UpdateBASF Q4 op profits down 5.6%

21 February 2008 09:46  [Source: ICIS news]

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LONDON (ICIS news)--Chemical company BASF posted a 5.6% year-on-year drop in fourth-quarter operating profit excluding special items due in part to maintenance shutdowns at its petrochemicals plants, the German company said on Thursday.

 

The company posted earnings before interest and tax (EBIT) and special items of €1.76bn ($2.58bn), the world’s biggest chemicals firm by sales added in a statement.

 

But the company’s 2007 operating profit rose 8.4% from 2006 to a record €7.3bn ($10.7bn) on strong chemicals and plastics performance and higher selling prices which offset increasing raw material costs, the statement said.

 

"We posted higher sales volumes in almost all areas of our portfolio [in 2007]," it added. "In many businesses this was associated with increases in sales prices due to continued strong demand and higher raw material costs."

 

In the chemicals segment, the firm posted a fourth-quarter operating profit drop of 47% to €314m but full-year operating profit increased 18% to more than €2bn.

 

Fourth-quarter plastics operating profit rose 36% to €345m and 9.1% to €1.3bn over the full year.

 

Fourth-quarter chemical sales were down 0.9% to €3.4bn and 4.2% down to €1.1bn in the agricultural, products and nutrition sector.

 

However, overall 2007 sales were 10.2% higher at nearly €58bn, driven by organic growth and the positive developments of the businesses it acquired in 2006, it said.

 

The highest contribution to the group’s 2007 sales performance came from the chemicals division, which saw revenues rise 22% to around €14.2bn, followed by performance products at €11.7bn, up 15.4%.

 

Within chemicals, petrochemicals contributed 40% to sales, catalysts 34% and intermediates 18%, BASF said.

 

The highest contribution in performance products sales came from functional polymers and performance chemicals followed by coatings and construction chemicals, it added.

 

Styrenics sales at 39% were the highest contributor to the plastics division revenues, followed closely by polyurethanes at 38% and performance polymers at 23%, BASF said.

 

Agricultural products sales were 1.1% higher at nearly €5bn, on strong demand for BASF’s innovative products and favourable market developments.

 

"Sales in the fine chemicals division declined slightly due to the exit from the lysine and premix businesses," BASF said.

 

The oil and gas division’s overall performance declined as higher sales and volumes in natural gas trading could not offset the fall in exploration and production revenues, it added.

 

The company's net income for the fourth quarter increased 8.3% to €793m while it surged 26.4% to just over €4bn for 2007, helped by lower tax rates in Germany due to revaluation of deferred taxes.

 

"Acquisitions, especially the businesses acquired in mid-2006, contributed €3.6bn to the sales increase," BASF added.

 

Currency effects reduced 2007 sales by 3.8%, or nearly €1.2bn, in 2007, the firm said.

 

"Our business has developed successfully since the beginning of 2008. The level of orders remains strong," BASF added.

 

The company expected its business to develop positively in the next two years, assuming a moderate global economic slowdown, 2.8% growth in chemical production, declining interest rates in the US with modest knock-on effects for Europe, an average exchange rate of $1.45 to the euro and $78/bbl oil prices, it said.

 

"In 2008, assuming there are no changes made to our portfolio, we aim to increase sales and improve income from operations before special items slightly," BASF said.

 

($1 = €0.68)

 

Divya Chowdhury contributed to this story

By: Lucy Craymer
+44 20 8652 3214

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