The high level of uncertainty that arose over the course of 2022 due to the war in Ukraine, high raw materials and energy costs in Europe, rising prices and interest rates, inflation and the development of the coronavirus pandemic will continue in 2023. All of these factors will negatively impact global demand, which is why we only expect moderate growth for the global economy in 2023.
Outlook for 2023 at a glance
- Sales of between €84 billion and €87 billion
- EBIT before special items of between €4.8 billion and €5.4 billion
- ROCE of between 7.2% and 8.0%
- CO2 emissions of between 18.1 million metric tons and 19.1 million metric tons
- Capex of around €6.3 billion
We anticipate moderate growth in the majority of our customer industries and expect the slight recovery in the automotive industry in particular to continue. Our forecast assumes that the war in Ukraine will continue but not escalate further, although the further development of the war in Ukraine and its effects on economic growth are still subject to a high degree of uncertainty. In addition, we are assuming that an acute gas shortage with regulatory cuts in natural gas supply to energy-intensive industries in Europe will not materialize. We expect China’s departure from its zero-COVID strategy to have a positive impact on the development of demand.
The global economy is expected to grow by only 1.6% in 2023 (2022: 3.0%). We expect growth of 1.8% for global industrial production (2022: 2.5%), while global chemical production is likely to expand by 2.0% in 2023 (2022: 2.2%). Our planning assumes an average oil price of $90 for a barrel of Brent crude and an exchange rate of $1.05 per euro. We anticipate elevated and very volatile gas prices in Europe.
- More information on our expectations for the economic environment in 2023
- More information on the material opportunities and risks that could affect our forecast
Sales, earnings and ROCE forecast for the BASF Group1
The BASF Group is expected to generate sales of between €84 billion and €87 billion in 2023. Planned volume growth in all segments will contribute here. We anticipate slight sales growth in the Agricultural Solutions and Materials segments, mainly driven by higher prices and volumes in both segments. Sales in Other should be slightly higher. We are forecasting sales at prior-year level in the Nutrition & Care segment. We anticipate lower price levels, especially for basic chemicals and precious metals, which will lead to a slight sales decrease in the Chemicals and Surface Technologies segments. The Industrial Solutions segment is also expected to see slightly lower sales due to the sale of the kaolin minerals business.
The BASF Group’s EBIT before special items is expected to decline to between €4.8 billion and €5.4 billion. Our planning for the Agricultural Solutions segment assumes a slight increase in EBIT before special items. In the Nutrition & Care, Surface Technologies and Industrial Solutions segments, we expect slightly lower EBIT before special items. We anticipate significantly lower contributions from the Chemicals and Materials segments and from Other. We expect a weak first half of 2023 followed by an improved earnings environment in the second half of the year due to recovery effects, especially in China.
Based on the weaker earnings performance and slightly higher cost of capital basis forecast for the BASF Group in 2023, we expect a ROCE of between 7.2% and 8.0%. ROCE should increase slightly in the Agricultural Solutions segment. In the Industrial Solutions and Surface Technologies segments, ROCE is likely to decline slightly. Compared with the previous year, we anticipate a considerable decrease in ROCE in the Chemicals, Materials and Nutrition & Care segments.
1 For sales, “slight” represents a change of 0.1%–5.0%, while “considerable” applies to changes of 5.1% and higher. “At prior-year level” indicates no change (+/–0.0%). For earnings, “slight” means a change of 0.1%–10.0%, while “considerable” is used for changes of 10.1% and higher. “At prior-year level” indicates no change (+/–0.0%). For ROCE, we define a change of 0.1 to 1.0 percentage points as “slight,” a change of more than 1.0 percentage points as “considerable” and no change (+/–0.0 percentage points) as “at prior-year level.”
CO2 emissions forecast for the BASF Group
CO2 emissions are expected to be between 18.1 million metric tons and 19.1 million metric tons in 2023. We anticipate additional emissions from moderate growth in production and slightly higher capacity utilization at emissions-intensive plants. For example, the ammonia plants in Europe will probably see higher capacity utilization compared with 2022 but will continue to run at low levels due to sustained high gas prices. We will counteract this increase with targeted measures to reduce emissions, further increase energy efficiency and optimize processes and, above all, continue the shift to electricity from renewable energies.