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BASF surprises with strong fourth-quarter results

The German chemical producer’s sales and earnings beat analyst estimates

by Alexander H. Tullo
January 20, 2021

A photo of a building at BASF's headquarters.
Credit: BASF
BASF's building D-105 in Ludwigshafen, Germany

Providing an early indication of what financial results will look like when chemical companies report 2020 earnings in the coming weeks, BASF, the world’s largest chemical maker, has released promising preliminary figures for a year overshadowed by the COVID-19 pandemic.

The German firm reported sales of $19.3 billion for the fourth quarter of 2020, an increase of 8.3% over the same quarter in 2019 and better than stock analysts had expected. Earnings before taxes and special items increased a whopping 32.2% over the prior-year quarter to $1.3 billion, also outperforming analyst estimates.

The strong end to the year, however, wasn’t enough to offset difficult second and third quarters. For the full year, BASF posted $71.6 billion in sales, a decline of $200 million versus 2019, slightly beating analyst consensus. And earnings for the year sunk considerably, dropping 23.3% to $4.3 billion. Analysts had forecast $4.0 billion.

BASF’s announcement was light on commentary, which will have to wait until the firm unveils final figures on Feb. 26. However, the company noted earnings strength in its materials, chemicals, and industrial solutions businesses during the quarter, while agriculture was its weakest performer. For the full year, earnings in nearly all of the firm’s segments slumped.

In a note to clients, Jefferies stock analyst Laurence Alexander says he expects agricultural results to improve in 2021 and to see “tailwinds” in industrial and automotive markets. “Our base case is that momentum and pricing power improve” in the first half of 2021, he wrote.


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