Outlook

For 2016, we anticipate a continuation of the currently challenging conditions along with substantial risks. Whereas economic risks are increasing in Europe especially, developments in China have been somewhat more positive than we expected. The global economy should continue to grow at a level approximating that of 2015. We confirm our 2016 forecast for sales and income from operations (EBIT) before special items of the BASF Group: We aim to increase sales volumes. BASF Group sales will decline considerably, however, especially as a result of the divestiture of the gas trading and storage business as well as lower oil and gas prices. We expect EBIT before special items to be slightly below 2015 levels. This remains an ambitious goal in the current volatile and challenging environment, and is particularly dependent on further oil price developments.

Opportunities and Risks

The statements on opportunities and risks made in the BASF Report 2015 remain fundamentally valid. The first half of 2016 saw the following significant developments: Chinese economic figures were somewhat more positive than we had expected; growth slowed less rapidly than we had anticipated. Significant risks nevertheless still lurk in any substantial deceleration of growth in China over the remaining course of the year. After the British vote to leave the European Union, economic risks particularly increased for Europe. Our overall assessment of opportunities and risks remains largely valid.

Forecast

  • Considerable sales decline due to divestiture of gas trading and storage business
  • Income from operations (EBIT) before special items expected at level slightly below 2015

Our expectations for the global economic environment in 2016 remain unchanged:

  • Growth of gross domestic product: 2.3%
  • Growth in industrial production: 2.0%
  • Growth in chemical production: 3.4%
  • An average euro/dollar exchange rate of $1.10 per euro
  • An average Brent blend oil price for the year of $40 per barrel

BASF Group sales will decrease considerably in 2016. As a consequence of the asset swap with Gazprom, the Oil & Gas segment is no longer receiving contributions from the natural gas trading and storage business in particular. In the first three quarters of 2015, these activities had contributed a total of around €10.1 billion to sales. Sales will be furthermore reduced by lower prices for oil and gas. We aim to increase sales volumes, excluding the effects of acquisitions and divestitures. EBIT before special items is expected to be slightly below 2015 levels. This remains an ambitious goal in the current volatile and challenging environment, and is particularly dependent on further oil price developments.

We expect EBIT to decline slightly overall in 2016. In addition to a lower level of EBIT before special items, this assumption reflects the charges expected to arise from restructuring measures. The BASF Group’s EBIT after cost of capital1 will presumably see a considerable decline. We will still earn a premium on our cost of capital.

1 For a description of this KPI, see BASF Report 2015 – Value-based management.