Supply constraints and tight global logistics? BASF, Dow, and LG Chem's third quarter earnings report

BASF

Sales of 19.7 billion euros; EBIT of approximately 1.8 billion euros

BASF (BASF) yesterday disclosed its results for the third quarter of this year: sales of 19.7 billion euros, an increase of 5.9 billion euros over the same period last year, an increase of 42%. Operating profit before interest and taxes (EBIT) is approximately 1.8 billion euros, which is much higher than the -2.6 billion euros reported in the same period last year. This is largely due to the income contribution of Yangzi Petrochemical-BASF. Net income was 1.3 billion euros, an increase of 3.4 billion euros over the same period last year.

The BASF Group stated that the global economy will continue to recover in the third quarter of 2021. Due to supply constraints in many value chains of the manufacturing industry, the growth momentum has slowed compared to the previous quarter. Asian production and logistics have exacerbated the scarcity of global raw materials. The global automotive industry is affected by the shortage of chips, which has led to a sharp decline in production.

In addition, the curtailment of electricity in some provinces in China has a certain negative impact on production, especially for energy-intensive enterprises. Although rising energy prices have burdened companies and customers, global demand for consumer products has remained stable.

BASF looks forward to the full-year performance of 2021: sales will increase to 76 billion to 78 billion euros, and EBIT excluding special items will increase to 7.5 billion to 8 billion euros.

Dow

Net sales of $14.8 billion, a year-on-year increase of 53%

The financial report for the third quarter of 2021 released by Dow Corporation (DOW) is as follows:

Net sales were US$14.8 billion, a year-on-year increase of 53% and a month-on-month increase of 7%. All operating segments and regions achieved growth.

Local prices increased by 50% year-on-year and 5% month-on-month. GAAP net income was $1.7 billion. Operating profit before interest and taxes (EBIT) was US$2.9 billion, a year-on-year increase of more than US$2.1 billion.

Dow said that sales increased by 2% year-on-year, mainly driven by the packaging and specialty plastics, functional materials and coatings two major operating sectors. At the same time, sales volume increased by 2% month-on-month, reflecting the continued economic recovery and the continued strong end market basic demand. However, tight supply and global logistics restrictions partially offset these positive factors.

Mr. Jim Fitterling, CEO of Dow, said that Dow’s sales and profits have both achieved chain and year-on-year growth. Relying on flexibility in global layout and raw materials, as well as structural cost advantages. The terminal market demand will continue to remain strong and is expected to continue until 2022. Dow will continue to seize the strong demand and price trends in the terminal market to achieve growth in operating segments and regional sales.

At the same time, Dow said that there are still restrictions on logistics in the near future, and the entire value chain maintains low inventory levels. In the future, Dow will seize the growth in demand for circular economy products and low-carbon to zero-carbon emission products; promote productivity actions and continue to achieve its key financial goals. "

LG Chem

Sales of 9.16 billion US dollars, a year-on-year increase of 41.4%

LG Chem announced its third-quarter 2021 results on October 25: sales of 9.16 billion US dollars, a year-on-year increase of 41.4%. Operating profit was US$630 million, a year-on-year decrease of 19.6%.

The three major business segments that contributed the most to the performance were LG Chem’s petrochemicals (sales of US$4.86 billion, operating profit of US$940 million), cutting-edge materials (sales of US$1 billion, operating profit of US$40 million) and life sciences (sales 150 million U.S. dollars, operating profit 10 million U.S. dollars).

LG Chem’s CFO Che Dong Suk said, “Despite the unclear internal and external situation, the company’s continued growth in sales and strong profitability remain unchanged.” He also emphasized: “LG Chem will focus on the development of environmentally sustainable businesses and further expand batteries. Materials business, strengthen the clinical investment in new drug research and development, and become a sustainable enterprise."

Celanese

Sales of 2.266 billion US dollars, a record high

On October 22, Celanese announced that its third-quarter net sales reached a record $2.266 billion, with consecutive pricing and sales growth of 3% and 1%, respectively. The adjusted profit before interest and tax was US$648 million, and the net profit was US$507 million.

Celanese’s engineering materials, one of Celanese’s three major business segments, has increased its pricing by 3% and created sales of US$684 million in the quarter. Due to limited procurement and semiconductor shortages, global automotive manufacturing volumes have further declined, and engineering materials sales This is a decrease of 2% from the previous quarter. The net sales of Acetyl Chain reached US$1.5 billion, a record high, an increase of 6% over the previous quarter. The adjusted profit before interest and taxes was US$517 million. Acetate tow generated net sales of US$128 million and adjusted profit before interest and taxes of US$46 million.

The company said that the engineering materials, acetyl chain, and acetate tow business segments are all subject to "increasingly severe" procurement and logistics restrictions. It is expected that in the fourth quarter, most end markets will still have strong demand for the company's products.