29 April 2010 18:43 [Source: ICIS news]
By Nigel Davis
Of that amount, $539m was earned in the
It is the momentum gained this year that has come as a surprise to some.
The world’s largest petrochemicals producer has clearly made the most of feedstock cost advantages in the
The energy giant’s non-US chemicals businesses generated first-quarter 2010 earnings of $710m, up from $424m in the fourth quarter of 2009 and $267m in the first quarter of last year.
The upturn thus far has been widespread. But, as BASF showed on Thursday, it is the industry-related businesses that have fared the best.
The German chemical major's first-quarter 2010 sales grew by about 27% year on year to €15.5bn, almost reaching the level that BASF said was characteristic “of very good quarters before the crisis”.
BASF said it saw demand from its industrial customers increase almost across the board, which drove sales gains for its chemicals, plastics performance products and some of its more specialised materials-based businesses.
It also said it had seen improved demand, particularly from the automotive, electric and electronic industries.
BASF’s quarterly operating profit (earnings before interest and tax, or EBIT) before special items nearly doubled year on year to €1.95bn as a result of substantially improved operating rates and continued cost control.
This is reason enough to be cheerful, but not complacent.
“We currently see that the recovery will continue over the next quarters,” said BASF CEO Jurgen Hambrecht. But he added that BASF expected growth to be slower and uneven as the year progressed.
Part of that will be due to the way in which comparisons will be made with improving quarterly performance in 2009. BASF also has to bring its big chemical complex at
And it pays to revsit the concerns about global growth, and its performance, that BASF had at the start of the year, and which the chemicals giant believes are still relevant.
“We expect that national stimulus programmes around the world will wind down. Further recovery is therefore not certain and surprises cannot be ruled out for 2010,” said Hambrecht, although BASF reckons it can grow faster than the market and in 2010 earn a premium on its cost of capital.
The risks will be less in 2010 than they were in 2009, but there can be no doubt that significant uncertainties remain.
The economic recovery is far from robust, and governments have yet to produce concrete plans to tackle significant budget deficits. Dithering over the economic bail-out for
Pressure has been put on other southern European countries such as
And most chemical firms are not immune from adverse supply/demand balances.
New capacities coming on stream in the Middle East catch the headlines, but significant new petrochemical capacity additions in
Facing a volatile economic outlook and uncertainty in chemicals, companies cannot yet be sure of their footing.
($1 = €0.76)
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