Chems, agri boost BASF Q4 net income despite oil, gas EBIT slump
Tom Brown
27-Feb-2015
(re-leads, adds division performance, global
outlook)
LUDWIGSHAFEN,
GERMANY (ICIS)–Stronger performances by its chemicals and
agricultural solutions divisions helped drive a 25.7%
year-on-year increase in net income for BASF to €1.42bn
despite lower profits for its oil and gas operations, the
Germany-headquartered chemicals major said on Friday.
Sales slipped by 0.6% year on year to €18bn in the fourth
quarter while earnings before interest, taxes, depreciation
and amortisation (EBITDA) was up by 10.8% at €2.87bn, the
company added.
Earnings before income and taxes (EBIT), before special
items, was up by 2.8% year on year at €1.5bn in the fourth
quarter of 2014, BASF said.
CEO Kurt Bock said the improved fourth-quarter performance
was achieved “despite the disappointing economic development
in Europe.”
“We further strengthened our chemicals business and in turn
improved our margins,” he added.
Tailwinds from shifting currency rates added a 2% sales
uplift compared to the same quarter a year earlier, but this
was more than offset by the fall in oil prices, which reduced
sales revenues by 4%, BASF added.
With its chemicals operations and its Wintershall oil and gas
subsidiary, the sharp fall in oil prices over the last six
months is a mixed blessing for BASF, but the boost to
chemicals and industrial production is likely to be an
overall positive, according to CEO Kurt Bock.
“We… anticipate somewhat stronger growth in the global
economy, industrial production and the chemical industry than
in 2014,” he said.
BASF is predicting global growth of 2.8% and an average Brent
crude oil price of $60-70/bbl this year.
Chemicals division earnings before interest and taxes (EBIT)
and special items rose €70m year on year to €580m on the back
of higher contributions from the petrochemicals division,
while performance products division before special
items was steady over the same period at €217m.
Despite an “increasingly gloomy market” for Performance
Products materials over the course of 2014, increased sales
volumes with stable prices helped to offset negative currency
effects, BASF said.
Functional Materials and Solutions saw an €18m year on year
decline (-7.6%) in EBIT before special items for the quarter
to €220m despite improved contributions from the catalysts
and coatings division.
Agricultural Solutions division EBIT before special items
increased €56m year on year to €123m (up 83.6%) during the
quarter thanks to strong European and North American demand,
as well as greater demand for fungicides and herbicides, BASF
said, while oil and gas EBIT before special items was €155m
below fourth-quarter 2013 levels at €347m (down 30.9%) on the
back of lower oil and gas prices, BASF added.
For the full year of 2014, the company posted a 7.6% increase in its net income to €5.16bn, with sales up by 0.5% at €74.3bn, it said.
BASF’s EBITDA in the full-year of 2014 rose by 5.9% year on year to €11.0bn, the company added.
Its EBIT, before special items, rose by 4.0% year on year to €7.36bn in 2014.
“The global economy will continue to face substantial risks. In this volatile and challenging environment, we want to perform well and increase sales slightly in 2015,” said Kurt Bock, the chairman of the board of executive directors at BASF.
EBIT before special items in 2015 will likely match the previous year’s level, the company said.
“The company expects considerably larger contributions from Performance Products, Functional Materials & Solutions and Agricultural Solutions. EBIT before special items in the Chemicals segment is likely to decline slightly because of expenses for starting up several plants,” it added.
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