Outlook

The global economy continued to recover in the third quarter of 2021 following the sharp decline in economic activity in the previous year. However, growth momentum slowed compared with the previous quarter due to supply bottlenecks in many value chains of the manufacturing sector. Further pandemic-related disruptions in production and logistics in Asia intensified the scarcity of precursors worldwide. The global automotive industry was especially affected by a chip shortage that led to significant drops in production. In addition, power cuts in some provinces of China had a negative impact on production, especially in energy-intensive industries. Global demand for consumables and consumer durables remained stable despite the burden of rising energy prices on companies as well as on end users.

BASF assumes that supply bottlenecks will continue to negatively impact global economic recovery in the fourth quarter of 2021. The assessment of the global economic environment in 2021 has therefore been slightly adjusted (figures for industrial and chemical production rounded to the nearest half percentage point; previous forecast in parentheses):

  • Growth in gross domestic product: +5.3% (+5.5%)
  • Growth in industrial production: +6.0% (+6.5%)
  • Growth in chemical production: +6.0% (+6.5%)
  • Average euro/dollar exchange rate of $1.20 per euro ­(unchanged)
  • Average annual oil price (Brent crude) of $70 per barrel ­($65 per barrel)

Based on the BASF Group’s sustained good business performance and the anticipated continuation of solid demand, especially in the Chemicals and Materials segments, the forecast for the 2021 ­business year was raised in accordance with market expectations (previous forecast from the Half-Year Financial Report 2021 in parentheses):

  • Sales growth to between €76 billion and €78 billion (between €74 billion and €77 billion)
  • EBIT before special items of between €7.5 billion and €8.0 billion (between €7.0 billion and €7.5 billion)
  • Return on capital employed (ROCE) of between 13.2% and 14.1% (between 12.1% and 12.9%)
  • Increase in Accelerator sales to between €21.5 billion and €22.5 billion (between €21.0 billion and €22.0 billion)
  • Stabilization of CO2 emissions at between 20.5 million metric tons and 21.5 million metric tons (unchanged)

Our forecast assumes that severe restrictions on economic activity to contain the coronavirus pandemic, such as lockdowns, will not be reintroduced.

Due to the previously mentioned developments, BASF continues to expect extremely volatile markets and the resulting uncertainties in the fourth quarter of 2021. Risks arise from further increases in energy and raw materials prices as well as from a faster-than-expected decrease in prices, particularly in basic chemicals. ­Opportunities could arise if positive demand and margin development continue and if supply shortages are overcome more quickly than expected, particularly in chips for the automotive industry. ­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 global economic crisis.