BASF Earnings: Slight Volume Growth Supports Our Recovery Thesis

Following inventory destocking that weighed heavily on 2023 profits, BASF reported solid results for the first quarter of 2024. Volume excluding metals trading rose 2% versus the prior-year quarter, a much-improved result versus the 12% volume decline for full-year 2023. The results were in line with our view that BASF will see a profit rebound in 2024 as slightly higher volume allows the company to run its plants at a higher capacity utilization, taking advantage of the Verbund process (the physical integration of production, market platforms, and technologies that tie the businesses together) that underpins our narrow moat rating based on a cost advantage.