By Ed Frankl

 

BASF SE on Wednesday raised its 2021 guidance after it said it generated strong sales growth in the third quarter, despite flagging enduring supply-chain constraints.

The German chemicals conglomerate said that despite supply bottlenecks, it anticipates continuing solid demand, expecting full-year sales to grow to between EUR76 billion and EUR78 billion, from EUR74 billion to EUR77 billion under previous guidance issued in the summer.

The Ludwigshafen-based company posted revenue of EUR19.67 billion in the three months to the end of September, a 42% jump on-year and above analysts' expectations of EUR17.83 billion according to estimates provided by the company.

"Sales growth was due mainly to significantly higher prices resulting from strong demand alongside, low product availability and increased prices for raw materials," BASF said.

Demand remained solid during the summer months and, compared with 3Q 2020, the company increased prices by 36% and volumes by 6%, BASF said.

"The basic demand from the consumer side is good," Chief Executive Martin Brudermueller told a press conference, adding that there are no signs that customers are ordering less, he said.

But growth momentum slowed compared with the second quarter of 2021 because of supply-chain issues, which the company assumes will continue to hurt the global economic recovery in the fourth quarter, BASF said. Hurricanes in the U.S. and raw-material shortages negatively impacted product market availability, the company added.

The company's automotive business was especially affected by continuing chip shortages, it said, and BASF flagged power cuts in China as having a negative impact on production.

Pandemic-related disruptions in production and logistics in Asia intensified the scarcity of precursors world-wide, it added.

In its bottom line, BASF swung to a net profit of 1.25 billion euros ($1.45 billion) for the third quarter, compared with a net loss of EUR2.12 billion a year earlier that was heavily impacted by the coronavirus pandemic.

Earnings before interest and taxes before special items came in at EUR1.87 billion, around EUR1.28 billion higher year-on-year, mainly due to its chemicals segment, BASF said.

Increases in earnings at the company's materials and industrial solutions businesses also boosted profits. But its agricultural solutions, automotive-centric surface technologies unit and nutrition & care business declined considerably.

That earnings mix was comparable with the second quarter, Mr. Brudermueller said.

"Our downstream businesses are still confronted with further rising raw material, energy and freight costs. Price increases in most downstream businesses could only partially offset these higher costs," he said.

However, the company upgraded its guidance for 2021 EBIT before special items to between EUR7.5 billion and EUR8.0 billion, from EUR7.0 billion to EUR7.5 billion beforehand.

The company also now sees full-year return on capital employed of 13.2%-14.1%, from between 12.1% and 12.9% before, and an increase in its accelerator business sales to between EUR21.5 billion and EUR22.5 billion, from EUR21.0 billion-EUR22.0 billion previously.

 

Olaf Ridder contributed to this article

 

Write to Ed Frankl at edward.frankl@dowjones.com

 

(END) Dow Jones Newswires

October 27, 2021 06:49 ET (10:49 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
BASF (QX) (USOTC:BASFY)
Historical Stock Chart
From Oct 2021 to Nov 2021 Click Here for more BASF (QX) Charts.
BASF (QX) (USOTC:BASFY)
Historical Stock Chart
From Nov 2020 to Nov 2021 Click Here for more BASF (QX) Charts.