BASF Maintains Good Business Performance in the Third Quarter
LUDWIGSHAFEN, Germany, October 29, 2012
LUDWIGSHAFEN, Germany, October 29, 2012 /PRNewswire/ --
- 3rd quarter 2012:
*Sales up 8% and EBIT before special items up 5% compared with third
quarter of 2011
*Successful business development continues in Agricultural Solutions and
Oil & Gas segments
*Earnings in chemicals business below third quarter of previous year
- Outlook for full year 2012 confirmed: Increase in sales and earnings
After a solid first half, BASF maintained good business performance overall in
the third quarter. Sales rose by 8% to €19 billion, particularly due to higher
volumes. At just under €2.1 billion, income from operations (EBIT) before
special items was 5% above the level of the third quarter of 2011. The higher
contribution from the Oil & Gas and Agricultural Solutions segments more than
offset lower earnings in the chemicals business (which comprises the
Chemicals, Plastics, Performance Products and Functional Solutions segments).
At the presentations of the results, Dr. Kurt Bock, Chairman of the Board of
Executive Directors of BASF SE said: "In the past quarter, the outlook for the
world economy has once again not improved and the uncertainty on the
international capital markets continues. In China, growth in the third quarter
of 2012 has slowed once again compared with the same quarter of the previous
year. We see stabilization at the current level in China, but no visible
BASF confirms outlook for full year 2012
The company has adjusted some of its expectations for the global economy
(previous forecast in parentheses):
*Growth of gross domestic product: 2.2% (2.3%)
*Growth in industrial production: 2.8% (3.4%)
*Growth in chemical production: 2.9% (3.5%)
*An average euro/dollar exchange rate of $1.30 per euro ($1.30 per euro)
*An average oil price of $110/barrel in 2012 ($110/barrel)
BASF does not anticipate an upturn in the global economy or in demand in its
chemicals business for the fourth quarter of 2012. "However, we still aim to
exceed the 2011 record levels in sales and EBIT before special items," said
Bock. The forecast is supported by the resumption of the crude oil production
in Libya and by the company's successful business with crop protection
products. Earnings from the chemicals business in 2012 will not match the
level of the previous year.
"In this challenging environment, we are concentrating on our strengths and
expanding our business, but we are also keeping an eye on the costs and are
continuing to optimize our business processes," said Bock. For example, at the
beginning of this week, BASF Group Company Wintershall signed an agreement
with Statoil ASA to substantially expand its production of oil and gas on the
Norwegian continental shelf. In addition, through the planned acquisition of
US-based Becker Underwood, Inc., BASF aims to become one of the leading global
providers of technologies for biological seed treatment and biological crop
protection. BASF's strategic excellence program STEP, which was already
announced in November 2011, is making good progress. STEP comprises more than
100 projects that are expected to successively lower fixed costs and raise
profit margins. From completion of the program in 2015, the company expects an
annual earnings contribution of around €1 billion.
Business development in the segments in the 3rd quarter
In the Chemicals segment, sales grew significantly in comparison with the
previous third quarter. This was due in particular to sales to Styrolution
Group companies in addition to positive currency effects and higher sales
volumes. Earnings declined considerably, owing to lower margins as well as to
plant shutdowns in the Petrochemicals division.
Sales rose in the Plastics segment, especially as a result of currency
effects. In the Polyurethanes division, sales volumes and prices also
increased. Despite improved earnings in Polyurethanes, lower margins for
polyamide precursors led to a considerable decline in earnings in the segment
compared with the same period of the previous year.
Sales in the Performance Products segment were slightly above the level of the
third quarter of 2011. This was mainly the result of positive currency
effects. Lower volumes and sales prices weakened sales growth, however.
Earnings declined as a result of higher costs due to idle capacity as well as
increased spending on research and development.
Despite positive currency effects, sales fell in the Functional Solutions
segment. This was mostly due to the lower contribution from precious metal
trading as a result of reduced volumes and sales prices. Earnings did not
match the level of the previous third quarter, particularly because of higher
raw material costs.
Sales significantly increased in the Agricultural Solutions segment. The start
to the season in South America and fall business in the Northern Hemisphere
were both very successful. In addition to improved sales volumes, currency
effects also contributed positively to sales development. Earnings were
considerably above the level of the previous third quarter thanks to higher
Sales grew significantly in the Oil & Gas segment. Sales volumes were higher
in both business sectors. Greater demand on spot trading markets led to higher
volumes in natural gas trading. After the suspension of production in Libya
from February to October of the previous year, it was possible to continuously
produce crude oil there during the third quarter of 2012. Earnings therefore
significantly exceeded the level of the previous third quarter, and net income
grew considerably, as well.
Other posted a decline in sales, largely as a result of the divestiture of our
styrenic plastics business, which was contributed to the Styrolution joint
venture as of October 1, 2011. Earnings in Other declined significantly. In
addition to the missing earnings contribution from the styrenic plastics
business, the increase in provisions for the long-term incentive program
resulting from a higher share price negatively impacted earnings. By contrast,
the reversal of provisions for the long-term incentive program in the previous
third quarter had led to an improvement in earnings.
Business development in the regions in the 3rd quarter
Sales in Europe were 12% higher than the level of the third quarter of 2011.
As a result of the continuous production of crude oil in Libya, volumes in the
Oil & Gas segment increased considerably. The Chemicals segment also posted
significant sales growth, which was largely attributable to portfolio effects.
EBIT before special items was significantly boosted thanks to the higher
contribution from the Oil & Gas and Agricultural Solutions segments: At €1.4
billion, this represented a year-on-year increase of €214 million.
In North America , sales decreased by 9% in U.S. dollars and rose by 3% in
euro terms. This development was supported by positive currency effects and
demand-driven higher sales volumes in the Plastics segment. Lower sales prices
weakened sales growth, however. At €229 million, earnings were €72 million
lower than in the third quarter of 2011 particularly owing to unscheduled
plant shutdowns in the Petrochemicals division.
Sales in Asia Pacific fell by 6% in local-currency terms while growing by 5%
in euro terms. Positive currency effects were able to more than offset
declining sales prices. Sales volumes in the region improved thanks primarily
to a considerable volumes growth in the Chemicals segment. Earnings declined
by €23 million to €236 million despite the significantly increased
contribution from the Polyurethanes division. This was mostly due to higher
depreciation and amortization on investments and increased spending on
research and development.
In South America, Africa, Middle East , sales increased by 1% in local
currency terms and 3% in euro terms. Thanks to high sales volumes and currency
effects, the Agricultural Solutions segment made a substantial contribution to
sales growth. By contrast, sales declined in the Catalysts division and the
Oil & Gas segment. At €157 million, earnings were €13 million below the level
of the previous third quarter, largely as a result of lower earnings
contribution from the Oil & Gas segment.
BASF is the world's leading chemical company: The Chemical Company. Its
portfolio ranges from chemicals, plastics, performance products and crop
protection products to oil and gas. We combine economic success, social
responsibility and environmental protection. Through science and innovation we
enable our customers in almost all industries to meet the current and future
needs of society. Our products and system solutions contribute to conserving
resources, ensuring healthy food and nutrition and helping to improve the
quality of life. We have summed up this contribution in our corporate purpose:
We create chemistry for a sustainable future. BASF posted sales of about €73.5
billion in 2011 and had more than 111,000 employees as of the end of the year.
BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA)
and Zurich (AN). Further information on BASF is available on the Internet at
Note to Editors
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This release contains forward-looking statements based on current experience,
estimates and projections of BASF management and currently available
information. They are not guarantees of future performance, involve certain
risks and uncertainties that are difficult to predict and are based upon
assumptions as to future events that may not prove to be accurate. Many
factors could cause the actual results, performance or achievements of BASF to
be materially different from those that may be expressed or implied by such
statements. BASF does not assume any obligation to update the forward-looking
statements contained in this release.
Contact: Elena Papayorgioglu, Phone: +971-4-8072-106, Telefax:
+971-4-8838-675, email@example.com; BASF FZE Jebel Ali Free Zone,
P.O.Box 61309, Dubai, United Arab Emirates, Phone +971-4-8838773, Telefax
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