BASF full-year 2020 financial results: Nutrition & Care sales decline but growth projected for 2021

26 Feb 2021 --- BASF Group has released its full-year financial results for 2020. Sales of €59.1 billion (US$71.5 billion) in the full year 2020 were “almost stable,” according to the company. 

Before the pandemic outbreak, the company had predicted that the Nutrition & Care segment would contribute a “considerable increase” in sales, but ultimately resulted in a “slight decline.”

A BASF source tells NutritionInsight that the contributing factors to the Nutrition & Care segment’s slightly lower EBIT were Care Chemicals’ lower sales, especially in the Home Care, Industrial and Institutional Cleaning and Industrial Formulators categories. 

The impact was predominantly driven by COVID-19 global lockdown measures and enforced travel restrictions. These factors led to lower demand in the hospitality industry, UV filter and high-end cosmetics customer industries.

“Overall, our market environment is and remains strongly dependent on the development of the pandemic and respective local restrictions,” the BASF source says. 

Performance from Nutrition & Care
The Nutrition & Care segment – consisting of the Care Chemicals and Nutrition & Health divisions – brought in 10 percent of total BASF sales, the second-lowest ranking after the Other segment (4 percent).

BASF Nutrition & Care focuses on its core products, such as vitamins and carotenoids, as well as newer, emerging ingredients like HMOs.Nutrition & Care contributed €6,019 million (US$7,292 million) marking a -1 percent change since 2019 (€6,075 million/US$7,358 million). 

The Nutrition and Health division made up a third of these sales with €2,030 million (US$2,459 million), presenting a 4 percent change since 2019. 

Of the €2,030 million contributed by Nutrition & Health, 37 percent of sales came from Europe. 

This was followed by Asia Pacific (35 percent); North America (18 percent); and South America, Africa, Middle East (10 percent). 

BASF invested nearly €2.1 billion (US$2.5 billion) in R&D in 2020, of which the Nutrition & Care segment made up 8 percent.

Transparency triumphs
BASF’s Nutrition & Health division produces additives for the food and feed industries, such as vitamins, carotenoids, sterols, enzymes, emulsifiers and omega 3s.

Consumer demand for environmentally sustainable products, natural and organic ingredients, and their traceability are projected trends to drive future growth in BASF’s markets. 

Evidencing these trends, Innova Market Insights crowned “Transparency Triumphs” as its top F&B trend for 2021, highlighting how consumers worldwide are increasingly interested in traceable farm-to-fork journeys.

“Innovation will be the key driver here and we are working on innovative approaches beyond existing purely chemical solutions with R&D in white biotech and fermentation technologies,” Lay Kwan Goh, global head of marketing for Human Nutrition at BASF, also tells NutritionInsight.

Furthermore, BASF remains in “relentless pursuit” of UN Sustainable Development Goals Zero Hunger (Goal 2) and Good Health and Well-Being (Goal 3) “to build a more equal, more secure world by 2030.” 

For example, BASF’s vitamin A production targets fortification programs to global underserved communities. Its expanded vitamin A production facilities in Ludwigshafen, Germany, will begin operation in 2021.

BASF invested nearly €2.1 billion in R&D in 2020.Breaking ground with HMOs
Besides BASF’s core vitamin and carotenoid products, human milk oligosaccharides (HMOs) have attracted the company’s attention as “newer, emerging ingredients.”

Throughout 2020, NutritionInsight has spoken with BASF representatives on how HMOs are pegged for success in the personalization, functional foods and immunity spaces.

BASF also recently broke new ground in the HMO arena, with a recent Therapeutic Good Administration (TGA) approval of 2‘-Fucosyllactose (2‘-FL) in Australia. This gives BASF the exclusivity to supply 2‘-FL for use in dietary supplements for two years in Australia. 

Last May, a BASF-supported study found its 2’-FL branded Prebilac can lead to compositional changes in the gut microbiota associated with reduced body weight. 

Factoring in the pandemic
BASF expects the global economy to recover in 2021 after the sharp downturn resulting from the coronavirus pandemic. 

“In a challenging 2020 business year, BASF was able to close out the year on a strong note,” says BASF’s chairman of the board of executive directors, Dr. Martin Brudermüller.

However, uncertainty about future developments remains “exceptionally high.” The company’s forecast therefore includes wide ranges to account for the risk of renewed significant disruptions to global supply chains and the associated negative effects on the entire economy. 

Brudermüller comments: “However, we are confident that without such negative impacts, we will be able to achieve earnings at the upper end of the forecast range.”

Brudermüller (left) and chief financial officer Dr. Hans Ulrich-Engel at BASF’s annual press conference for the full year 2020.At short notice, the company also created a global health campaign to provide its employees special offerings on remote working, such as videos and consultations on nutrition, exercise, ergonomics and psychological stress.

In total, the company will pay out €360 million (US$436 million) in bonuses to its employees. “With this bonus, we want to acknowledge the huge effort put in by the BASF team in the pandemic year 2020, which was difficult for everyone,” says Brudermüller.

Next year’s predictions
In line with overall economic recovery, BASF expects the health and nutrition sector to grow “markedly” in the year to come. Overall, 2021 is predicted to yield group sales growth between €61 billion and €64 billion (US$73.9 billion and US$77.6 billion).

The company’s planning assumes improved product availability, especially in the Nutrition & Health division. 

“We expect the segment’s EBIT before special items to be slightly above the previous year, due to a higher contribution from the Nutrition & Health division, driven by volume growth,” BASF states.

Group capital expenditures of €3.6 billion (US$4.4 billion) are planned for 2021. This figure rises to €22.9 billion (US$27.8 billion) in the period of 2021-2025, of which the Nutrition & Care segment will constitute 13 percent.

For 2020, BASF will propose a dividend of €3.30 (US$4.36) per share, the same as in 2019. “A reliable dividend payment is a priority for us, even in difficult times,” says Brudermüller. 

By Anni Schleicher