BASF shows strength in global crisis

30 Apr '09

5 min read

As a result of very weak demand from the construction and automotive industries and a decline in prices for precious metals, sales dropped dramatically in the Functional Solutions segment. The Catalysts and Coatings divisions were affected particularly badly. In contrast, sales in the Construction Chemicals division were at the same level as in the first quarter of 2008. Profitability in this segment was negatively impacted by the extremely weak business with the automotive industry and earnings were negative.

In the Agricultural Solutions segment, higher volumes and price increases led to strong sales growth. The nonagricultural pest control business of the Sorex Group acquired at the end of 2008 also contributed to the increase in sales. The new growing season got off to a particularly successful start in Europe and North America. Earnings improved significantly compared with the same quarter of the previous year as a result of higher sales volumes, increased margins and positive currency effects.

The Oil & Gas segment also posted slightly higher sales. The drastic fall in oil prices was more than compensated by the increased prices in the Natural Gas Trading business sector. Earnings in the Exploration & Production business sector decreased substantially due to lower prices, whereas earnings in Natural Gas Trading increased greatly due to higher margins. However, this increase in earnings in Natural Gas Trading was not enough to offset the decline in earnings overall.

Sales in Other decreased significantly, primarily due to lower sales in Styrenics. Volumes of fertilizers also decreased considerably as a result of an unusually late and therefore also poor fertilizer season. Earnings in Other were negatively impacted by currency losses from the hedging of forecasted sales not allocated to the segments.

Special items of minus €57 million (first quarter of 2008: minus €51 million) were related in particular to expenses for restructuring.

Compared with the first quarter of 2008, EBIT dropped 60% to €928 million, while EBITDA decreased by 46% to €1.6 billion.

At minus €202 million, the financial result was €80 million lower than in the first quarter of 2008. The main reason for this was a €52 million decline in earnings from investments consolidated using the equity method.

Income before taxes and minority interests fell 67% in the first quarter to €726 million. At 37.1%, the tax rate was lower than in the first quarter of 2008. Income taxes for oil production that are non-compensable with German corporate income tax declined significantly.

Net income decreased by 68% to €375 million. Earnings per share were €0.41 in the first quarter compared with €1.24 in the same period of 2008.

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