BASF has tough 2018, brands 2019 as 'transitional year'

Ludwigshafen, Germany – BASF increased sales in its chemicals segment by EUR 170m, taking the total to EUR 16.5bn. However, EBITDA fell by 9% in the segment to EUR 4.4bn in 2018.

Across the business, BASF had a tough year in 2018. Sales rose by 3,3%, but EBITDA fell by almost 15% and the ratio of earnings to sales shrank compared with 2017. In 2018, sales were EUR 62.7 bn. This compares with EUR 61.2 bn in 2017.

Group EBITDA in 2018 was EUR 9.2 bn. BASF has restated the 2017 results to remove the oil and gas business, which is being sold.

CEO Martin Brudermuller said: 'We are tackling these challenges. With our new corporate strategy, we will use 2019 as a transitional year to emerge even stronger. This year, we are adapting our structures and processes, and focusing our organisation clearly on the needs of our customers.'

BASF is restructuring, and made a number of changes from 1 January 2019. These include taking the monomers division out of the chemicals segment, and adding it to a new materials segment, along with the performance materials division of the functional materials and solutions segment.

Propylene oxide and propylene glycol businesses joined the monomers division at the start of 2018. Before the move, they were parts of the petrochemicals division.

The new materials segment includes diisocyanates and polyamides, as well as basic inorganic products. Specialities for plastics and plastics processing across a number of industries are also included.

BASF said that 2018 sales in the Monomers Division were down 7%. They reached EUR 6.46bn this as a result of 'lower margins and volumes in the isocyanates business'.

The company added that there was a 'considerable year-on-year decline' in EBIT in the monomers division between 2017 and 2018. The company attributes this, at least in part, to diisocyanate prices falling in the second half of the year.

In the functional materials & solutions segment, which housed systems and applications for polyurethane to the end of 2018,  sales grew by 3.3% EUR 21.4 bn.

EBITDA before special items was down 14.8% to EUR 1.9bn, as volumes and prices fell in the segment. Currency effects helped to mitigate some of these falls.