Basf Se S/Adr

Good morning, ladies and gentlemen. On behalf of BRZEF, I would like to welcome you to our conference call on the first quarter 2024 results. Throughout today's recorded presentation, all participants will be in listen-only mode. The presentation will be followed by a question and answer session. If you have any difficulties hearing the conference, please press the star key followed by zero on your telephone for operator assistance. This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors. They involve various risks and uncertainties, and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in Opportunities and Risks of the BRSF Report 2023. BRSF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. With me on this early morning call today are Martin Kudermüller, Chairman of the Board of Executive Directors, and Dirk Elvermann, Chief Financial Officer. Please be aware that we have already posted the speech on our website at brsf.com slash Q1 2024. Now I would like to hand over to Martin Brudermüller.

Good morning, ladies and gentlemen. Sirk Elbermann and I welcome you to our analyst conference call. Today we will provide you with details regarding our business development in the first quarter of 2024. Let's start with the development of chemical production by region. Based on the currently available data, global chemical production grew by 5.4% in Q1 2024 compared with the prior year quarter on account of a strong growth in China. As in previous quarters, the growth in China was driven by recovering domestic demand and exports. However, this volume growth in China was still associated with low sales prices and is influenced by positive base effects. In North America, chemical production was essentially flat, while in the European Union, production increased slightly compared with the week prior year quarter, and in Asia, excluding China, production decreased slightly. To sum up, the volume recovery continued, but slowly this trend is also seen in a sequential comparison as volumes increased slightly in Q1 2024 compared with Q4 2023. Still, we cannot yet confirm a fundamental turnaround in industry dynamics. For this, we will need to see the current positive trend continuing in the coming quarters. We now move on to BASF's performance in the first quarter of 2024 compared with the prior year quarter. Overall, BASF group sales were 12% lower at 17.6 billion euros. This was mainly due to lower sales prices, which declined across almost all segments. Prices predominantly decreased on account of lower raw material prices. In agricultural solutions, we were able to slightly increase prices. Currency headwinds dampened sales in all divisions. Volumes of the ESF group increased by 0.5%. Excluding precious and base metals, volume increased by 2.1% compared with the prior year quarter. In terms of earnings development, we had a solid start to the year. EBITDA before special items amounted to 2.7 billion euros. This is slightly below the figure of the prior year quarter and slightly ahead of analyst consensus. Higher earnings in the nutrition care, materials, industrial solutions, and chemical segments more than compensated for the decline in other agricultural solutions and service technologies. Let's take a closer look at the volume development by segment. Volumes in the chemicals, materials, nutrition care, and industrial solution segments increased, while agricultural solutions and service technology recorded a decline. Higher volumes in our upstream businesses led to improved utilization rates at our major plants and positively impacted profitability. Excluding precious and base metals, The service technology segment recorded a volume decline of only 0.9% on account of the catalyst division. Volumes in the coatings division increased. In agricultural solutions, volume declined mainly to lower sales of herbicides and fungicides compared with the record prior year quarter. And with that, I hand over to Dirk for more financial information.

Thank you, Martin. Good morning, ladies and gentlemen. I will now provide you with further financial details for the first quarter of 2024 compared with the prior year quarter. As Martin already mentioned, EBITDA before special items decreased by 5% and amounted to 2.7 billion euros. EBIT before special items declined by 9% and came in at 1.8 billion euros. Net income declined by 12% to 1.4 billion euros. In Q1 2024, the tax rate was 20% compared with 17% in the prior year quarter. ESF cash flows from operating activities improved by 49% to minus 513 million euros, and free cash flow was minus 1.5 billion euros compared with minus 1.9 billion euros in Q1 2023. I will comment on the cash flow development in more detail on one of the next slides. BASF's equity ratio remained very solid. It amounted to 47.2% at the end of March 2024. Now let's take a look at the development of EBITDA B4 special items by segment compared with the prior year quarter. BASF's group earnings performance was driven in particular by the significant decline in earnings in other segments. which was primarily attributable to higher bonus provisions as well as high expenses from the long-term incentive program and lower contributions from DSF internal insurance companies. Agricultural solutions and surface technologies also recorded a decline in ABDA before special items. In agricultural solutions, this was mainly due to lower volumes. The decline in earnings in the surface technology segment was due to lower precious metal prices in the catalyst division. This was partially offset by the increase in earnings in the coatings division. All other segments, nutrition and care, materials, industrial solutions, and chemicals, increased ABDA before special items, in some cases significantly, mainly due to fixed cost reductions and higher contribution margins, predominantly driven by higher volumes. For detailed explanation of the earnings development by segment, please refer to BSS quarterly statement Q1 2024 published this morning. I will now continue with more details of our cash flow development. In the first quarter of 2024, cash flows from operating activities improved by 502 million euros to minus 530 million euros. Changes in net working capital led to a cash outflow of 3.2 billion euros compared with the cash outflow of €3.6 billion in the prior year quarter. This positive development was due to lower payments from declining accounts payable. Changes in inventories were almost stable. Overall, this once again demonstrates a strong focus on inventory management and cash generation. Compared with the prior year quarter, payments made for property, plant and equipment and intangible assets rose by 9% to €943 million. This increased was mainly attributable to the construction of our new plant site in South China. In Q1 2024, the free cash flow improved by 426 million euros to minus 1.5 billion euros. Typically, DSL's free cash flow is negative in Q1 and recovers in the course of the year. This is mainly due to the seasonality of the cash flows from operating activities in our agricultural solution business. Let's now turn to our balance sheet at the end of March 2024 compared with year-end 2023. Total assets amounted to €81.7 billion. This is an increase of €4.3 billion, mostly on account of higher current assets, which increased by €3.4 billion. This increase is mainly attributable to the previously mentioned seasonality of our businesses, particularly in the agricultural solutions segment, which resulted in higher trade accounts receivable compared with year-end 2023. Higher additions to property, plant, and equipment were the main driver for the slight increase in non-current assets compared with year-end 2023. That increased to 18.2 billion euros at the end of March 2024, compared with 16.6 billion euros at the end of December 2023. At 47.2%, our equity ratio at the end of March 24 was at the same level as our year-end 2023. And with that, back to you, Martin.