Corrected: BASF closes in on 2020 emerging markets sales goal – analyst

20 April 2012 15:58  [Source: ICIS news]

Correction: In the ICIS story headlined "BASF closes in on 2020 emerging markets sales goal – analyst " dated 20 April 2012, due to a corrected report by Bernstein Research please read in the third paragraph...BASF defines emerging markets as the Asia Pacific region (except Japan, Australia and New Zealand), South and Central America, Eastern Europe, the Middle East and Africa...instead of...Bernstein said BASF defines its emerging market as the EU15, Norway, Switzerland, North America, Japan, Australia and New Zealand...A corrected story follows.

LONDON (ICIS)--German chemical major BASF is more than halfway towards a 2020 goal of achieving 45% of its sales in emerging markets, global analyst Bernstein Research said on Friday.

BASF aims to increase its emerging markets sales exposure from around 34% to 45%, excluding oil and gas, by 2020.

BASF defines emerging markets as the Asia Pacific region (except Japan, Australia and New Zealand), South and Central America, Eastern Europe, the Middle East and Africa.

“BASF expects that greater emerging market exposure will increase top-line growth, thanks to higher industrial production growth, and that emerging markets offer greater opportunities for BASF to gain market share,” the analyst group said.

“We have quantified BASF's real (direct and indirect) sales exposure to emerging markets at [around] 42%, over halfway to its goal of 45%,” it added.

However, the effect of greater emerging market exposure on BASF's margin is less clear, said Bernstein.

“On the one hand, the greater exposure is being gained through exporting high-value goods to emerging market consumers, often at a significant premium (e.g. luxury cars). On the other hand, these exports have to compete with domestic production and incur the transport and tariff costs,” it added.

Meanwhile, investment bank JP Morgan Cazenove said on Friday that BASF’s first quarter results, to be announced on 27 April, are unlikely to shed further light on the company’s ability to increase year-on-year earnings and cash flow for the whole of 2012.

Without a clearer outlook, JP Morgan Cazenove said BASF would not see significant share price improvement for the remainder of the year.

“With current muted trading conditions in Europe and slight improvement in the US and Asia, further catalysts are needed [for BASF] to see significant share price outperformance for full year 2012,” the bank said.

Bernstein Research rates BASF “market-perform” with a €58 ($76) share price target, while JP Morgan Cazenove rates the company at “neutral” with a share price target of €61, up from €57.

At 14:22 GMT, BASF’s shares were trading at €65.86 on the London Stock Exchange, up 1.38% on the previous close.

($1 = €0.76) 


By: Leigh Stringer
+44 208 652 3214



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