FRANKFURT (Reuters) – Germany’s BASF increased its 2021 earnings guidance on Wednesday for the third time as its large industrial customers readily accepted marked-up prices for basic chemicals amid a raft of global materials shortages.
The world’s largest chemicals maker by sales said in a statement it now expected 2021 earnings before interest and tax (EBIT), adjusted for special items, to come in at between 7.5 billion and 8 billion euros ($8.7-$9.3 billion), compared to a previous forecast for 7.0 billion to 7.5 billion euros.
Adjusted operating earnings in the third-quarter, when a summer lull normally dampens demand in the sector, jumped to 1.87 billion euros, up from 581 million euros in the pandemic-stricken year-earlier period and beating the 1.8 billion expected on average by analysts.
A 42% surge in group revenues to 19.7 billion euros was fuelled by price increases of 36% on average.
The upswing came even as a shortage of microchips in the car sector and power cuts in China were a drag on demand.
“Growth momentum slowed compared with the previous quarter due to supply bottlenecks in many value chains of the manufacturing sector,” the company said.
While benefiting BASF’s basic chemicals units, the global material scarcities and higher procurement costs proved a burden on BASF businesses that make more sophisticated products such as farming pesticides, coatings and nutritional supplements, where margins and earnings slipped.
(Reporting by Ludwig Burger; Editing by Riham Alkousaa and Emma Thomasson)