching the prior-year quarter.
- Volume Growth: Increased by 7% excluding precious and base metals.
- Currency Impact: Sales growth dampened by 3% due to currency headwinds.
- EBITDA Before Special Items: EUR1.6 billion, a 5% improvement.
- EBITDA Margin Before Special Items: Increased from 9.8% to 10.3%.
- EBIT Before Special Items: EUR635 million, a 10% increase.
- Net Income: EUR287 million, compared to minus EUR249 million in Q3 2023.
- Cash Flows from Operating Activities: Decreased by EUR633 million to EUR2.1 billion.
- Free Cash Flow: EUR569 million, down from EUR1.5 billion in Q3 2023.
- Total Assets: EUR79.4 billion, a decrease of EUR3.2 billion.
- Net Debt: Increased to EUR19.7 billion from EUR18.9 billion.
- Equity Ratio: 45.4% at the end of September 2024.
- Cost Savings Program: Achieved a cost reduction run rate of around EUR800 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BASF SE (ETR:BASFN) (BASFY) reported a 5% increase in EBITDA before special items, reaching EUR 1.6 billion, driven by higher volumes and margins in core businesses.
- The Chemicals segment saw strong volume growth and increased specific margins, particularly in the Petrochemicals division.
- The Materials segment benefited from higher volumes and significant margin increases, especially in the Monomers division.
- The Industrial Solutions segment achieved significant volume growth and improved margins, particularly in the fuel and lubricants, coatings, and semiconductor industries.
- The Agricultural Solutions segment achieved strong volume growth in fungicides, seeds, traits, and insecticides, despite challenges in specific margins.
- Currency headwinds, particularly from the Argentinian peso and Brazilian Real, dampened sales growth by 3%.
- The Surface Technologies segment experienced a decline in EBITDA before special items due to lower volumes in the Catalysts division.
- Global automotive production declined by more than 5% in Q3, negatively impacting the Surface Technologies segment.
- The Agricultural Solutions segment faced lower specific margins due to lower prices in South America and a positive one-time effect in the prior-year quarter.
- Cash flows from operating activities decreased by EUR 633 million to EUR 2.1 billion, mainly due to lower cash inflows from changes in net working capital.
A: Dirk Elvermann, CFO, explained that despite typical Q4 volatility, BASF expects to reach the low end of their guidance range. The company has seen progress in cost improvement programs and stable volumes, with some uncertainty due to customer inventory management and presales in the agricultural business. The impact of the Nutrition & Health division's force majeure is also a factor, but overall, they anticipate maintaining momentum.
Q: How does the shift in automotive production from the US and Europe to China affect BASF's coatings and polyamide businesses?
A: Markus Kamieth, Member of the Board of Executive Directors, stated that regional shifts in automotive production are not a major concern for BASF due to their global presence and assets in all major production areas. The overall production volume trajectory is more concerning, as Q3 momentum was not favorable, and Q4 is expected to be challenging.
Q: What is the impact of increased fixed costs from the new site in China on the chemicals division?
A: Dirk Elvermann noted that the new site in China has already started to impact fixed costs, with a low triple-digit million euro burden expected for 2024. For 2025, the impact is anticipated to be around EUR100 million per quarter, mainly affecting the chemicals division.
Q: Can you provide more details on the strong unit margins in the monomer segment within materials?
A: Markus Kamieth highlighted that margin expansion in Q3 was seen in the ammonia value chain and the PA66 and PA6 value chains within the monomers division. These areas contributed to the positive margin trend, although sustainability of these margins in a cyclical business is uncertain.
Q: How is BASF positioned regarding potential tariff policy changes between the US and China?
A: Markus Kamieth explained that BASF's strategy of having assets in major markets minimizes exposure to tariff changes. While BASF is robust against such changes, the broader concern is that increased tariffs could slow global economic growth, which would be challenging for the industry.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.