Ludwigshafen, Germany
April 26, 2007
Powerful start to 2007
• Further increase in sales (plus 17 percent) and EBIT before
special items (plus 13 percent)
• Earnings jump (plus 98 percent) in Chemicals segment
• Positive outlook for 2007 confirmed: Significant increase in
sales and EBIT before special items to at least match the
previous year’s strong level
BASF
remained on its successful course in the first quarter of 2007
and looked confidently to the coming months following a powerful
start to the year. “BASF’s team is working constantly to bring
the company even closer to its customers and make BASF even more
innovative and cyclically resilient,” said BASF’s Chairman Dr.
Jürgen Hambrecht during the presentation of the company’s
results for 2006 and the first quarter of 2007 at the 55th
Annual Meeting in Mannheim on April 26, 2007.
Compared with the same period of 2006, sales in the first
quarter rose 17 percent to €14.6 billion. This was due primarily
to the acquisitions in 2006, as well as higher volumes and sales
prices in the chemical businesses. Disregarding currency
effects, in particular from the depreciation of the U.S. dollar,
sales increased by 21 percent.
Compared with the very strong first quarter of 2006, BASF
increased income from operations (EBIT) before special items by
13 percent to €2.1 billion. Earnings in the Chemicals segment
almost doubled, and were significantly higher in all divisions.
Margins improved, in particular for petrochemicals. The
Catalysts division also made a major contribution to the
earnings growth. In the Plastics segment, earnings declined
slightly because the Polyurethanes division did not quite match
the strong performance of the previous year’s first quarter.
Earnings improved in the Styrenics business due to the expansion
of the business and improved efficiency. Earnings in the
Performance Products segment were lower than in the first
quarter of 2006 as a result of persistent pressure on margins
for functional polymers. Both divisions in the Agricultural
Products & Nutrition segment posted higher earnings. The
earnings situation in Brazil improved in the Agricultural
Products division. In the Fine Chemicals division, earnings
increased as a result of the restructuring measures initiated in
2006 and the contribution from the acquired personal care
business. In the Oil & Gas segment, a rise in the contribution
from the natural gas trading business kept earnings at the
previous year’s strong level despite the decline in oil prices.
Compared with the same period of 2006, first-quarter EBIT after
special items rose by 9 percent to approximately €2 billion.
Special items in income from operations were related to
integration costs for the acquisitions made in 2006 and expenses
for restructuring.
The financial result declined by €115 million to minus €94
million. Interest expenses rose in connection with financing for
the acquisitions made in mid-2006. The previous year’s first
quarter contained proceeds from the sale of securities.
Income before taxes and minority interests rose by 2 percent to
€1.9 billion. The tax rate declined from 46 percent to 40
percent as a result of the acquisitions and the lower
contribution to the BASF Group’s earnings from the Oil & Gas
segment. In the first quarter, foreign taxes for oil production
that are noncompensable with German corporate income tax
amounted to €258 million compared with €272 million in the same
period of 2006.
Net income rose by 9 percent to more than €1 billion. Earnings
per share were €2.08 compared with €1.87 in the first quarter of
2006.
Positive outlook confirmed for full-year 2007
Hambrecht remained confident with regard to the ongoing year,
expecting global economic growth of 3.2 percent. In 2007, the
company anticipates an average oil price (Brent) of about
$55/barrel and an average euro/dollar exchange rate of $1.30 per
euro. Major risk factors are seen as being associated with an
escalation in geopolitical trouble spots.
“The good start in the first quarter confirms our positive
outlook for 2007. We expect significantly higher sales based on
the acquisitions made in 2006 and organic growth. We expect to
at least match the previous year’s strong EBIT before special
items despite our assumption of a lower average oil price in
2007,” said Hambrecht.
Double-digit sales growth in all regions
Sales by location of company in Europe increased by 14
percent in the first quarter of 2007. EBIT before special items
rose by €171 million to €1.6 billion. This was due both to the
acquired businesses and organic growth in the chemical
businesses. Earnings in the Oil & Gas segment matched the
previous year’s level despite the decline in oil prices.
As a result of the acquisitions, companies in North America
increased sales by 23 percent in dollar terms and by 15 percent
in euro terms. EBIT before special items declined by €33 million
to €265 million. Earnings were reduced by the shutdown of the
TDI plant in Geismar, Louisiana, as well as by weaker demand
from the automotive industry. This could not be fully offset by
the acquired businesses.
In Asia Pacific, BASF increased sales by 37 percent in
local currency terms and by 28 percent in euro terms. EBIT
before special items climbed €92 million to €207 million. The
sales and earnings growth was due to the acquisitions as well as
strong demand for products from the Chemicals and Plastics
segments. The measures to increase efficiency that were
initiated in 2006 also contributed to the rise in earnings.
In South America, Africa, Middle East,
first-quarter sales by location of company rose by 49 percent in
local currency terms and by 41 percent in euro terms. EBIT
before special items increased by €21 million to €53 million.
The activities of the Catalysts division in South Africa and the
Agricultural Products division in South America contributed to
the expansion of the business. Higher prices for agricultural
produce improved the economic situation for farmers in Brazil,
thus increasing demand for crop protection products.
BASF is the world’s leading chemical company: The Chemical
Company. Its portfolio ranges from chemicals, plastics,
performance products, agricultural products and fine chemicals
to crude oil and natural gas. As a reliable partner to virtually
all industries, BASF’s high-value products and intelligent
system solutions help its customers to be more successful. BASF
develops new technologies and uses them to meet the challenges
of the future and open up additional market opportunities. It
combines economic success with environmental protection and
social responsibility, thus contributing to a better future.
BASF has approximately 95,000 employees and posted sales of
€52.6 billion in 2006. BASF shares are traded on the stock
exchanges in Frankfurt (BAS), London (BFA), New York (BF) and
Zurich (AN). |
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