BASF SE (BAS), the world’s largest chemical maker, reported third-quarter profit which beat analyst estimates after making acquisitions into higher-margin areas such as nutrition.
Earnings before interest, taxes and one-time items jumped 15 percent to 1.69 billion euros ($2.33 billion), the Ludwigshafen, Germany-based company said today. The average estimate of six analysts surveyed by Bloomberg was 1.62 billion euros. Sales climbed 1.5 percent to 17.7 billion euros.
“The increase in earnings was largely due to higher contributions from the Functional Materials and Solutions, and Performance Products segments,” Chief Executive Officer Kurt Bock said in the statement. “Currency effects will continue to negatively impact sales and earnings in the fourth quarter.”
As Bock works towards a revenue target of 110 billion euros by the end of the decade, he has been cutting jobs in Europe and adding production in Asia to counter increased competition in areas such as additives used in paper and pulp. BASF announced plans this week to scrap 650 positions at its pigment unit, while creating new positions in China and South Korea.
Bock has been shifting BASF toward additives for health foods and other higher-margin specialty chemicals to help shield the company from economic swings. He acquired Pronova BioPharma ASA for $654 million last November to add Omega-3 fatty acid offerings.
BASF reiterated today it expects full-year sales and earnings higher than last year’s 72.1 billion euros and 6.6 billion euros respectively. BASF has instigated a four-year plan to trim costs by 1 billion euros by the end of 2015, with about 300 million euros in savings realized this year.
The 147-year-old company is joining rivals Saudi Basic Industries Corp. (SABIC) and Clariant AG (CLN) in making cutbacks as the advent of low-cost producers in Asia and a renaissance in the U.S.’s commodity chemical industry on the back of shale gas changes the dynamics of the marketplace.
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