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(Bloomberg) — BASF SE reported stronger-than-expected earnings in the first quarter while warning that the Middle East conflict makes the outlook for the rest of the year increasingly uncertain.
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The German chemicals maker said earnings before interest and tax were €2.4 billion ($2.8 billion) in the period, exceeding an average estimate of €2.2 billion in a Bloomberg survey of analysts. Currency headwinds of more than €100 million weighed on the results, it added.
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It stuck to its 2026 guidance but cautioned that its assumptions about global growth and expansion in industrial and chemicals production may prove too optimistic.
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“Given the rapidly changing situation – especially with regard to energy and raw material prices as well as potential disruptions to global supply chains – it is currently impossible to reliably quantify or assess the resulting effects,” the company said.
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Ludwigshafen-based BASF is navigating a prolonged downturn in the global chemicals sector it dominates along with rivals like state-owned China Petroleum & Chemical Corp. and Dow Inc. of the US.
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Already grappling with overcapacity, weak demand and high energy costs, the US-Israeli war on Iran has added a further layer of uncertainty for companies and raised concerns about supply-chain disruptions and a new spike in input prices.
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BASF has responded with price hikes. The latest came on Monday when it said it was adding an additional 25% to the cost of plastic-protecting chemicals commonly used in the car and consumer-goods industries.
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In the first quarter, sales declined in all regions compared to the prior year except for Asia Pacific, with China growing by 20.7%, BASF said.
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The company opened its Chinese Verbund site in Zhanjiang last month as it shifts production to the market that makes up the biggest share of global chemicals demand.
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“While plants in Ludwigshafen are being shut down as the industrial customer base in Europe shrinks, tomorrow’s production capacity is being built in China,” said Vanda Rothacker, senior ESG strategist at Union Investment, a BASF investor. “BASF is downsizing in Europe to position itself for growth in Asia.”
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Analysts largely agree on the importance of the Chinese market but some see it as a potentially risky bet given the current geopolitical volatility.
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(Updates with investor comment in 10th paragraph.)
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English (US)