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FRANKFURT (Reuters) -BASF on Friday forecast lower 2022 operating earnings due to slower economic growth, with the German chemicals giant’s supply chain vulnerable to disruptions.
The company said earnings before interest, tax and special items will likely be between 6.6 billion euros ($7.4 billion) and 7.2 billion euros this year, down from 7.77 billion euros in 2021.
Despite a very strong start to the year, “BASF expects global economic growth of 3.8% to be somewhat more moderate in 2022 following the very strong recovery in 2021”.
The forecast takes into account the risk of supply chain disruptions, more pandemic headwinds and potentially higher energy prices, BASF said.
The German group did not provide an update in its earnings on plans for an initial public offering of shares in the Wintershall Dea joint venture. Nearly half of the joint venture’s oil and gas production is from Russian extraction sites.
BASF declined to comment on the joint venture’s IPO plans. A media call following earnings is scheduled at 0830 GMT.
Wintershall said on Thursday a “politically motivated” cancellation of Gazprom’s Nord Stream 2 gas pipeline, which Wintershall co-funded, would enable its operator to lodge compensation claims.
Germany has effectively halted a ramp-up in preparations on the pipeline following a first wave of sanctions on Russia, where Wintershall has been active for more than three decades.
Moscow on Thursday mounted an assault by land, sea and air on Ukraine in the biggest attack on a European state since World War Two, drawing international condemnation.
Any impact from BASF’s holding in Wintershall is not included in the group’s outlook on adjusted earnings, the German firm said.
BASF holds 67% of the ordinary voting shares in Wintershall, or a total of 72.7% taking into account non-voting preference shares. Russian billionaire Mikhail Fridman’s investment firm LetterOne, the former Wintershall owner, owns the rest.
BASF’s group EBIT, adjusted for one-off items, rose more than 10% to 1.23 billion euros in the three months through December, missing a company-compiled estimate of 1.35 billion euros.
The German company proposed an annual dividend of 3.40 euros per share, slightly above expectations of 3.39 euros.
Reporting by Ludwig Burger; Editing by Kirsti Knolle and Shounak Dasgupta
