FRANKFURT (Reuters) – Germany’s BASF is benefiting as people under lockdown fix up their homes but its CEO said the chemical maker may be left out of the party after the pandemic as consumers turn their spending to entertainment.
Lockdowns are spreading as a third wave of COVID-19 infections hits Europe and the Americas, even as vaccination campaigns take hold.
CEO Martin Brudermueller told Reuters that BASF, whose chemicals and plastics go into items including cars, furniture and construction materials, has benefited from purchasing activity amid lockdowns.
“What’s happening now is that consumers are purchasing quite a lot of things. They are redoing the house, buying furniture, a new kitchen, they get a paint job done, buy a home trainer. That creates a lot of demand for chemical products,” he told Reuters.
But he said he believes that when lockdowns end, people will shift their spending to “leisure activities like travel, restaurant visits and culture events”.
“We should anticipate that parts of the current demand has been brought forward and will get a little weaker in the second half. That is why we have a little question mark behind our outlook,” Brudermueller told Reuters.
In January, BASF, the world’s largest chemicals maker by sales, beat fourth-quarter earnings expectations.
But the group’s profit growth outlook in February was slightly cautious. The maker of engineering plastics, coating additives, insulation foams and automotive catalytic converters forecast 2021 adjusted core earnings of 4.1-5.0 billion euros ($4.8-5.89 billion), up from 3.6 billion, but analysts had expected it to reach the upper end of that range.
BASF attributed its caution to uncertainty about virus mutations and the progress of global vaccination campaigns.
($1 = 0.8484 euros)
(Editing by Jason Neely)