UpdateBASF’s Q4 net profit falls 13%, higher volumes lift sales

26 February 2013 10:21  [Source: ICIS news]

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BASFLONDON (ICIS)--BASF’s fourth-quarter net profit fell 13% year on year to €980m ($1.29bn) after its Chemicals, Performance Products and Agricultural Solutions business segments all reported lower earnings, the German chemicals major said on Tuesday.

Sales in the fourth quarter were €19.6bn, 8.7% higher than in the same quarter of the previous year, mainly because of higher volumes in almost all segments as well as price and currency effects, BASF added.

Total earnings before interest and tax (EBIT) before special items in the quarter rose by 18% year on year to €1.79bn mainly due to significantly higher volumes in BASF’s Oil & Gas business, which saw segment EBIT before special items grow 46% to €999m, on better sales following increased oil production in Libya and improved volumes from Natural Gas Trading.

There was also improved EBIT before special items in its Plastics segment, which increased 64% to €180m, as sales grew 12% to €2.88bn, because of higher volumes and prices as well as positive currency effects.

“There was continuing strong demand from the automotive industry, particularly in North America and Asia. EBIT before special items rose substantially due to a significant improvement in earnings in Polyurethanes,” the company added.

BASF’s Functional Solutions segment saw its EBIT before special items rise 60% to €141m, as good demand in catalysts and coatings from the automotive industry and “strict fixed cost management led to a substantial increase,” it said, despite sales in the fourth quarter falling 2.6% year on year to €2.79bn on lower volumes, particularly due to a fall in contribution from precious metals trading.

However, EBIT before special items in the group’s Chemicals business in the fourth quarter fell 6.8% to €355m, mainly due to lower margins and plant shutdowns, although segment sales rose 10% to €3.44bn, as “volume growth and currency tailwinds also contributed to topline growth,” BASF said.

In the group’s Performance Products segment, EBIT before special items decreased by 17% due to lower margins. However, higher volumes helped lift fourth-quarter segment sales 2.9% to €3.74bn.

BASF’s Agricultural Solutions business posted a 20% fall in EBIT before special items to €33m, because of higher research and development expenditures and investments in growth markets, although sales were up 6.7% to €877m in the fourth quarter “driven by higher volumes, the Becker Underwood acquisition, and favourable currency effects, while “sales in South America increased significantly despite dry weather conditions in Brazil.”

For the full year of 2012, BASF posted a net profit of €4.88bn, compared with €6.19bn in the previous year, partly due to a decline in its chemicals business.

BASF’s sales in 2012 rose 7.1% to €78.7bn compared with 2011, while EBIT before special items improved by 5.1% to €8.88bn.

“The Oil & Gas and Agricultural Solutions segments achieved new records, while development in our chemicals business was weaker than in 2011,” Kurt Bock, BASF chairman said.

Looking ahead, Bock said BASF aims to exceed the 2012 levels in total sales and EBIT before special items in 2013.

“The company strives to increase sales and earnings in all operating segments. The expected increase in demand, together with measures to improve operational excellence and raise efficiency, will contribute to this. BASF aims to earn a high premium on its cost of capital once again in 2013,” he added.

BASF expects the global economy to grow at a rate of 2.4% in 2013, slightly faster than the 2.2% in 2012, however it still forecasts a volatile environment.

Bock also said BASF would once again increase its research and development spending in 2013, after expenditures of €1.7bn in the past year – around 9% more than in 2011.

($1 = €0.76)

Additional reporting by Surinder Malhi

By: Franco Capaldo
+44 (0)20 8652 3214

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