Outlook

In the first three quarters of 2015, growth in the global economy, global industrial production and the chemical industry remained considerably below our expectations. The economic environment clouded over in important emerging markets, especially in China.

For the 2015 business year, we now expect a more challenging economic environment than had been anticipated in the middle of the year. In addition to weaker economic development and the lower price of oil, the divestitures concluded in the third quarter of 2015 will put a strain on sales and earnings development. We are therefore adjusting our outlook for 2015. We now expect a slight decrease in sales and income from operations before special items.

Opportunities and Risks

  • Opportunities and risks to be found in overall economic development as well as in exchange rate and margin volatility

In 2015, opportunities may arise for us from a revival of the global economy and from the development of key customer industries, as well as through exchange rate volatility and margin improvements.

We also see opportunities in the implementation of our “We create chemistry” strategy and in further improving our operational excellence, as well as strengthening research and development. We will continue to concentrate on expanding our business in growth markets as well as on innovations, portfolio optimization, restructuring and increasing efficiency. For example, our excellence program, STEP, serves to strengthen our competitiveness and profitability. Starting at the end of 2015, STEP is expected to contribute around €1.3 billion to earnings each year. STEP comprises over 100 individual projects and is running right on schedule.

Yet there are also risks to the development of our business. These include an economic slowdown in China and uncertainty as to growth in Europe. Risks also lurk in exchange rate and margin volatility as well as in the development of our key customer industries.

The statements on opportunities and risks made in the BASF Report 2014 remain valid.

More detailed information can be found in the BASF Report 2014, in the Opportunities and Risks Report

Forecast

  • Slight decrease expected in sales and income from operations before special items

We have further reduced our expectations for the global economy in 2015 (previous forecast in parentheses):

  • Gross domestic product growth: 2.3% (2.4%)
  • Growth in industrial production: 2.0% (2.9%)
  • Growth in chemical production: 3.5% (3.8%)
  • An average euro/dollar exchange rate of $1.12 per euro ($1.15 per euro)
  • An average oil price for the year of $55 per barrel ($60 to $70 per barrel)

It is unlikely that the BASF Group will achieve the slight sales growth forecast for 2015. We now expect sales to decline slightly. This assumption is based on the divestiture of the gas trading and storage business concluded in the third quarter of 2015 as well as on the lower price of oil. Our continued aim is to raise our sales volumes, excluding the effects of acquisitions and divestitures.

Contrary to expectations, income from operations before special items in 2015 will probably not match the previous year’s level and will instead see a slight decrease. We continue to anticipate larger contributions from our chemicals business, whereas earnings in the Oil & Gas segment will decrease considerably. In the crop protection business, the difficult market environment will likely result in earnings that, against expectations, come in slightly below the level of 2014. We still foresee a slight decline in income from operations for the BASF Group. In 2014, higher levels of special income arose primarily from the disposal of our 50% share in Styrolution Holding GmbH. As a result, there is likely to be a considerable decline in EBIT after cost of capital.