BASF reports dip for Nutrition & Health in Q2 amid “profitable” overview
28 Jul 2021 --- BASF has reported a “considerable decrease” in its Nutrition & Health division in its Q2 results for 2021, which – along with Care Chemicals – is part of its Nutrition & Care segment.
“At €138 million (US$162 million), EBIT before special items declined considerably compared with the second quarter of 2020, due primarily to lower margins and higher fixed costs in both divisions,” the company explains.
However, Nutrition & Care saw an overall 2 percent increase in Q2. Compared to last year, the segment rose to reach €1.6 billion (US$1.89 billion) driven by sales growth in the Care Chemicals division.
The decline of the Nutrition & Care segment is a continuation of the pattern reported in Q1 2021 results.
=Last year, the Nutrition & Care segment brought in 10 percent of total BASF sales, the second-lowest ranking after the Other segment (4 percent).
For the second half of 2021, BASF anticipates a stable industrial economic development for the company overall. Stability after COVID-19
For the second half of 2021, BASF anticipates a stable industrial economic development for the company overall.
“Our forecast assumes that there will be no severe restrictions on economic activity due to measures to combat the coronavirus pandemic in the second half of 2021,” the company notes.
Overall, the company saw a sales growth of 56 percent to €19.8 billion (US$23.38 billion). EBIT before special items increased to €2.4 billion (US$2.83 billion) and cash flows from operating activities were €2.5 billion (US$2.95 billion).
Its 2021 outlook for sales raised to between €74 billion (US$87.37 billion) and €77 billion (US$90.91 billion) and for EBIT before special items to between €7.0 billion (US$8.26 billion) and €7.5 billion (US$8.86 billion).
“The strong growth momentum of the previous two quarters has continued and thanks to higher prices and volumes, we can present very strong Q2 results today,” supports Dr. Martin Brudermüller, chairman of the board of executive directors of BASF.
“We achieved volume growth and price increases across all regions and all segments compared with the second quarter of 2020,” claims Brudermüller.
Decline in Nutrition & Care
EBIT before special items in Other and in the Nutrition & Care and Agricultural Solutions segments decreased considerably, according to the company.
However, EBIT increased from €59 million (US$69.66 million) in the second quarter of 2020 to €2.3 billion (US$2.72 billion).
“Considerably higher earnings in our upstream businesses due to higher prices and volumes were the main driver for the strong increase in earnings overall,” says Brudermüller. “In our downstream segments, we also managed to increase volumes and prices based on strong demand.”
According to the company, sales performance was driven primarily by slightly higher overall volumes resulting from the volume increase in all business areas of Care Chemicals.
The decline of the Nutrition & Care segment is a continuation of the pattern reported in Q1 2021 results. Volumes in the Nutrition & Health division matched the level of the prior-year quarter. Higher volumes in the pharmaceutical business offset lower volumes in the animal nutrition business, mainly due to the ongoing expansion of the vitamin A plant.
Sales performance was also weighed down by negative currency effects, mainly relating to the US dollar.
Income from operations (EBIT) before special items declined considerably compared with the second quarter of 2020, due primarily to lower margins and higher fixed costs in both divisions.
Margins in Nutrition & Health declined, particularly because of the price and currency-related sales decrease as well as higher raw materials costs. The margin decrease in Care Chemicals resulted mainly from higher raw materials costs.
Industry moves
BASF recently completed the sale of its manufacturing site in Kankakee, Illinois, to Kensing, a newly founded affiliate of One Rock Capital Partners. The agreement also covers the Kankakee site’s associated businesses, which include vegetable-oil-based raw material sterols and natural vitamin E, anionic surfactants and esters.
The company is also “exploring possible synergies” with industrial synthetic biotech company Bota Biosciences following BASF Venture Capital’s investment of an undisclosed sum.
Meanwhile, Azelis is distributing BASF Human Nutrition’s health and colorant ingredients in the F&B and dietary supplement market segments in Greece, building upon the existing partnership between Azelis and BASF Human Nutrition in Turkey.
Edited by Kristiana Lalou
