Growth in industrial production fell short of our expectations in the third quarter of 2018, primarily due to developments in the automotive industry in September in particular. The introduction of new emission standards had an impact in Europe. The effects of the trade conflict between the United States and China are also showing. This is leading to a slowdown in economic growth in Asia in particular, mainly in China.

We have therefore adjusted our assessment of the global economic environment in 2018 as follows (forecast from the BASF Half-Year Financial Report 2018 in parentheses):

  • Growth in gross domestic product: 3.0% (3.0%)
  • Growth in industrial production: 3.1% (3.2%)
  • Growth in chemical production: 3.1% (3.4%)
  • Average euro/dollar exchange rate of $1.20 per euro ($1.20 per euro)
  • Average Brent blend oil price for the year of $70 per barrel ($70 per barrel)

The signing of the definitive transaction agreement on the merger of Wintershall and DEA reduces the BASF Group’s sales and EBIT by the contribution of its oil and gas activities – retroactively as of January 1, 2018, and with the prior-year figures restated – due to their presentation as discontinued operations.1 This was explained in the BASF Report 2017.2 Furthermore, the risk of a growth slowdown has increased. Otherwise, the statements on opportunities and risks made in the BASF Report 2017 continue to apply overall. According to our assessment, there continue to be no individual risks that pose a threat to the continued existence of the BASF Group. The same applies to the sum of individual risks, even in the case of another global economic crisis.

For more detailed information, see the Opportunities and Risks Report in the BASF Report 2017

On September 27, 2018, we adjusted the BASF Group’s forecast3 for the full year 2018 made in the BASF Report 2017 as a result of the changed presentation of the Wintershall Group (previous forecast from the BASF Report 2017 in parentheses):

  • Slight sales growth (slight growth)
  • Slight decrease in EBIT before special items (slight increase)
  • Considerable decline in EBIT (slight decline)
  • Significant premium on cost of capital with considerable decline in EBIT after cost of capital4 (considerable decline)

1 For more information, see Other and the Restated Quarterly Figures for 2017 and 2018 in this quarterly statement.

2 For more information, see the Outlook in the BASF Report 2017.

3 For 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%).

4 For an explanation of this indicator, see the BASF Report 2017, EBIT after cost of capital.