BASF expects 2.8% global chems growth in 2008

21 February 2008 12:43  [Source: ICIS news]

LUDWIGSHAFEN, Germany (ICIS news)--BASF is projecting a slowdown in global chemicals growth for 2008 to 2.8%, matching its lower expectations for global GDP, CEO Jurgen Hambrecht said on Thursday.

The company is projecting growth on the assumption of declining interest rates in the US having moderate knock-on effects in Europe, an average exchange rate of $1.45 to the euro and an average oil price of $78/bbl for Brent crude.

The world’s largest chemical company, however, sees little concrete evidence of a recession in the US, said Hambrecht.

“The first few weeks of 2008 have run on smoothly from the past year for BASF,” Hambrecht said at the company’s annual press conference, which also outlined mixed full-year and quarterly results.

“The level of orders remains strong and capacity utilisation rates of our plants are high,” he added.

BASF currently is aiming for a slight increase in sales and income before special items for 2008.

It lifted sales by 10% to €58bn ($85bn) in 2007 and earnings before interest and tax (EBIT) before special items by 5% to €7.6bn.

The business slowed in the fourth quarter with lower year-on-year sales and profits comparisons, driven by slower North America business and extended plant outages.

Hambrecht said the downside risks for BASF in 2008 include the global credit crisis, the downturn in the key end-user constructing and automotive markets and increasing exchange rate imbalances.

High raw material costs and further geopolitical tensions political tensions are further possible risks, he added.

The company’s global GDP growth assumption for 2008 compares with 3.5% for 2007. “We expect a more moderate growth momentum,” Hambrecht said in German.

GDP growth in North America is likely to slip from 2.2% to 1.6%, he added, with no or very limited chemicals production growth.

($1 = €0.68)

By: Nigel Davis
+44 20 8652 3214

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