BASF Q1 2023 Results: Resilience
Outlook for 2023 - BASF in 2023: Proving its Worth in the Portfolio?
For entertainment only!
Here is my piece from earlier this year:
BASF Analysis - Undervalued monster?
This is not investment advice for entertainment only. I am not an engineer, and I lack knowledge of chemistry massively. In my opinion, we need some grit and dirtiness in our portfolios in the next decade. BASF is extremely ugly — my Marty Mcsorley. Grizzled tough and mean, but it comes with high risk. BASF can't be ignored.
BASF is doing in my portfolio what it should do - be resilient. I was expecting an even worse start for the year and hoping to snatch more BASF at lower prices.
Key points from Q1
BASF's Q1 2023 sales and EBIT before special items were down by 13.4% and 31.5%, respectively, above analyst estimates.
The agricultural and automotive sectors performed nicely.
Net income at €1.6 billion, up €340 million year-on-year.
Proposed dividend of €3.40 per share, offering a high yield of 7.3%.
2023 outlook: Sales projected between €84 billion and €87 billion; EBIT before special items between €4.8 billion and €5.4 billion.
Strong performance in the agricultural and automotive sectors demonstrates BASF's resilience and adaptability. The proposed dividend yield of 7.3% is a testament to BASF's commitment to return value to shareholders like myself, even in tough times.
For my fourth line: I want resilient, well-managed companies offering reliable shareholder returns.
Recession…
“BASF starts 2023 better than expected in a stagnating environment.”
The results in Q1 have been “ok”, but some have started to cut costs heavily and expect zero growth for 2023.
Nothing has changed for me in BASF, and I was not expecting anything spectacular short term; if the thesis changes, I will cut this asap. It feels like everybody on Twitter is now expecting a major crash in markets. Sure, most companies are heavily overvalued, but BASF is still compared to those massively “undervalued”. We want to buy excellent companies at low prices.
Biggest risk: geopolitical tensions and commodity price volatility.
Conclusion
Overall, BASF is a well-managed company with a strong track record of profitability. BASF is well-positioned to benefit from the strong global economic recovery, and it is investing heavily in innovation and sustainability. BASF benefits greatly from this EU “green transition” in the long run.
BASF is a monster of a company. I am long BASF, and I am confident it will continue to be a winner in the years to come.