Outlook

Early economic indicators have risen over the past few months, signaling a stronger recovery in macroeconomic activity than we previously assumed. However, the renewed rise in infection rates in many countries and ongoing restrictions on economic activity mean that the economic situation is still extremely fragile. In addition, disruptions to global supply chains could temporarily impact industry growth. Against this background, the assumptions presented in the BASF Report 2020 for growth in global gross domestic product and industrial and chemical production have been raised moderately. Expectations for oil prices have also been revised.

The assessment of the global economic environment in 2021 has been adjusted as follows (previous forecast from the BASF Report 2020 in parentheses):

• Growth in gross domestic product: 5.0% (4.3%)
• Growth in industrial production: 5.0% (4.4%)
• Growth in chemical production: 5.0% (4.4%)
• Average euro/dollar exchange rate of $1.18 per euro (unchanged)
• Average annual oil price (Brent crude) of $60 per barrel ($50 per barrel)

Some of the opportunities for higher volumes and margins pres­ented in the BASF Report 2020 have materialized and led to con­siderable year-on-year earnings growth in the first quarter of 2021, especially in the Materials, Chemicals and Surface Technologies segments. These were offset in part by risks that materialized as a result of higher raw materials prices.

Based on the development of sales and earnings in the first quarter of 2021, the stronger-than-expected recovery of the global economy and much higher raw materials prices than planned, the forecast for the BASF Group presented in the BASF Report 2020 was revised as follows (previous forecast from the BASF Report 2020 in paren­theses):

• Sales growth to between €68 billion and €71 billion (between €61 billion and €64 billion)
• EBIT before special items of between €5.0 billion and €5.8 billion (between €4.1 billion and €5.0 billion)
• Return on capital employed (ROCE) of between 9.2% and 11.0% (between 8.0% and 9.2%)
• Increase in Accelerator sales to between €19.0 billion and €20.0 billion (between €18.0 billion and €19.0 billion)
• Stabilization of CO₂ emissions at between 20.5 million metric tons and 21.5 million metric tons (unchanged)

However, the market environment continues to be dominated by a high level of uncertainty. Risks could arise if restrictions on macro­economic activity continue for longer than expected as a result of measures to fight the corona­virus pandemic. Opportunities could arise from a faster vaccination rate and a more rapid recovery of the economy as a whole, as well as a continuation of the positive margin trend.

For the remaining opportunity and risk factors, the statements made in the BASF Report 2020 continue to apply overall.

According to the company’s 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 or an intensification of the global economic crisis.