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BASF achieves leap in earnings
02-08-2010: In a further improving business environment, BASF has achieved a leap in earnings. The recent portfolio measures are paying off and the earnings strength of the chemicals business has improved sustainably. And BASF is continuing to actively shape its business further and is laying the foundation for future growth.
At a conference call to present BASF’s figures for the first half and second quarter of 2010, Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors stated: “Our strategy is clear: We are focusing on businesses that are closer to customers and on growth markets. The capital markets acknowledge our achievements: BASF share prices rose 7.8% in the first half of 2010, outperforming the DAX 30, DJ EURO STOXX 50 and all chemical industry indices.”
Following the upturn in business performance in the first three months of 2010, BASF continued to gain momentum in the second quarter. Sales rose 30% compared with the previous year to €16.2 billion. Second-quarter income from operations (EBIT) before special items rose 94% to €2.2 billion.
Sales in the first six months increased 28% to €31.7 billion and EBIT before special items rose 96% to €4.2 billion. Both sales and EBIT before special items were also above the good level of the first quarter of 2010. These developments were especially due to very high demand in the chemicals businesses, that is, in the Chemicals, Plastics, Functional Solutions and Performance Products segments. This was augmented by inventory restocking along the value chain.
Outlook for the full year 2010
The full-year estimates are based on the following expectations for the global economy: Growth of gross domestic product: 3 - 4%; Growth in industrial production: 7 - 8%; Growth in chemical production (excluding pharma): 7 - 8%; An average dollar-euro exchange rate of $1.30 per euro; An average annual oil price of $75 per barrel
Hambrecht said: “We expect our sales to grow in 2010 and outpace global chemical production. We anticipate that EBIT before special items will improve considerably and we will again earn a premium on our cost of capital. According to our dividend policy, we expect a higher dividend for 2010.”
BASF’s Chairman expects that economic recovery will continue at a moderate pace in the second half of 2010. The necessary consolidation of government budgets around the world will dampen demand, as will the winding down of national stimulus programs. Other risks are primarily associated with volatile raw materials markets, excess capacities, growing geopolitical tensions and protectionism.
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