UpdateBASF Q1 income up 11% on oil and gas

24 April 2008 10:12  [Source: ICIS news]

MUMBAI (ICIS news)--BASF has posted an 11% year-on-year rise in its first-quarter 2008 operating income to €2.4bn ($3.8bn), with the strongest growth coming from its oil and gas segment, the German chemicals major said on Thursday.

 

“Our long-term strategy is paying off. That’s most apparent in turbulent times like the ones we’re currently seeing in the financial markets. BASF’s strategy is not to try to achieve improvements over just a few quarters,” BASF chairman Jurgen Hambrecht said.

 

In the first quarter, the company’s sales were up 9% to €15.9bn, as compared with the year-ago period, the company said.

 

For the period, the strongest growth was recorded by BASF’s oil and gas segment on higher crude oil prices and increased natural gas production as well as sales volume increases in the natural gas trading business sector, it added.

 

“The strong start to the first quarter confirms our positive outlook for 2008. Assuming that there are no changes to our portfolio, we aim to increase sales and improve income from operations before special items slightly in 2008,” Hambrecht said.

 

By segment, BASF’s chemicals business reported a 7% drop in operating profits at €524m due to a decline in cracker margins and decreased plant availability in petrochemicals. These problems could not be offset by significantly higher earnings in inorganic chemicals, which benefited from high margins in methanol and a ammonia.

 

The plastics business increased operating profits by 14% to €358m, as a strong performance in polyurethanes offset lower earnings in performance polymers. The latter was impacted by a weak US dollar and higher raw material costs.

 

BASF’s performance products segment reported a €231m profit, up 19% year-on-year. Growth was driven by a strong performance in care chemicals, benefiting from price increases in vitamins.

 

Functional solutions’ profit dropped 7% due to weaker business activities in structural chemicals, while the agricultural solutions business reported 15% higher earnings at €259m.

 

Oil and gas reported a 16% earnings increase at €984m driven by volume and price increases in the exploration and production sector.

 

BASF shares were at €91.67 in mid-morning trading on the Xetra exchange, down 1.41% from an opening price of €92.98.

 

Mark Watts contributed to this article

 

($1 = €0.63)

By: Isha Jha
+65 6780 4359

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