BASF SE forecast growth in earnings and sales this year after demand for plastics used to lighten cars and higher oil production buoyed quarterly earnings.
Earnings before interest, tax and one-time items increased 18 percent to 1.8 billion euros ($2.4 billion) in the fourth quarter, the company said today, in line with analysts’ estimates. The stock dropped as much as 3.7 percent as the proposed dividend was less than estimated by some analysts and European stock markets tumbled on concern Italy’s elections will lead to renewed market turmoil.
Chief Executive Officer Kurt Bock is betting economic conditions will improve and that the world’s biggest chemical company will benefit from its shift to newer technologies such as battery materials for electric cars. Bock said today the Ludwigshafen, Germany-based company will also have to become more efficient to help it boost annual earnings. BASF proposed an annual dividend of 2.60 euros per share.
“The outlook is positive, although I would be careful because they didn’t give any specific figures,” Oliver Schwarz, an analyst at MM Warburg in Hamburg, said today by phone. “The dividend is less than I had expected.” Schwarz, who rates BASF buy, had forecast a payout of 2.70 euros.
The stock declined as much as 2.76 euros to 72.25 euros and was down 3.6 percent as of 9:17 a.m. Before today, the shares had gained 19 percent in six months, boosting the company’s market value to 68.9 billion euros. BASF has the largest weighting on Germany’s benchmark DAX index, which gained 10 percent in the same period.
Quarterly sales rose 9 percent to 19.6 billion euros compared with a 19 billion-euro estimate. Net income declined 13 percent to 980 million euros as the restart of oil production in Libya raised the company’s tax bill. Oil production in the country had been halted between February and October in 2011 because of political unrest.
BASF today forecast world economic growth will accelerate to 2.4 percent from 2.2 percent last year, with chemical production growing even faster at 3.6 percent.
“The expected increase in demand, together with measures to improve operational excellence and raise efficiency” will contribute to a gain in earnings and sales this year, Bock said in today’s statement. “Innovations are the basis of future growth and thus lie at the core of our competitiveness.”
Bock, who became CEO in May 2011, has pledged to generate a quarter of sales from products that are less than 10 years old by the end of the decade. He’s helping drive that goal by buying four battery-material companies as well as seed-treatment maker Becker Underwood Inc. and drug-ingredient supplier Pronova BioPharma ASA.