Investing.com -- Shares of BASF (BU:BASF) traded lower on Monday as the company's preliminary 2024 figures posted a sharp decline in earnings due to impairments and restructuring costs.
According to the company's statement, EBIT for 2024 is expected to reach €2 billion, a stark drop compared to the analyst consensus of €3.2 billion and the 2023 figure of €2.2 billion.
The deviation from expectations is attributed mainly to non-cash impairments, particularly in the battery materials segment under Surface Technologies, and extensive restructuring measures across all segments.
The impairments, amounting to €1.9 billion in special items, reflect ongoing challenges in adapting to market conditions.
Despite higher volumes in core businesses and some recovery in sales prices, these gains were insufficient to offset the costs and reduced earnings momentum, especially in the Chemicals segment during the fourth quarter of 2024.
However, the Agricultural Solutions segment managed to achieve a notable increase in its contribution compared to the previous year.
Sales for the year are projected at €65.3 billion, down from €68.9 billion in 2023, driven by price declines and adverse currency effects, despite a slight increase in volumes.
The German chemical company’s free cash flow is expected to be €0.7 billion, beating both analyst estimates and BASF’s forecasts. Still, this represents a drop from €2.7 billion in 2023.
Net income for 2024 remains uncertain due to pending contributions from an at-equity participation.
“BASF expects that the analyst consensus of €2.2 billion will not be achieved. However, the net income of €225 million for 2023 will be significantly exceeded,” the company said in a statement late on Friday.