BASF raises profit forecast after price hikes tied to Iran war

German chemicals giant BASF said on Wednesday, 28 October, that it is raising its profit guidance for this year. The company, which makes everything from automotive paints to sunscreen ingredients, now expects core profit of €7.4 billion to €7.8 billion ($8.2bn to $8.7bn), compared with an earlier forecast of €6.9bn to €7.7bn. The update matters because it shows a major player in Europe's chemicals industry managing to offset cost increases linked to the US-Israeli war against Iran.

Price increases drive results

BASF's earnings have been supported by price rises: in March the company increased prices for some products by up to 30%, responding to surging energy and other raw material costs. In the third quarter, core profit rose 15% from the same period a year earlier to €1.6 billion. Overall sales grew 14% to €16.4 billion.

The company said in a statement that the increase was mainly driven by considerably higher prices (up 12%) and slightly higher volumes (up 2%).

An industry under pressure

The results come as Europe's chemicals sector faces heavy pressure from high energy prices and increasingly intense competition from Asian rivals. BASF is carrying out a major restructuring, cutting thousands of jobs at its historic headquarters in Ludwigshafen, Germany. Earlier this year it opened a large chemical complex in China to serve Asian markets.

BASF is also exploring a multibillion-euro acquisition of its German rival Evonik. The company says a combination could allow it to obtain feedstocks and precursor chemicals at lower cost.