BASF Cuts Earnings Guidance Due to Weak Industrial Demand Amid Pandemic

BASF, the German chemical company, announced on Tuesday that it is cutting its 2023 earnings guidance due to weak industrial demand caused by the ongoing COVID-19 pandemic. The company now expects earnings before interest and taxes (EBIT) to be between 6.7 billion and 7.3 billion euros ($7.9 billion to $8.6 billion) in 2023, down from its previous guidance of 7.5 billion to 8.5 billion euros.

The company also announced that it will be taking a non-cash impairment charge of around 2.8 billion euros ($3.3 billion) in the second quarter of 2021, mainly related to its upstream oil and gas assets. BASF stated that the impairment charge was necessary due to the ongoing low oil and gas prices and weak demand caused by the pandemic.

BASF CEO, Martin Brudermüller, stated that the pandemic is continuing to have a significant impact on the company's business, particularly in industries like automotive and aviation, which have been hit hard by the pandemic. He also noted that the company is facing increasing competition from China and other Asian countries, which are investing heavily in their own chemical industries.

BASF's announcement comes as other chemical companies are also facing challenges due to the pandemic. Dow Chemical, for example, recently announced that it is increasing its prices for polyethylene and other resins due to tight supply and high demand caused by the pandemic.

Despite these challenges, BASF stated that it remains committed to its long-term growth strategy, which includes a focus on sustainability and digitalization. The company is investing in new technologies and processes to reduce its carbon footprint and improve its efficiency, and is also exploring new business models and partnerships to drive growth.

Overall, while BASF and other chemical companies are facing significant challenges due to the ongoing pandemic, they are also looking for opportunities to innovate and grow in the long term. The industry will need to continue to adapt and evolve to stay competitive in a rapidly changing global market.