BASF’s business to face downturn in second half – CEO says

FRANKFURT (Reuters) – Chemicals group BASF will be likely to face a considerable downturn early in the second half of the year because inflation will begin to weigh on consumer demand and competitors are expected to reinstate crippled supply chains, its CEO said.

“Speaking for my business, we are able pass along higher prices because there is no arbitrage trade because supply chains don’t work,” Chief Executive Martin Bruedermueller said at a German industry event.

But inflation and, in its wake, lower consumer demand was “knocking on the front door”, he said. He added that rivals would soon be able to improve their supply chains, which are battered by the coronavirus pandemic and global shortages.

“That means no more pricing power and then we will struggle to generate margins on top of the high energy prices. That’s when it gets really difficult,” he added.

(Reporting by Ludwig Burger. Editing by Jane Merriman)