BASF Earnings: Management Slashes 2023 Guidance in Anticipation of Suppressed Demand

BASF’s second-quarter results reflected depressed demand across end markets with total revenue declining 25% year over year and 13% sequentially. The firmwide adjusted EBITDA margin contracted to 6% due to reduced product pricing and lower fixed cost absorption, which we expect will continue to weigh on profitability through year-end. Management indicated customer inventories of commodity chemicals have depleted enough to spur modest demand recovery in the second half, but demand for more specialized products (such as consumer goods) will likely remain depressed through year-end. We’ll incorporate the firm’s full financial and operating results shortly, but after this first look, we maintain our narrow moat rating and EUR 65 ($18) fair value estimate.