We have adjusted our expectations for the global economic environment in 2017 as follows (forecast from the Half-Year Financial Report 2017 in parentheses):
- Growth of gross domestic product: 2.8% (2.5%)
- Growth in industrial production: 3.1% (2.5%)
- Growth in chemical production: 3.4% (3.4%)
- Average euro/dollar exchange rate of $1.10 per euro ($1.10 per euro)
- Average Brent blend oil price for the year of $50 per barrel ($50 per barrel)
The statements on opportunities and risks made in the BASF Report 2016 continue to apply. For the fourth quarter of 2017, we continue to expect considerable risks from currency and margin volatility. There is still a risk of a global economic slowdown – due in part to the increased tendency toward protectionism – as well as a risk of escalating geopolitical conflicts. Our overall assessment of opportunities and risks remains principally valid.
Sales and earnings development1 in the Chemicals segment in the third quarter of 2017 exceeded our expectations. As a result, we now expect the BASF Group’s EBIT before special items for the second half of 2017 to considerably exceed the level of the second half of 2016.
With the exception of the forecast for EBIT after cost of capital, we are maintaining our 2017 forecast for the BASF Group (previous forecast from the Half-Year Financial Report 2017 in parentheses):
- Considerable sales increase (considerable increase)
- Considerable increase in EBIT before special items and EBIT (considerable increase)
- Significant premium on cost of capital with considerable increase in EBIT after cost of capital2 (slight increase in EBIT after cost of capital)
Sales and earnings forecast for the BASF Group presented in the Half-Year Financial Report 2017, Economic Environment and Outlook and in the BASF Report 2016, Outlook 2017
1 With reference to sales, “slight” represents a change of 1–5%, while “considerable” applies to changes of 6% and higher. “At prior-year level” indicates no change (+/–0%). For earnings, “slight” means a change of 1–10%, while “considerable” is used for changes of 11% and higher. “At prior-year level” indicates no change (+/–0%).
2 For an explanation of this figure, see the BASF Report 2016, Value-based management.