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BASF guides slowdown for 2022 after energy costs bite in fourth quarter

By Ed Frankl

BASF SE said Friday that revenue and earnings would decline in 2022 as it forecasted a slowing economy while it continues to combat continuing pressures from energy and raw-material prices.

The German chemical company said January 2022 figures were above the same month of the previous year, but targeted full-year revenue of between 74 billion and 77 billion euros ($82.84 billion and $86.20 billion). That falls below 2021's figure of EUR78.60 billion.

BASF also expects 2022 adjusted earnings before interest and taxes to be between EUR6.6 billion and EUR7.2 billion--after it more than doubled in 2021 to EUR7.77 billion--and return on capital employed to be between 11.4% and 12.5%--down from 13.5%.

"BASF expects global economic growth of 3.8 percent to be somewhat more moderate in 2022 following the very strong recovery in 2021," the company said.

It comes after the Ludwigshafen-based company reported fourth-quarter profit that fell year-on-year, although sales rose, as it dealt with the impact of higher gas prices by ramping up prices.

BASF said quarterly net profit was EUR898 million, down from EUR1.06 billion in the same period a year earlier.

Revenue rose 24% to EUR19.78 billion after the company increased sales prices by 25% and volumes by 11% as it combated rising inflationary pressures.

BASF's earnings were hit by around EUR800 million in additional costs due to rising natural-gas prices in Europe in 4Q, it said. Higher raw-material prices and logistics costs also hurt the company.

"We will implement further substantial price increases in the coming months to pass on the significantly higher costs and improve our margins in the downstream businesses," Chief Executive Martin Brudermueller said.

"The established pricing procedures in these businesses lead to a delay in passing on costs," the company added.

BASF's automotive-related businesses also continued to be hurt by the semiconductor shortage, it said.

The 4Q net profit figure fell behind expectations of EUR969 million, though sales were ahead of views of EUR18.44 billion, according to analysts' estimates compiled by the company.

Volumes in 4Q rose across all divisions except in its materials segment, while EBIT before special items rose 4.5% to EUR2.18 billion. Free cash flow came in at EUR1.8 billion, up 84% year-on-year, the DAX-listed company said.

BASF proposed a dividend of EUR3.40 a share for the year, up from EUR3.30 in 2020.

Write to Ed Frankl at edward.frankl@dowjones.com

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02-25-22 0301ET

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