BASF increases earnings considerably in the second quarter due to higher volumes

   BASF increases earnings considerably in the second quarter due to higher
                                   volumes

PR Newswire

LUDWIGSHAFEN, Germany, July 24, 2014

LUDWIGSHAFEN, Germany, July 24, 2014 /PRNewswire/ --

  oSecond quarter 2014:

       oSales €18.5billion (+ 1 percent)
       oEBIT before special items €2.1billion (+ 12 percent)
       oConsiderable earnings growth in the chemicals business and in Oil &
         Gas
       oEarnings in Agricultural Solutions considerably below previous year
         quarter due to currency effects

  oOutlook 2014 confirmed: slight increase in EBIT before special items
    expected despite a more challenging environment

BASF Corporation Logo.

BASF's business developed positively in the second quarter of 2014. At
€18.5billion, sales rose by 1 percent compared with the same period of the
previous year.

"This was largely the result of higher sales volumes in our chemicals
business, which comprises the Chemicals, Performance Products and Functional
Materials & Solutions segments, as well as in the Oil&Gas segment," said
Kurt Bock, Chairman of the Board of Executive Directors of BASF SE at the
Half-Year Telephone Conference. Sales prices decreased slightly. On balance,
portfolio measures increased sales by 1 percent. Continuing negative currency
effects (minus 4 percent) and a considerable decline in sales in Other
dampened sales growth for the BASF Group.

At around €2.1billion, income from operations (EBIT) before special items
surpassed the level of the second quarter of 2013 by €221million. Earnings
increased considerably in the chemicals business and the Oil & Gas segment.
Earnings declined considerably, however, in the Agricultural Solutions segment
and in Other. "The devaluation of almost all major currencies against the euro
negatively impacted earnings by roughly €200million compared to the previous
second quarter," explained Bock.

EBIT increased by €246million to €2.0billion compared with the previous
second quarter. Net income rose by €142million to €1.3billion. Earnings per
share were €1.41 in the second quarter of 2014 compared with €1.26 in the same
period of the previous year. Adjusted for special items and amortization of
intangible assets, earnings per share rose to €1.54 (second quarter of 2013:
€1.40).

North America

In North America, sales grew by 4 percent in euro terms and by 10 percent in
U.S. dollars compared to the second quarter of 2013. "We had significantly
higher sales volumes, especially in the Chemicals and Functional Materials &
Solutions segments," said Hans Engel, Chairman and CEO of BASF Corporation.

At €466million, EBIT before special items was €19million below the level of
the same quarter of 2013. While earnings in the Chemicals and Functional
Materials & Solutions segments increased considerably, earnings declined in
the Performance Products and Agricultural Solutions segments as well as in
Other.

Further implementation of the "We create chemistry" strategy

"In the past months, we continued to implement our 'We create chemistry'
strategy. We invested in attractive business areas and were successful in the
market with our innovations. In addition, we optimized businesses and
increased our efficiency," said Bock.

Just a few days ago, BASF inaugurated a new production plant for mobile
emissions catalysts in Sroda Slaska near Wrocław, Poland. The company is also
increasing investments in plastics and plastic precursors business in Asia.
The restructuring of the Performance Products segment is on track. Through the
restructuring measures in this segment, more than 2,000 positions will be
reduced by the end of 2017. BASF expects an annual earnings improvement of
about €500million from 2017 onward. One-time costs are €250to300million.

Outlook for full year 2014

For 2014, BASF now expects weaker growth in the global economy than was
foreseen six months ago. The weakness of relevant major currencies is an
additional burden. The company has thus reduced some of its expectations for
the global economy in 2014 (previous forecast in parentheses):

  oGrowth of gross domestic product: 2.5 percent (2.8 percent)
  oGrowth in industrial production: 3.7 percent
  oGrowth in chemical production: 4.4 percent
  oAn average euro/dollar exchange rate of $1.35 per euro
    ($1.30 per euro)
  oAn average oil price for the year of $110 per barrel

Bock: "The slight upturn in growth expected for the global economy and key
customer industries in 2014 has a positive effect on our business. We thus
stand by our outlook for 2014 despite even more unfavorable currency
developments and increased political risks. We aim to increase our sales
volumes excluding the effects of acquisitions and divestitures."

Nonetheless, sales are likely to decrease slightly compared with 2013, due to
the divestiture of the gas trading and storage business, as well as to
continuing negative currency effects. BASF expects a slight rise in EBIT
before special items, especially as a result of considerably higher
contributions from the Performance Products and Functional Materials &
Solutions segments. EBIT is likely to increase considerably. Special income
from the planned divestiture of the gas trading and storage business as well
as from the divestiture of BASF's share in the Styrolution joint venture will
make a significant contribution here.

BASF now expects the closing of the asset swap with Gazprom, agreed upon in
December 2013, in autumn 2014 – still with retroactive financial effect from
April 1, 2013. The transaction includes the divestiture of the gas trading and
storage business. The complex legal unbundling process involving the
establishment of new companies in Russia, the Netherlands and Germany is
taking longer than initially anticipated.

Business development in the segments in the second quarter

In the Chemicals segment, sales were up 3 percent compared with the second
quarter of 2013. Sales volumes rose in all divisions, posting especially
strong volumes growth in the Petrochemicals division in North America. Lower
sales prices and negative currency effects reduced the sales increase. EBIT
before special items surpassed the level of the previous second quarter by
€75million and increased to €570million, mainly as a result of higher
margins in the Petrochemicals division.

Sales in the Performance Products segment declined by 3 percent due to
negative currency effects. With prices stable, volumes slightly increased;
sales volumes grew especially in the Asia Pacific region. EBIT before special
items grew by €41million to €435million. This was mainly the result of lower
fixed costs, partly owing to restructuring measures.

Sales matched the previous second-quarter level in the Functional Materials &
Solutions segment. Sales volumes increased considerably, primarily in the
Catalysts division. Negative currency effects put a strain on sales
development. In the Construction Chemicals division, sales declined
considerably as a result of portfolio effects, as well. EBIT before special
items increased by €63million to €356million. This was largely owing to
higher volumes and reduced fixed costs.

In the Agricultural Solutions segment, sales declined by 4 percent compared
with the second quarter of 2013. This was due to negative currency effects.
Sales prices could be raised in all regions. Volumes remained stable. At
€433million, EBIT before special items was €52million below the previous
second-quarter level, on account of negative currency effects and higher
research expenses.

Sales in the Oil & Gas segment exceeded the level of the previous second
quarter by 13 percent. Sales volumes increased sharply, especially in the
Exploration & Production business sector. The activities in Norway acquired
from Statoil also contributed to sales growth. In the Natural Gas Trading
business sector, significantly lower gas prices dampened sales development.
EBIT before special items rose by €205million to €587million as a result of
the higher volumes.

Compared with the second quarter of 2013, sales in Other fell by 20 percent.
This was primarily due to reduced raw material sales and lower plant
availability. EBIT before special items declined by €111million to minus
€328million. Currency losses contributed significantly to this development.

Business development in other regions in the second quarter

Sales at companies located in Europe rose by 1 percent in the second quarter
compared with the same quarter of the previous year. Higher volumes in the
segments Chemicals, Functional Materials & Solutions and especially Oil & Gas
could more than compensate for lower prices and negative currency effects.
Sales declined considerably in Other. EBIT before special items grew by
€273million to €1.3billion mainly due to higher contributions from the
chemicals business and from the Oil & Gas segment.

In Asia Pacific sales rose by 1 percent in local-currency terms, but were down
5 percent in euro terms owing to negative currency effects and slightly
declining sales prices. Sales decreased considerably in the Chemicals segment.
EBIT before special items fell by €24million to €172million. Considerably
lower earnings in the Chemicals and Agricultural Solutions segments
contributed to this.

Sales in South America, Africa, Middle East grew by 6 percent in
local-currency terms, but fell by 7 percent in euro terms. Sales volumes
declined slightly. Highly negative currency effects could only be partially
offset by increased prices. EBIT before special items decreased by €9million
to €68million, mainly due to the Oil&Gas segment.

BASF - The Chemical Company

BASF Corporation, headquartered in Florham Park, New Jersey, is the North
American affiliate of BASF SE, Ludwigshafen, Germany. BASF has nearly 17,000
employees in North America, and had sales of $19.3 billion in 2013. For more
information about BASF's North American operations, visit www.basf.us.

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 with
environmental protection and social responsibility. Through science and
innovation, we enable our customers in nearly every industry to meet the
current and future needs of society. Our products and solutions contribute to
conserving resources, ensuring nutrition and improving quality of life. We
have summed up this contribution in our corporate purpose: We create chemistry
for a sustainable future. BASF had sales of about €74 billion in 2013 and over
112,000 employees as of the end of the year. Further information on BASF is
available on the Internet at www.basf.com.

On July 24, 2014, you can obtain further information from the internet at the
following addresses:

Interim Report (from 7:00 a.m. CEST)
basf.com/interimreport(English)
basf.com/zwischenbericht (German)

Global Press Release (from 7:00 a.m. CEST)
basf.com/pressrelease(English)
basf.com/pressemitteilungen (German)

Live Transmission (from 9:00 a.m. CEST)
basf.com/pcon(English)
basf.com/pk (German)

Speech – Print version (from 9:00 a.m. CEST)
basf.com/pcon (English)
basf.com/pk(German)

Live Transmission – Telephone conference for analysts and investors (from
11:00 a.m. CEST)
basf.com/share(English)
basf.com/aktie(German)

Press Photos
basf.com/pressphoto-database (English)
basf.com/pressefoto-datenbank (German)

TV Footage
tvservice.basf.com/en (English)
tvservice.basf.com (German)

Forward-looking statements
This release contains forward-looking statements. These statements are based
on current 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 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.

Logo - http://photos.prnewswire.com/prnh/20140221/MM69780LOGO

SOURCE BASF Corporation

Website: http://www.basf.us
Contact: John C. Schmidt, BASF Corporation, Tel: (973) 245-6405, E-mail:
john.schmidt@basf.com, or Jennifer Moore-Braun, BASF SE, Tel: +49 621
60-99123, E-mail: jennifer.moore-braun@basf.com
 
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