BASF displays exemplary results in face of adversities

31 Jul '08

6 min read

Sales in the Performance Products segment were 1 percent higher than in the second quarter of 2007. Negative currency effects and the effect of divestments were more than offset by higher volumes and sales prices. EBIT before special items increased by 22 percent, in particular thanks to the strong performance of the Care Chemicals division.

The Functional Solutions segment posted a 2 percent increase in sales due to higher prices. EBIT before special items fell by 34 percent, above all because of a decline in demand from the key customer industries construction and automotive in North America.

Sales in the Agricultural Solutions segment rose by 21 percent in the second quarter thanks to higher volumes and prices. EBIT before special items climbed 51 percent due to higher volumes and sales prices and the higher proportion of innovative and highly profitable products.

Sales in the Oil & Gas segment rose strongly by 41 percent as a result of higher natural gas production, higher volumes in natural gas trading and higher oil prices. EBIT before special items rose significantly by 44 percent. Earnings in the natural gas trading business declined, however, because as contractually agreed, BASF can only adjust sales prices to reflect higher purchase prices after a certain time lag.

Sales growth in all regions:
Sales grew in all regions in the first half of 2008, and declined only in North America in euro terms.

Sales by location of company in Europe increased by 15 percent in the first half of 2008. EBIT before special items rose by more than EUR 600 million to EUR 3.7 billion. The Oil & Gas segment posted higher sales and earnings mainly due to the rise in oil prices. Business in the Agricultural Solutions segment, particularly in cereal fungicides, developed well as a result of favorable market conditions. Earnings decreased in the Chemicals segment, in particular due to weaker margins for cracker products.

In North America, sales by location of company increased by 14 percent in dollar terms and decreased by 1 percent in euro terms. At EUR 443 million, EBIT before special items was 19 percent lower than in the first half of 2007. Above all, lower margins for cracker products in the Chemicals segment resulted in a decline in earnings. Business in Plastics and Functional Solutions weakened, primarily due to the increasing slowdown in the automotive and construction industries.

In Asia Pacific, sales rose by 19 percent in local currency terms and by 8 percent in euro terms. EBIT before special items rose by 19 percent to EUR 454 million. The Plastics segment made an important contribution as a result of the strong performance of Polyurethanes. Sales and earnings in the Performance Products segment rose due to increasing demand and higher sales prices for vitamins. In the Chemicals segment, earnings declined as a result of weaker margins for cracker products.

Sales in South America, Africa, Middle East were 16 percent higher in local currency terms and 10 percent higher in euro terms. EBIT before special items increased by 33 percent to EUR 148 million. Sales and earnings for fungicides and herbicides grew considerably in the Agricultural Solutions segment, in particular due to the increased share of highly profitable products. In the Functional Solutions segment business developed favorably, in particular in Construction Chemicals and Coatings.

BASF

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