Basf SE (BASFY) Q3 2024 Earnings Call Highlights: Strong Volume Growth Amid Currency Challenges

GuruFocus News
4 min read

In This Article:

  • Sales: EUR15.7 billion, matching the prior-year quarter.

  • Volume Growth: Increased by 7% excluding precious and base metals.

  • Currency Impact: Sales growth dampened by 3% due to currency headwinds.

  • EBITDA Before Special Items: EUR1.6 billion, a 5% improvement.

  • EBITDA Margin Before Special Items: Increased from 9.8% to 10.3%.

  • EBIT Before Special Items: EUR635 million, a 10% increase.

  • Net Income: EUR287 million, compared to minus EUR249 million in Q3 2023.

  • Cash Flows from Operating Activities: Decreased by EUR633 million to EUR2.1 billion.

  • Free Cash Flow: EUR569 million, down from EUR1.5 billion in Q3 2023.

  • Total Assets: EUR79.4 billion, a decrease of EUR3.2 billion.

  • Net Debt: Increased to EUR19.7 billion from EUR18.9 billion.

  • Equity Ratio: 45.4% at the end of September 2024.

  • Cost Savings Program: Achieved a cost reduction run rate of around EUR800 million.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • BASF SE (BASFY) reported a 5% increase in EBITDA before special items, reaching EUR 1.6 billion, driven by higher volumes and margins in core businesses.

  • The Chemicals segment saw strong volume growth and increased specific margins, particularly in the Petrochemicals division.

  • The Materials segment benefited from higher volumes and significant margin increases, especially in the Monomers division.

  • The Industrial Solutions segment achieved significant volume growth and improved margins, particularly in the fuel and lubricants, coatings, and semiconductor industries.

  • The Agricultural Solutions segment achieved strong volume growth in fungicides, seeds, traits, and insecticides, despite challenges in specific margins.

Negative Points

  • Currency headwinds, particularly from the Argentinian peso and Brazilian Real, dampened sales growth by 3%.

  • The Surface Technologies segment experienced a decline in EBITDA before special items due to lower volumes in the Catalysts division.

  • Global automotive production declined by more than 5% in Q3, negatively impacting the Surface Technologies segment.

  • The Agricultural Solutions segment faced lower specific margins due to lower prices in South America and a positive one-time effect in the prior-year quarter.

  • Cash flows from operating activities decreased by EUR 633 million to EUR 2.1 billion, mainly due to lower cash inflows from changes in net working capital.

Q & A Highlights

Q: Can you explain the counter-seasonal performance expected for Q4, given the usual seasonality trends? A: Dirk Elvermann, CFO, explained that despite typical Q4 volatility, BASF expects to reach the low end of their guidance range. The company has seen progress in cost improvement programs and stable volumes, with some uncertainty due to customer inventory management and presales in the agricultural business. The impact of the Nutrition & Health division's force majeure is also a factor, but overall, they anticipate maintaining momentum.

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