26 April 2013 11:27 [Source: ICIS news]
(adds further financial detail, CEO comment)
LONDON (ICIS)--German chemicals major BASF on Friday reaffirmed its 2013 outlook, despite reporting a year-on-year fall in first-quarter net income.
“We stand by our outlook for 2013: We continue to aim to exceed the 2012 levels in sales and EBIT before special items,” said Kurt Bock, chairman of BASF’s board of executive directors.
The company’s expectations for the global economic environment in 2013 also remain unchanged, with GDP growth expected at 2.4% compared with 2012, growth in industrial production at 3.4%, and growth in chemical production at 3.6%.
Bock said: “We expect global economic growth to pick up only slightly in 2013. The chemical industry will increase production again compared to 2012 because the emerging markets are growing.
“However, we do not expect a straight-line trend. The market environment remains volatile,” he added.
Economic growth would be dampened by an escalation of the debt crises in the eurozone and the US as well as by lower demand in Asia, according to BASF.
On Friday, BASF announced a 15.1% year-on-year drop in its first-quarter net profit to €1.45bn ($1.88bn), weighed down by one-off gains in the same period of 2012 following the sale of its fertilizer business. Earnings before interest and taxes (EBIT) fell by 16.5% year on year to €2.17bn.
“Special income from the divestiture of the fertilizer business of €645m in the first quarter of the previous year was primarily responsible for this reduction,” BASF said.
Its EBIT before special items rose by 10.1% year on year to €2.2bn, buoyed by higher margins at its Chemicals segment.
The company’s sales in the quarter were up by 4.8% year on year to €19.7bn. BASF said sales volumes grew particularly as a result of intensified demand for crop protection products and increased volumes in its Oil & Gas segment.
“We have had a solid start to 2013. In particular, our business with crop protection products continued to be very successful,” said Bock.
Sales in BASF’s Chemicals segment fell 2.6% in the first quarter to €4.40bn, mostly on lower sales volumes, which were mainly attributable to plant shutdowns in the petrochemicals division. Segment EBIT rose 16.9% to €650m.
“Sales volumes in the Monomers and Intermediates divisions increased thanks to higher demand. As a result of better margins, earnings considerably surpassed the level of the first quarter of 2012,” BASF added.
First-quarter sales declined 2.1% to €3.88bn in its Performance Products segment, largely because of lower sales prices and negative currency effects, while EBIT fell 14.5% to €367m.
BASF’s Functional Materials & Solutions segment saw its sales flat with first-quarter 2012 levels, at €4.18bn, although EBIT dropped 17.2% year on year to €240m, partly because of a lower contribution from its Catalysts division.
Sales rose significantly in BASF’s Agricultural Solutions segment during the first quarter, increasing 17.3% to €1.56bn, as EBIT grew 17.4% to €492m, “boosted by higher prices as well as the acquisition of Becker Underwood”, the company said.
In its Oil & Gas segment, meanwhile, sales grew 19.7% to €4.66bn despite lower crude oil prices, mainly because of higher production and trading volumes. The Oil & Gas segment’s EBIT fell by 1.6% year on year to €630m as “pressure continued to rise on trading margins in the Natural Gas Trading business sector”, BASF added.
On 23 April, BASF announced it will cut 500 jobs the restructuring of its Performance Products operations. The restructuring measures are aimed at improving the efficiency of BASF’s plastic additives and pigments and resins businesses, leading to 350 jobs being cut in Basel, Switzerland, and an additional 150 positions to disappear elsewhere, primarily in Europe.
The European product management, quality management and product safety operations for pigments and resins will be consolidated at the company’s Verbund headquarters in Ludwigshafen, Germany, while global product management activities for the division will migrate to BASF’s Hong Kong office.
($1 = €0.77)
Additional reporting by Nurluqman Suratman and Tom Brown
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