BASF raises annual profit forecast after price increases amid the war with Iran

BASF raises its forecast amid rising prices

The German chemical group BASF on Wednesday, October 28, raised its forecast for underlying profit for the current year to €7.4–7.8 billion ($8.2–8.7 billion), up from the previously expected €6.9–7.7 billion. This was reported by euronews. The improvement was driven by price increases: in March, the company raised prices on a number of products by up to 30% in response to a sharp rise in energy and raw material costs amid the American-Israeli war against Iran.

Third-quarter results

BASF's underlying profit for the third quarter rose 15% compared with the same period last year, reaching €1.6 billion. Sales increased by 14% to €16.4 billion. In its statement, the company attributed the growth primarily to higher prices (+12%) and only a slight increase in volumes (+2%). In other words, the improvement in performance was mainly achieved by passing on increased costs into selling prices, rather than by expanding production.

Context: pressure on the European chemical industry

The release of the results coincided with a period of serious pressure on the European chemical industry due to high energy prices and growing competition from Asian producers. According to euronews, BASF is carrying out a large-scale restructuring, cutting thousands of jobs at its historic Ludwigshafen site, after opening a major chemical complex in China earlier this year to serve Asian markets. The company is also exploring the possibility of a multibillion-dollar acquisition of the German competitor Evonik, believing that a merger would allow it to obtain raw material components and basic chemicals at a lower cost.