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Outlook 2020

Report 2020

We expect the global economy to recover in 2021 after the sharp downturn resulting from the coronavirus pandemic. However, uncertainty about future developments remains exceptionally high. Our forecast therefore includes wide ranges to account for the possibility of significant disruptions to global supply chains and negative effects on the entire economy. At the same time, we are confident that without such negative impacts, we will be able to achieve earnings at the upper end of the forecast range. Our forecast assumes growth in our customer industries. For the automotive industry in particular, we are forecasting significant production growth compared with 2020. The global economy should see significant growth of 4.3% compared with 2020 (–3.7%). Global chemical production is expected to expand by 4.4%, well above the prior-year level (2020: –0.4%). We anticipate an average oil price of $50 for a barrel of Brent crude and an exchange rate of $1.18 per euro.

Based on these assumptions, we aim to increase our sales to between €61 billion and €64 billion (2020: €59,149 million). The BASF Group’s income from operations (EBIT) before special items is expected to be between €4.1 billion and €5.0 billion (2020: €3,560 million). The return on capital employed (ROCE) should be between 8.0% and 9.2% (2020: 1.7%).

For 2021, we anticipate Accelerator sales of between €18 billion and €19 billion (2020: €16.7 billion). Our CO2 emissions are expected to stabilize at between 20.5 million metric tons and 21.5 million metric tons in 2021 (2020: 20.8 million metric tons).

Sales, earnings and ROCE forecast for the BASF Group1

  • Sales growth to between €61 billion and €64 billion
  • EBIT before special items of between €4.1 billion and €5.0 billion
  • ROCE of between 8.0% and 9.2%

In 2021, we expect the BASF Group as a whole to increase sales to between €61 billion and €64 billion (2020: €59,149 million). The main drivers should be volume growth and higher prices. By contrast, currency and portfolio effects will have a negative impact. The Materials segment and Other are expected to see considerable sales growth. We are forecasting slightly higher sales in the Surface Technologies, Chemicals, Agricultural Solutions and Nutrition & Care segments, and a slight year-on-year decline in the Industrial Solutions segment.

The BASF Group’s EBIT before special items is expected to increase to between €4.1 billion and €5.0 billion (2020: €3,560 million). We anticipate considerably higher contributions from the Materials and Chemicals segments, Other and the Surface Technologies segment. The Agricultural Solutions and Nutrition & Care segments should record slightly higher EBIT before special items. By contrast, we are forecasting slightly lower EBIT before special items in the Industrial Solutions segment.

Based on the expected recovery in the global economy, a positive business trajectory and a lower cost of capital basis in 2021, we expect the BASF Group’s ROCE to be between 8.0% and 9.2% (2020: 1.7%). We expect a considerable increase in ROCE in all segments compared with the previous year.

Our forecast for 2021 takes into account the agreement between BASF and DIC on the sale of the global pigments business. The transaction is expected to close in the first half of 2021, subject to the approval of the U.S. competition authorities, which is still outstanding. Until closing, the assets and liabilities to be divested will be presented in a disposal group in the Dispersions & Pigments division.


1
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%). At a cost of capital percentage of 9% for 2021, we define a change in ROCE 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 percentage points) as “at prior-year level.”

Accelerator sales and CO2 emissions forecast for the BASF Group

We expect Accelerator sales to increase to between €18 billion and €19 billion in 2021 (2020: €16.7 billion), in line with the global economic recovery and growing demand for chemical products. The divestiture of BASF’s global pigments business will also reduce sales of Accelerator products in BASF’s portfolio. Compensating factors will include the expected increase in Accelerator products from the initial portfolio segmentation of the businesses acquired from Solvay.

Despite the global economic recovery and growing demand for chemical products, CO2 emissions are expected to stabilize at between 20.5 million metric tons and 21.5 million metric tons in 2021. We will keep emissions roughly at the prior-year level (2020: 20.8 million metric tons) with targeted measures. These include the implementation of further projects to increase energy efficiency and optimize processes, for example, to significantly reduce nitrous oxide emissions in Ludwigshafen, Germany. In addition, we are switching energy supply agreements to renewable energy sources, for example in Freeport, Texas, where we have signed long-term supply agreements for wind power. Emissions will also be reduced by the divestiture of BASF’s global pigments business in 2021.

The significant opportunities and risks that could affect our forecast are described in the BASF Report 2020.

Disclaimer

This page contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in Opportunities and Risks of the BASF Report 2020. BASF does not assume any obligation to update the forward-looking statements contained in this outlook above and beyond the legal requirements.

Sales and earnings forecast for the segments

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Last Update February 26, 2021