BASF: Strategy for profitable growth paying off
BASF announces third quarter results 2000 Sales and income continue to increase Further growth in 2001
BASF increased sales and income from operations again in the third quarter of 2000. Sales rose 27% compared to the same period in 1999 to a record EUR 9 billion. Income from operations before special items was up more than 10% to EUR 765 million. In the period from January to September 2000, sales at BASF climbed 25% to over EUR 26.6 billion. In the same period, income from operations before special items increased by about 23% to over EUR 2.5 billion.
"We will keep our promise to increase comparable income from operations before special items by more than 10% in 2000," said Dr. Jürgen F. Strube, Chairman of BASF's Board of Executive Directors, today (November 9, 2000) in Ludwigshafen, Germany. Strube also forecast further grow in the coming years. BASF has been building on its clear strategy and has continously improved its portfolio in 2000. Through this, BASF's growth and profitability has reached a new level. Strube added, "From this level, we will continue to grow profitably. Greatly increased sales and income will be the proof of this."
Higher sales volumes and increasing raw material prices
That BASF's business is doing well can be clearly seen in the sales volumes which continued to increase. In the third quarter, sales volumes rose almost 6 %; for the period from January to September, the increase is over 8 %.
During the third quarter, business in many divisions continued to be impacted by increasing raw materials prices. Such a development intensifies the pressure on margins, since the required increases in selling prices are only possible to implement with a time lag. Overall, raw material costs in this quarter were 38% higher than in the same period last year.
Nevertheless, BASF was successful in passing on raw materials costs - even by comparison within the industry. Overall, selling prices were raised 12.5%. In the chemicals businesses, meaning the Chemicals, Colorants & Finishing Products, Plastics & Fibers segments, an 11% increase in prices was achieved. The higher prices largely compensated for the increases in raw material costs faced by the chemicals businesses in the third quarter. However, many divisions will have to work hard in the coming months to compensate for the narrowing of margins which occurred in the first half of the year.
Higher sales in all segments
All segments contributed to the sales growth in the third quarter. Plastics & Fibers achieved the largest increase in sales of any segment. Sales in this segment increased 40% to more than EUR 3 billion. The Chemicals and Oil & Gas segments improved income from operations before special items.
The Oil & Gas segment is increasing its contribution to BASF's business more and more. Sales in this segment in the third quarter rose 23% to EUR 946 million compared with the previous year's quarter. Income from operations before special items rose 83% to EUR 357 million. The segment's sales in the period from January to September increased about 27% to EUR 2.56 billion, while income from operations before special items soared 132% to EUR 844 million. Especially when crude oil prices are high and the margins in the chemicals businesses are under pressure, the ea
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