Outlook 2024

Q3 2024

According to the most recent estimates, global gross domestic product (GDP) grew by around 2.7% in the third quarter of 2024 compared with the prior-year quarter.

In the European Union (E.U.), GDP grew by around 1% compared with the prior-year quarter, which was considerably below the global average. According to current expectations, Germany is in a recession, as GDP is expected to have decreased for the second time quarter-on-quarter. Germany’s economy is also estimated to have contracted compared with the third quarter of 2023. Italy’s economy grew slightly compared with the previous year, however at a rate expected to be less than 1%. Growth in France accelerated temporarily to more than 1%, due in part to the positive economic stimulus generated by the Olympics. GDP growth in Spain was considerably higher at around 3%.

According to current estimates, the U.S. economy’s momentum in the third quarter slowed just slightly. At nearly 2.5%, GDP growth is expected to be considerably stronger than in the E.U. However, this growth continued to be heavily driven by services; the industrial economy in the United States remained weak.

In China, GDP growth weakened to just under 5% in the third quarter. Industry was a key driver of this economic development. From a demand perspective, domestic consumption nevertheless remained weak and growth was driven primarily by the solid export economy.

Based on preliminary, partly estimated data, global industrial production in the third quarter expanded by a total of 1.5% compared with the previous year. Developments varied by region: In the E.U., production in the manufacturing sector continued to decline, while in the United States it largely stagnated. By contrast, production in Asia’s large emerging markets expanded. Production in the manufacturing sector is estimated to have increased by around 5% in China and by some 3% in India. Together, the two countries account for around 40% of value creation in the global manufacturing sector.

By contrast, production in the automotive industry declined sharply overall: According to recent forecasts, around 1.2 million fewer vehicles were produced in the third quarter of 2024 than in the third quarter of the previous year, which reflects a decrease of more than 5%. This affected all major markets: In the E.U. and North America, production decreased by between 5% and 6%, in China by around 4%, in Japan by nearly 6% and by about 8% in South Korea.

In the consumer goods sector, demand for durables was particularly weak. By contrast, global food production increased moderately. According to recent estimates, production of care chemicals trended sideways.

Although long-term interest rates have now declined slightly, demand in the construction sector remained weak, especially for new construction in the private housing segment. In the E.U., construction activity declined. In the United States, real construction spending increased, while construction starts for private housing decreased by 6% compared with the prior-year quarter. In China, the crisis in the real estate market continued to have a negative impact on the construction sector.

The agricultural sector presented a mixed scenario: Lower prices for agricultural goods dampened demand for agrochemicals. Conversely, lower customer inventories in Europe and North America bolstered the market.

Global chemical production rose by around 4% in the third quarter of 2024 compared with the previous year. China drove global production with growth of around 6% and widely varying growth rates for individual products and segments. Outside China, by contrast, production increased on average by only around 1.5%. In the E.U., chemical production is estimated to have grown at an above-average rate of 3%. By contrast, chemical production in the United States stagnated.

The oil price averaged $80 per barrel (Brent crude) in the third quarter, below the level of the prior-year quarter ($86 per barrel). The fluctuation range was comparatively high with daily prices of around $70 to around $90 per barrel. While weak demand and Saudi Arabia’s announced production increase dampened oil prices, the conflicts in the Middle East temporarily boosted oil prices.

For the full year 2024, BASF’s assumptions for global chemical growth may prove to be too conservative. This will largely depend on whether chemical production in China can continue to grow at a high level. With respect to the industrial economy, however, leading economic indicators signal a global deceleration for the fourth quarter of 2024. Against this backdrop, BASF’s assumptions remain unchanged:

• Growth in gross domestic product: +2.3%
• Growth in industrial production: +2.2%
• Growth in chemical production: +2.7%
• Average euro/dollar exchange rate of $1.10 per euro
• Average annual oil price (Brent crude) of $80 per barrel

The BASF Group’s forecast for the 2024 business year published in the BASF Report 2023 also remains unchanged:

• EBITDA before special items of between €8.0 billion and €8.6 billion
• Free cash flow of between €0.1 billion and €0.6 billion
• CO₂ emissions of between 16.7 million metric tons and 17.7 million metric tons

For the fourth quarter of 2024, there are risks from potential declines in prices and lower volume growth than expected. Opportunities may arise from a positive development in demand and margins.

The statements on opportunities and risks made in the BASF Report 2023 continue to apply overall. According to the company’s assessment, neither existing individual risks nor the sum of individual risks pose a threat to the continued existence of the BASF Group.

Report 2023

In line with the Differentiated Steering approach that we introduced at the beginning of the year, we are reporting two new most important key performance indicators for the BASF Group at financial level, which are forecast below at Group and segment level: income from operations before depreciation and amortization and special items (EBITDA before special items) and free cash flow or the corresponding segment cash flow. In addition, we will continue to forecast Scope 1 and Scope 2 CO₂ emissions for the BASF Group.

We expect the weakness in global economic momentum from 2023 to continue in the first half of 2024. The main reason for this will be the expected persistently high interest rates, which will continue to dampen growth in the United States and Europe. The positive trend in service consumption will no longer be a significant factor. Global economic growth is only expected to accelerate somewhat later in the year, meaning that we expect the global economy to grow by 2.3% overall in 2024 (2023: +2.6%). In Europe, the comparatively very high energy prices and unfavorable framework conditions for industrial value creation continue to slow down economic development.

We expect that demand for industrial goods will normalize only gradually and that the share of goods in private consumption will rise again only slowly. For this reason, we only expect very moderate growth in most of our customer industries. Conversely, we expect weak growth overall in the automotive industry following strong growth in 2023, which was characterized by catch-up effects. Recovery in China remains extremely uncertain, particularly with regard to the real estate sector and the development of the labor market. We do not expect any significant growth stimulus in the E.U. We are forecasting a gradual slowdown in the United States as a result of high interest rates. The geopolitical situation remains critical against the backdrop of the wars in Ukraine and the Middle East and other geopolitical tensions, particularly between the United States and China. In our forecast, we assume that these conflicts will not escalate even further in 2024, but we also do not anticipate a fundamentally positive turnaround. All in all, global industrial production will likely expand by 2.2% overall (2023: +1.4%). Global chemical production is expected to grow faster in 2024, by 2.7% (2023: +1.7%). This will be driven primarily by the expected growth in the Chinese chemical industry. Our planning assumes an average oil price of $80 for a barrel of Brent crude and an exchange rate of $1.10 per euro.
 

Earnings and free cash flow forecast for the BASF Group¹

The BASF Group’s EBITDA before special items is expected to rise to between €8.0 billion and €8.6 billion in 2024 (2023: €7.7 billion). Volume and margin growth in all segments will contribute here. Rising fixed costs due to inflation but also in connection with the construction of our new Verbund site in China will weigh down earnings in some segments. The Nutrition & Care, Industrial Solutions and Chemicals segments are expected to considerably increase EBITDA before special items. We anticipate slight earnings growth in the Materials segment. In the Surface Technologies segment, we are forecasting earnings at the prior-year level. EBITDA before special items in the Agricultural Solutions segment will likely decrease slightly. 

We forecast the BASF Group’s free cash flow to be between €0.1 billion and €0.6 billion (2023: €2.7 billion). This is based on expected cash flows from operating activities from €6.6 billion to €7.1 billion, minus expected payments made for property, plant and equipment and intangible assets² in the amount of €6.5 billion. The high investment-related cash outflow is mainly due to investments in the new Verbund site in China, which will reach their absolute peak in 2024.

The BASF Group’s free cash flow comprises the cash flows of the segments and additionally includes transactions that are not allocated operationally as well as adjustments of other noncash effects. For 2024, we expect a considerable decline in cash flows in all segments compared with 2023. The investment-related cash outflow for the construction of the new Verbund site in China will primarily affect the Chemicals segment. In the other segments, the expected decline in cash flows is likely to result primarily from a lower cash inflow from the reduction in working capital compared with the strong previous year.

¹ For EBITDA before special items and free cash flow, “slight” represents a change of 0.1%–10.0%, while “considerable” applies to changes of 10.1% and higher. “At prior-year level” indicates no change (+/-0.0%).

² Capex plus investments in intangible assets and IT

Forecast at Group level

Million €

CO₂ emissions forecast for the BASF Group

CO₂ emissions are expected to be between 16.7 million metric tons and 17.7 million metric tons in 2024. We anticipate additional emissions compared with the previous year from higher production volumes based on rising demand. We will counteract this increase with targeted measures to reduce emissions, such as increasing energy efficiency and optimizing processes as well as continuing the shift to electricity from renewable energies through the shareholding in the Hollandse Kust Zuid offshore wind farm, for example.

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 2023. BASF does not assume any obligation to update the forward-looking statements contained in this outlook above and beyond the legal requirements.