BASF with solid start to the year

BASF had a solid start to 2012. Sales were higher than in the very good first quarter of the previous year and rose 6% to €20.6 billion. Income from operations (EBIT) before special items decreased as expected and, at €2.5 billion (down 7%), was slightly below the same quarter of the previous year. “Increased raw material costs could not be fully passed on in all business areas, which put pressure on our margins. Our Oil & Gas and Agricultural Solutions segments increased their earnings significantly,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF, at the Annual Shareholders’ Meeting in the Congress Center Rosengarten in Mannheim.

Compared with the first quarter of the previous year, EBIT grew by 22% to €3.1 billion. Special items in EBIT resulted primarily from gains of €645 million on the disposal of thefertilizer business. EBITDA rose by €525 million to €3.9 billion.
At minus €73 million, the financial result was €903 million lower than in the same quarter of 2011. In the previous year, the financial result included special income of €887 million from the sale of shares in K+S Aktiengesellschaft.

Income before taxes and minority interests decreased by €333 million in the first quarter of 2012 to €3.0 billion. At 39.6%, the tax rate was far higher than in the first quarter of 2011. This increase is the result of the largely tax-free gain on the sale of shares in K+S Aktiengesellschaft in the previous year as well as a higher earnings contribution from the Oil & Gas segment in 2012.
Net income decreased by €687 million to €1.7 billion. Earnings per share were €1.88 in the first quarter of 2012, compared with €2.62 in the same period of 2011. Adjusted for special items and amortization of intangible assets, earnings per share amounted to €1.57 (first quarter of 2011: €1.94).
With cash provided by operating activities at just under €1.6 billion, BASF has been able to further reduce its net debt by €1.5 billion to around €9.4 billion since the beginning of the year.

At the end of the first quarter of 2012, BASF shares traded at €65.59, an increase of 21.7% compared with the closing price at the end of 2011. The BASF stock thus outperformed the German stock index DAX 30 and the European benchmark index DJ EURO STOXX 50 as well as the global industry indexes DJ Chemicals and MSCI World Chemicals.

Sales increased in the Chemicalssegment, mainly thanks to positive currency effects and sales to Styrolution Group companies. Sales volumes decreased as a result of the optimization of the supply chain for steam cracker products, carried out in the third quarter of 2011. On a comparable basis, volumes increased slightly. Higher raw material costs resulted in declining margins, which led to earnings significantly below the very good level of the previous first quarter.

In the Plastics segment, sales were slightly reduced compared with the first quarter of 2011. Higher prices and currency effects made a positive contribution to sales development; sales volumes were weaker. Lower margins led to a significant decline in earnings. Furthermore, the scheduled maintenance of the MDI and TDI plants in Geismar, Louisiana, negatively impacted earnings in the Polyurethanes division.

Source: BASF