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Diversified portfolio of BASF helps post solid earnings
26 Feb '09
7 min read
Significantly higher sales in Oil & Gas
In 2008, the Chemicals segment posted a 10 percent increase in sales compared with 2007. In particular, this was due to passing on considerably higher raw material prices. Income from operations declined. This was primarily the result of lower margins for cracker products as well as plant shutdowns due to the hurricanes in the United States and the significant decline in demand toward the end of the year.
In the Plastics segment, sales declined by 3 percent, in particular due to negative currency effects. The decline in earnings was primarily due to lower volumes and margins in the Performance Polymers division, as well as reduced capacity utilization rates and writedowns on inventory in the fourth quarter.
Sales in the Performance Products segment rose slightly (+1 percent) compared with 2007. The Acrylics & Dispersions division contributed mainly to this increase. The segment's earnings improved thanks to a further increase in earnings in the Care Chemicals division.
In the Functional Solutions segment, sales decreased slightly (-1 percent) due to lower sales in the Catalysts and Coatings divisions. Earnings declined in all divisions in this segment because of weaker demand from the automotive and construction industries, as well as higher raw material costs, which negatively impacted margins.
In the Agricultural Solutions segment, sales increased by 9 percent due to strong demand for crop protection products resulting from high prices for agricultural produce. Earnings grew strongly thanks to higher volumes and margins.
Sales in the Oil & Gas segment rose significantly (+37 percent) thanks to the higher average oil price in 2008 and higher sales volumes in natural gas trading. Segment earnings rose compared with 2007, above all due to higher earnings in the Exploration & Production business sector as a result of the higher oil price.
Sales grow in Europe and South America
In 2008, companies in Europe increased sales by 13 percent to €38.7 billion. The economic environment has deteriorated since the second half of 2008. At €5.8 billion, income from operations was significantly higher than in 2007, in particular due to the contribution of the Oil & Gas segment.
Sales by companies in North America increased by 8 percent in local-currency terms but declined by approximately 1 percent in euro terms. The economic environment and domestic demand in the region weakened significantly in the second half of 2008. Income from operations declined by 90 percent to €73 million. This was due to plant shutdowns, a decline in margins, as well as a drop in overall business in the fourth quarter. Earnings were also negatively impacted by writedowns on long-term assets.
Companies in Asia Pacific increased sales in local currencies by 4 percent. At €8.7 billion, sales in euro terms declined slightly compared with 2007. Earnings dropped significantly by €574 million to €254 million, primarily as a result of weaker earnings in the Chemicals, Plastics and Functional Solutions segments. The Performance Products and Agricultural Solutions segments made a positive contribution.
Sales by companies in South America, Africa, Middle East rose in local currency terms by 12 percent and in euro terms by 7 percent. Earnings increased by 1 percent to €314 million. This was due in particular to the strong performance of the Agricultural Solutions segment in South America and strong growth in the Care Chemicals division.
In 2008, the Chemicals segment posted a 10 percent increase in sales compared with 2007. In particular, this was due to passing on considerably higher raw material prices. Income from operations declined. This was primarily the result of lower margins for cracker products as well as plant shutdowns due to the hurricanes in the United States and the significant decline in demand toward the end of the year.
In the Plastics segment, sales declined by 3 percent, in particular due to negative currency effects. The decline in earnings was primarily due to lower volumes and margins in the Performance Polymers division, as well as reduced capacity utilization rates and writedowns on inventory in the fourth quarter.
Sales in the Performance Products segment rose slightly (+1 percent) compared with 2007. The Acrylics & Dispersions division contributed mainly to this increase. The segment's earnings improved thanks to a further increase in earnings in the Care Chemicals division.
In the Functional Solutions segment, sales decreased slightly (-1 percent) due to lower sales in the Catalysts and Coatings divisions. Earnings declined in all divisions in this segment because of weaker demand from the automotive and construction industries, as well as higher raw material costs, which negatively impacted margins.
In the Agricultural Solutions segment, sales increased by 9 percent due to strong demand for crop protection products resulting from high prices for agricultural produce. Earnings grew strongly thanks to higher volumes and margins.
Sales in the Oil & Gas segment rose significantly (+37 percent) thanks to the higher average oil price in 2008 and higher sales volumes in natural gas trading. Segment earnings rose compared with 2007, above all due to higher earnings in the Exploration & Production business sector as a result of the higher oil price.
Sales grow in Europe and South America
In 2008, companies in Europe increased sales by 13 percent to €38.7 billion. The economic environment has deteriorated since the second half of 2008. At €5.8 billion, income from operations was significantly higher than in 2007, in particular due to the contribution of the Oil & Gas segment.
Sales by companies in North America increased by 8 percent in local-currency terms but declined by approximately 1 percent in euro terms. The economic environment and domestic demand in the region weakened significantly in the second half of 2008. Income from operations declined by 90 percent to €73 million. This was due to plant shutdowns, a decline in margins, as well as a drop in overall business in the fourth quarter. Earnings were also negatively impacted by writedowns on long-term assets.
Companies in Asia Pacific increased sales in local currencies by 4 percent. At €8.7 billion, sales in euro terms declined slightly compared with 2007. Earnings dropped significantly by €574 million to €254 million, primarily as a result of weaker earnings in the Chemicals, Plastics and Functional Solutions segments. The Performance Products and Agricultural Solutions segments made a positive contribution.
Sales by companies in South America, Africa, Middle East rose in local currency terms by 12 percent and in euro terms by 7 percent. Earnings increased by 1 percent to €314 million. This was due in particular to the strong performance of the Agricultural Solutions segment in South America and strong growth in the Care Chemicals division.
BASF
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