Chemical major BASF managed to increase volumes and prices based on strong demand in downstream segments, however pressure from increased raw material prices remained high in several downstream businesses, Martin Brudermuller, Chairman of the Board of Executive Directors and Chief Executive Officer, BASF, says.

“The strong growth momentum of the previous two quarters has continued. We achieved volume growth and price increases across all regions and all segments compared with the prior year quarter. In some businesses, we were able to restore and, in some cases, increase our margins with the price increases. In others, there's still some way to go. EBIT before special items rose by more than €2 billion compared with Q2 2020 and reached €2.4 billion. This is also considerably above the pre-pandemic level of roughly €1 billion in Q2 2019. Considerably higher earnings in our upstream businesses were the main driver for the strong increase in earnings overall. Compared with Q1 2021, margins in some commodity product lines such as isocyanates slightly declined in Q2 2021 but remain on a high level,” explains Brudermuller while sharing the highlights of the 2nd quarter of 2021.

According to the currently available data, global chemical production increased by almost 10% in Q2 2021 compared with the previous year quarter. With an increase in volumes of 28%, BASF Group grew well above global chemical production.

Sharing outlook on region-wise growth, Brudermuller says, “All regions recorded strong demand growth. This was most pronounced in Asia, excluding China, and in Europe. In the prior year quarter, these regions as well as North America were significantly impacted by the COVID-19-related lockdowns. And in comparison, chemical production in China had already grown in Q2 2020. During the past three quarters, we increased volumes in all regions. In Greater China, we recorded double-digit volume growth during the past 5 quarters. In Q2 2021, volume growth in China was less pronounced as the recovery was already in full swing in the second quarter of 2020. Volume growth, however, remains strong at 10%. In Europe and in North America, volumes grew considerably in Q2 2021 as the prior year quarter in these regions has heavily been impacted by the lockdowns due to the pandemic.”

On volume development by segment, the CEO says, “In Q2 2021, we increased volumes in all our segments. The volume increase was strongest in the Surface Technologies and Materials segment. Volumes also grew considerably in the Industrial Solutions, Chemicals and Agricultural Solutions. Overall, volumes increased by 28% or €3.5 billion in absolute terms compared with the prior year quarter.

Sharing insights on Nutrition & Care, Brudermuller says, “EBIT before special items declined by 46%. The earnings decline was mainly driven by the Nutrition & Health division. Compared with the strong prior year quarter fueled by an exceptional demand during the pandemic, margins declined on account of negative currency effects, lower prices and higher variable costs due mainly to higher raw material costs. In animal nutrition, the earnings decline was most pronounced. Lower volumes in vitamin A, particularly due to the tie-in and start-up of the vitamin A capacity expansion in Ludwigshafen, as well as higher costs from several turnarounds in Q2 were the main drivers. As announced, we plan to bring our vitamin A plant expansion onstream in the second half of 2021. The project is well on track.”

"The company’s Care Chemicals division earnings also declined compared with a strong second quarter in 2020. He explains: “This was mainly driven by higher raw material prices and put pressures on margins. Higher fixed costs, in part due to higher maintenance activities, also had an impact. During the second half of 2021, we expect an improvement of our earnings in the Nutrition & Care segment compared with the second half of 2020,” says Brudermuller.

On Agricultural Solutions, Brudermuller mentions that EBIT before special items declined by 38%.

“This is particularly disappointing because our agriculture team was very successful in driving volumes up by 15% and increasing prices by 3%. Due to our regional exposure, the ongoing strong FX headwind, mainly in the U.S. and in Latin America, dragged sales down by 7%. Higher fixed costs as well as freight cost increases due to higher sales volumes burdened earnings. Furthermore, margins developed unfavourably due to product mix effects,” concludes Brudermuller.