I’ve reviewed all Forward AM’s financial documents from the BASF era, and one thing puzzles me...

The Atomic Layers: S6E4 (00151)

Atomic Layer of the Day:

Two days ago, I reported that Forward AM had closed its U.S. branch, following its insolvency filing on November 21, 2024. After publishing the article, I reviewed the company’s financial documents to gain a clearer understanding of the situation.

Honestly, it never occurred to me to do this before—specifically for BASF/Forward AM. I had also never considered whether the 3D printing division of the German chemical giant was profitable or not.

In a massive global conglomerate like BASF, it seemed somewhat irrelevant.

Costs in such organizations are accounted for in many different ways. It’s not about fraud or "tax optimization," but rather the countless internal connections and formal, legal, and accounting dependencies within the Group that no outsider could possibly grasp.

However, Forward AM has not been part of BASF for six months and has now filed for insolvency. So, I started examining the financial records.

Let me put it this way—it looks very bad.

That said, within BASF’s context—a company operating on a scale of billions of EUR/USD, these are minor sums of no real significance. I’m confident that no one in the Group ever truly felt the impact of Forward AM’s revenues or losses (yes, losses—because profits were never a part of this story).

But as an independent company—especially one in the 3D printing sector—the financial results are dire. As you’ll see shortly, the question isn’t how to fix it but why anyone would even try?

Financial Results

The financial data comes from the official company register, where Forward AM is listed under its formal name, “BASF 3D Printing Solutions GmbH.” The records date back to 2018, but that year was transitional after the company was spun off from BASF New Business GmbH. Therefore, I focused on results starting from 2019, providing an overview of the past five years through 2023.

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Year 2019

• revenue: 8 962 556,58 EUR

• loss: -12 117 000,00 EUR

The company nearly doubled its revenue compared to 2018 (from €4.53 million to €8.96 million). However, despite the significant increase in sales, it recorded a deeper operating loss, which grew from -€4.42 million in 2018 to -€12.12 million in 2019.

The primary sources of revenue were R&D services provided to BASF New Business GmbH (€6.42 million) and sales of 3D printing-related products (€2.54 million).

Operating costs rose significantly, particularly material costs (from €0.25 million to €2.60 million) and personnel costs (from €3.5 million to €5.48 million). The company hired an additional 50 employees. Expenses related to expanding operations in North America and the construction of a new facility in Maastricht also contributed to the increase, especially in the "other operating costs" category, which rose from €3.89 million to €11.24 million.

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Year 2020

• revenue: 7 521 169,52 EUR

• loss: -17 279 000,00 EUR

Revenue decreased by -16% compared to 2019 (from €8.96 million to €7.52 million), while the net loss significantly deepened, growing from -€12.12 million in 2019 to -€17.28 million in 2020.

External sales increased by 43.6%, while revenue from R&D activities for BASF New Business GmbH declined. Personnel costs rose by 16.7%, driven by increased staffing levels and higher social costs. Other operating costs increased by 29.5% (from €11.24 million to €14.56 million), primarily due to underutilization of the Maastricht facility and the expansion of rented space.

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Year 2021

• revenue: 12 775 329,68 EUR

• loss: -13 921 774,43 EUR

In 2021, the company achieved a historic revenue growth of +69.9%. The main sources were the sale of products and services related to 3D printing technology and R&D activities conducted for the parent company. However, despite this significant increase in sales, the company once again recorded a net loss of -€13.92 million, which was fully covered by the parent company.

Material and personnel costs increased proportionally to the expansion of operations, impacting the operating result. A particularly notable factor was the rise in employee-related costs due to a 21% increase in staffing compared to the previous year.

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Year 2022

• revenue: 13 562 963,94 EUR

• loss: -13 179 427,58 EUR

Revenue growth slowed to +6.2%. A significant portion of revenue came from the sale of products and services in the 3D printing technology sector, reflecting the ongoing commercialization of operations. Despite challenging economic conditions, such as the impacts of the war in Ukraine and rising raw material and energy costs, the company increased its revenue from customers and BASF group entities by +33%.

The net loss once again amounted to -€13 million. However, compared to the previous year, the company reduced its financial liabilities to related entities, improving the structure of its liabilities. Nevertheless, reliance on funding from the BASF group remained a critical component of its operations.

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Year 2023

• revenue: 8 025 477,47 EUR

• loss: -24 319 491,89 EUR

In 2023, revenues decreased by -40.8% compared to the previous year, primarily due to the termination of the research and development collaboration with BASF New Business GmbH. Despite this change, revenues from external customers grew by +8.84%, reaching EUR 5.86 million.

The net loss amounted to EUR -24.32 million, significantly exceeding the result from 2022. The key factors were higher operating costs, including those related to the underutilization of the production facility in Maastricht and increased spending on research and development. Total operating costs rose by +34%, reaching EUR 16.76 million.

From a financial perspective, the company's balance sheet indicated an increase in assets, mainly due to higher receivables from the parent company. Nevertheless, the equity ratio continued to decline, highlighting the company's reliance on intra-group financing within BASF.

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And here, my friends, is how it looks on the chart (revenues in green, losses in red):

So, this was never a profitable business. What kept it alive was BASF, which covered the losses year after year. As I mentioned, for the world’s largest chemical company, those tens of millions of euros annually didn’t make much of a difference.

However, once the company gained independence in mid-2024, such a level of losses became lethal without additional funding. The insolvency filing should come as no surprise.

But what puzzles me is something else…

Why was the company spun off and the decision made to go solo in the first place? Looking at the above chart, what was the expectation? That things would somehow improve?

Interesting, isn’t it…?

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Atomic Layer from the Past:

01-04-2016: MakerBot announced the Smart Extruder+.

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