BASF stock: Forecast missed

Last Updated: 19. Januar 2024By

BASF stock has made significant gains at the end of the 2023 stock market year. However, at the start of the year, the shares of the chemical giant have almost completely given up their gains and are trading around 10 percent lower than just three weeks ago (as of January 19, around 10am).

Now, the company has released its preliminary figures for the 2023 fiscal year, falling short of expectations for both revenue and earnings. In the coming years, BASF will continue to focus on cost reduction. Investors should not underestimate the risks associated with the stock, but also keep an eye on the opportunities.

BASF with overall disappointing figures for 2023 With its preliminary figures for the past fiscal year, BASF has once again highlighted that things are currently anything but smooth sailing. Revenue is expected to reach around 68.9 billion euros – the DAX corporation had forecasted around 73 billion euros and even analysts had expected slightly more.

The same applies to EBIT before special items. After 6.9 billion euros in 2022, this figure dropped to around 3.8 billion euros last year. Even after the Q3 figures, the company was aiming for the lower end of a range between 4.0 and 4.4 billion euros. In the end, BASF is expected to have a profit of around 225 million euros for 2023 – at least after the previous year’s loss.

BASF stock: Problems persist – but so do opportunities The missed expectations and the generally disappointing development are partly due to weak global demand and increased costs. At the same time, cost-cutting measures were not enough to fully offset these challenges.

Therefore, BASF has announced that it will continue to tighten its spending in the coming years, as it already did after Q3. In addition to lower investments, costs are expected to be reduced by another 1.1 billion euros by the end of 2026.

Following the weak preliminary figures for the 2023 fiscal year, the BASF stock did not suffer any further losses. The stock has already seen a significant decline in the past two years – indicating that much has already been priced in.

For investors, the situation is tricky: On the one hand, the outlook for 2024 is also bleak and uncertain in the medium term. This could lead to further declines in the stock. On the other hand, there are opportunities for investors here as well. If the cost-reduction program takes effect and demand picks up in the coming quarters, the BASF stock has the potential for significant gains.