Corrected: FOCUS: BASF still confident for 2006

25 January 2006 18:16  [Source: ICIS news]

Correction: In the ICIS news story headlined “FOCUS: BASF still confident for 2006, eyes more R&D,” please read in the second graph: “We are expecting significantly higher sales and EBIT (earnings before interest and tax) before special items for 2005 compared with the previously strong level in 2004,” ... making clear the comment refers to 2005 performance.

In paragraph seven: “The company was aiming for R&D expenditure ...of Euro1.15bn in 2006/07…” instead of “...Euro1.5bn”. A corrected story follows.

LONDON (ICIS news)--BASF on Wednesday reiterated its positive outlook for the first half of 2006 but warned of uncertainties in the second half of the year.

“We expect recent positive trends in the chemical industry to continue into the first half of the year," said research and development (R&D) board member, Stefan Marcinowski,

Marcinowski cautioned, however, that prospects for the second half were blurred because of the steep recent increases in crude oil and naphtha feedstock costs. BASF can offset only some of the impact of these increases through its own oil and gas interests, he said.

"We are expecting significantly higher sales and EBIT (earnings before interest and tax) before special items for 2005 compared with the previously strong level in 2004,” Marcinowski added, re-iterating earlier 2005 earnings guidance.

Speaking to journalists, Marcinowski said BASF does not expect the pace of globalisation to slow down in 2006. This year, the company would start up with partners three isocyanates joint ventures at the Shanghai Chemical Industry Park, Shanghai, China.

The company revealed today that it was studying alongside US producer Huntsman and a group of Chinese companies --Shanghai Hua Yi, Sinopec Shanghai Gao Qiao Petrochemicals and Shanghai Chloro-Alkali Chemical-- the construction of a 400,000 tonne a year MDI (diphenylmethane diisocyanate plant in China. Several sites for the plant were being evaluated and start up was expected from 2010 onwards.

Marcinowski said BASF had started an “innovation offensive” that will see it push R&D into new areas and in new business models alongside research for existing markets. Total R&D spending will rise by 18% between 2004 and 2006, he said. Marcinowski outlined BASF's current R&D strategy to ICIS Radio. His remarks can be downloaded via this link or via ICIS TV on the ICIS site.

The company was aiming for R&D expenditure, excluding the Wintershall oil and gas business, of Euro1.15bn in 2006/07..

“We are not resting on our laurels. We have to launch new products if we are to increase our market share,” he said.

Marcinowski revealed that BASF was lifting its nanotechnology research and will open in April this year a new nanostructure research centre in Singapore. The centre will employ about 15 people to investigate nanostructures on surfaces to develop nano applications in plastics, coatings and other areas. BASF sales of nano products are already some Euro2bn a year, he said.

BASF executives, who were attending a lunch in London, would not comment further on the company’s current acquisition targets – US catalyst maker Engelhard and Degussa’s construction chemicals business.  BASF Group president for Europe, Walter Seufert indicated, however, that in Europe, BASF wants to outpace current market growth.

“We will do this by acquiring additional market value and working closer with the customer,” he said. Seufert pointed out successful joint ventures with shoe maker Adidas and car maker Renault as examples of how the company has helped customers differentiate offerings in their own markets.

BASF already makes Euro1bn of sales annually in construction chemicals from 800 products he said. The company was known to be attracted towards further developing its construction chemicals activities.

The same would be true in pharmaceuticals, Seufert said. BASF had been active in strengthening its custom chemicals synthesis portfolio and most recently bought Swiss producer Orgamol to help boost this business.

By: Nigel Davis
+44 20 8652 3214

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