Outlook 2024

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.

• More information on our expectations for the economic environment in 2024
• More information on the material opportunities and risks that could affect our forecast

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.

• More information on the calculation of free cash flow and segment cash flow

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.