UpdateGermany's BASF Q4 net income up 16%, driven by acquisitions

25 February 2014 10:11  [Source: ICIS news]

(updates with division performance throughout)

LUDWIGSHAFEN, Germany (ICIS)--BASF’s net income for the fourth quarter of 2013 jumped by 16% year on year to €1.14bn on the back of gains from acquisitions and higher sales volumes, the Germany-based chemicals major said on Tuesday.

Volume increases across all divisions helped to drive a slight rise in sales for the quarter year on year to €18.15bn compared to €17.98bn during the fourth quarter of 2012, despite lower overall prices year on year as a result of negative currency effects.

Acquisitions helped to buoy sales growth, particularly in the agricultural solutions and oil and gas divisions, the company said. BASF said in August 2013 that it had completed the integration of acquired US seed treatment business Becker Underwood’s products portfolio into its general business.

Earnings before interest and taxes (EBIT) increased by €584m year on year during the quarter to €1.64bn, due in part to a €429m gain from the reclassification of its stake in German gas pipeline joint venture GASCADE to equity. Before special items, EBIT increased by 18% year on year to €1.45bn.

Oil and gas and agriculture sales volumes increases drove a rise in full-year sales to €74bn, despite a decline in sales for the chemicals business.

Sales were down for the chemicals, performance materials and functional materials and solutions segments despite higher volumes, as a result of currency effects.

Fourth-quarter chemicals EBIT before special items rose by €65m to €510m as a result of substantially higher petrochemicals earnings, but lower prices and foreign exchange issues resulted in a 5.4% year-on-year drop in segment sales for the quarter to €4.2bn.

Higher volumes also buoyed results for functional materials and solutions, although currency and price issues resulted in a 1% fall in sales year on year to €4.13bn, while EBIT before special items increased by €10m to €238m due to higher catalysts and coatings division earnings.

The Becker Underwood acquisition helped to drive a doubling in agricultural solutions EBIT before special items to €67m, aided by higher margins. Higher volumes and prices more than offset currency effects to lead to a 1.5% year-on-year increase in segment sales for the quarter, to €890m, despite a seasonally slow quarter, BASF said.

Joint ventures for styrene monomer and propylene oxide in Europe and Asia contributed to 7.4% sales growth for BASF’s Other category, to €1.11bn, while EBIT before special items for the division declined by €47m to -€114m.

BASF is predicting “considerably” higher EBIT in 2014, although sales are likely to decline due to the anticipated sale of a gas trading and storage business earmarked for the middle of this year.

The company expects global economic growth of 2.8% compared to 2013, and growth in global chemicals production - excluding pharmaceuticals - of 4.4%, a slight dip on the 4.6% generated in 2013.

“We do not expect strong tailwinds this year either. Nevertheless, we are cautiously optimistic with regards to global economic development. The world economy is expected to grow slightly faster in 2014 than in 2013, despite continuing volatility,” said CEO Kurt Bock.

Full-year sales were up 2.6% at €73.97bn, while net income was broadly flat year on year at €4.84bn compared to €4.81bn in 2013. EBIT grew by 7.9% year on year to €7.27bn, BASF added.

By: Tom Brown
+44 208 652 3214

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