THE WHAT?  Chemical giant BASF SE has lowered its annual earnings forecast, attributing this decision to weak global industrial output and lagging consumer product demand. The company now projects earnings before interest and taxes to be around €4.4 billion, a significant drop from the previous estimate of €5.4 billion.

THE DETAILS?  BASF’s tempered expectations reflect growing investor unease, pointing to the sluggish global economies grappling with rising interest rates and slow recovery in China. While service demand has boosted GDP in the first half of 2023, industrial production growth has been decelerating. BASF also revealed that its second-quarter earnings were 57% lower than the previous year, citing significantly lower prices and volumes.

THE WHY?  The focus now shifts to BASF’s ability to pay dividends while expanding its business amidst these challenges. The recovery process remains uncertain, with key sectors like automotive and agriculture reducing their chemical inventories. An expected decrease in consumer goods demand will further pressure the company’s profit margins.