For 2017, we expect the global economy and chemical production to grow at around the same pace as 2016. We assume an average price of $55 for a barrel of Brent blend crude oil and an exchange rate of $1.05 per euro. In an environment that remains volatile, we aim to grow profitably and considerably raise the BASF Group’s sales. For income from operations (EBIT) before special items as well as for EBIT, we anticipate a slight increase compared with the previous year.1
Sales and earnings forecast for the BASF Group
- Considerable sales growth through increases in all segments
- Slightly higher EBIT before special items
We expect BASF Group sales to grow considerably in the 2017 business year. This will be supported by slightly higher sales in the Performance Products segment and by considerable increases in the other segments as well as in Other.
We want to slightly raise EBIT before special items compared with 2016. We anticipate considerably higher contributions from the Oil & Gas segment and from Other. In the Performance Products, Functional Materials & Solutions and Agricultural Solutions segments, we assume EBIT before special items will be slightly higher, while the contribution from the Chemicals segment will match the prior-year level.
BASF Group EBIT is also expected to grow slightly in 2017. A significantly higher contribution from the Oil & Gas segment and slight increases in the Chemicals, Performance Products and Agricultural Solutions segments are expected to more than offset the slight declines in the Functional Materials & Solutions segment and in Other. In 2016, EBIT of the Functional Materials & Solutions segment contained special income from divestitures, and EBIT of Other included special income from the sale of assets.
We are likely to once again earn a significant premium on our cost of capital in 2017; compared with the previous year, however, BASF Group EBIT after cost of capital will decrease considerably. The slight rise in EBIT – despite a lower level of special income from divestitures – will be contrasted by higher cost of capital, due for the most part to the acquisition of Chemetall at the end of 2016 as well as the startup of new plants. In the Functional Materials & Solutions segment, we are therefore assuming that EBIT after cost of capital will decline considerably. We aim to boost it slightly in the Chemicals segment and considerably in the other segments.
The signiﬁcant risks and opportunities that could affect our forecast are described in the Opportunities and Risks Report.
1 With reference to sales, “slight” represents a change of 1–5%, while “considerable” applies to changes of 6% and higher. “At prior-year level” indicates no change (+/–0%). For earnings, “slight” means a change of 1–10%, while “considerable” is used for changes of 11% and higher. “At prior-year level” indicates no change (+/–0 %).