LUDWIGSHAFEN, Germany,
July 24, 2014 /PRNewswire/ --
- Second quarter 2014:
- Sales €18.5 billion (+ 1 percent)
- EBIT before special items €2.1 billion (+ 12
percent)
- Considerable earnings growth in the chemicals business and
in Oil & Gas
- Earnings in Agricultural Solutions considerably below
previous year quarter due to currency effects
- Outlook 2014 confirmed: slight increase in EBIT before
special items expected despite a more challenging
environment
BASF's business developed positively in the second quarter of
2014. At €18.5 billion, sales rose by 1 percent compared with
the same period of the previous year.
"This was largely the result of higher sales volumes in our
chemicals business, which comprises the Chemicals, Performance
Products and Functional Materials & Solutions segments, as well
as in the Oil & Gas segment," said Kurt Bock, Chairman of the Board of Executive
Directors of BASF SE at the Half-Year Telephone Conference. Sales
prices decreased slightly. On balance, portfolio measures increased
sales by 1 percent. Continuing negative currency effects (minus 4
percent) and a considerable decline in sales in Other dampened
sales growth for the BASF Group.
At around €2.1 billion, income from operations (EBIT)
before special items surpassed the level of the second quarter of
2013 by €221 million. Earnings increased considerably in the
chemicals business and the Oil & Gas segment. Earnings declined
considerably, however, in the Agricultural Solutions segment and in
Other. "The devaluation of almost all major currencies against the
euro negatively impacted earnings by roughly €200 million
compared to the previous second quarter," explained Bock.
EBIT increased by €246 million to €2.0 billion
compared with the previous second quarter. Net income rose by
€142 million to €1.3 billion. Earnings per share were
€1.41 in the second quarter of 2014 compared with €1.26 in the same
period of the previous year. Adjusted for special items and
amortization of intangible assets, earnings per share rose to €1.54
(second quarter of 2013: €1.40).
North America
In North America, sales grew by
4 percent in euro terms and by 10 percent in U.S. dollars compared
to the second quarter of 2013. "We had significantly higher sales
volumes, especially in the Chemicals and Functional Materials &
Solutions segments," said Hans
Engel, Chairman and CEO of BASF Corporation.
At €466 million, EBIT before special items was
€19 million below the level of the same quarter of 2013. While
earnings in the Chemicals and Functional Materials & Solutions
segments increased considerably, earnings declined in the
Performance Products and Agricultural Solutions segments as well as
in Other.
Further implementation of the "We create chemistry"
strategy
"In the past months, we continued to implement our 'We create
chemistry' strategy. We invested in attractive business areas and
were successful in the market with our innovations. In addition, we
optimized businesses and increased our efficiency," said Bock.
Just a few days ago, BASF inaugurated a new production plant for
mobile emissions catalysts in Sroda Slaska near Wrocław,
Poland. The company is also
increasing investments in plastics and plastic precursors business
in Asia. The restructuring of the
Performance Products segment is on track. Through the restructuring
measures in this segment, more than 2,000 positions will be reduced
by the end of 2017. BASF expects an annual earnings improvement of
about €500 million from 2017 onward. One-time costs are
€250 to 300 million.
Outlook for full year 2014
For 2014, BASF now expects weaker growth in the global economy
than was foreseen six months ago. The weakness of relevant major
currencies is an additional burden. The company has thus reduced
some of its expectations for the global economy in 2014 (previous
forecast in parentheses):
- Growth of gross domestic product: 2.5 percent (2.8
percent)
- Growth in industrial production: 3.7 percent
- Growth in chemical production: 4.4 percent
- An average euro/dollar exchange rate of $1.35 per euro
($1.30 per euro)
- An average oil price for the year of $110 per barrel
Bock: "The slight upturn in growth expected for the global
economy and key customer industries in 2014 has a positive effect
on our business. We thus stand by our outlook for 2014 despite even
more unfavorable currency developments and increased political
risks. We aim to increase our sales volumes excluding the effects
of acquisitions and divestitures."
Nonetheless, sales are likely to decrease slightly compared with
2013, due to the divestiture of the gas trading and storage
business, as well as to continuing negative currency effects. BASF
expects a slight rise in EBIT before special items, especially as a
result of considerably higher contributions from the Performance
Products and Functional Materials & Solutions segments. EBIT is
likely to increase considerably. Special income from the planned
divestiture of the gas trading and storage business as well as from
the divestiture of BASF's share in the Styrolution joint venture
will make a significant contribution here.
BASF now expects the closing of the asset swap with Gazprom,
agreed upon in December 2013, in
autumn 2014 – still with retroactive financial effect from
April 1, 2013. The transaction
includes the divestiture of the gas trading and storage business.
The complex legal unbundling process involving the establishment of
new companies in Russia,
the Netherlands and Germany is taking longer than initially
anticipated.
Business development in the segments in the second
quarter
In the Chemicals segment, sales were up 3 percent
compared with the second quarter of 2013. Sales volumes rose in all
divisions, posting especially strong volumes growth in the
Petrochemicals division in North
America. Lower sales prices and negative currency effects
reduced the sales increase. EBIT before special items surpassed the
level of the previous second quarter by €75 million and
increased to €570 million, mainly as a result of higher
margins in the Petrochemicals division.
Sales in the Performance Products segment declined by 3
percent due to negative currency effects. With prices stable,
volumes slightly increased; sales volumes grew especially in the
Asia Pacific region. EBIT before
special items grew by €41 million to €435 million. This
was mainly the result of lower fixed costs, partly owing to
restructuring measures.
Sales matched the previous second-quarter level in the
Functional Materials & Solutions segment. Sales volumes
increased considerably, primarily in the Catalysts division.
Negative currency effects put a strain on sales development. In the
Construction Chemicals division, sales declined considerably as a
result of portfolio effects, as well. EBIT before special items
increased by €63 million to €356 million. This was
largely owing to higher volumes and reduced fixed costs.
In the Agricultural Solutions segment, sales declined by
4 percent compared with the second quarter of 2013. This was due to
negative currency effects. Sales prices could be raised in all
regions. Volumes remained stable. At €433 million, EBIT before
special items was €52 million below the previous
second-quarter level, on account of negative currency effects and
higher research expenses.
Sales in the Oil & Gas segment exceeded the level of
the previous second quarter by 13 percent. Sales volumes increased
sharply, especially in the Exploration & Production business
sector. The activities in Norway
acquired from Statoil also contributed to sales growth. In the
Natural Gas Trading business sector, significantly lower gas prices
dampened sales development. EBIT before special items rose by
€205 million to €587 million as a result of the higher
volumes.
Compared with the second quarter of 2013, sales in Other
fell by 20 percent. This was primarily due to reduced raw material
sales and lower plant availability. EBIT before special items
declined by €111 million to minus €328 million. Currency
losses contributed significantly to this development.
Business development in other regions in the second
quarter
Sales at companies located in Europe rose by 1 percent in the second
quarter compared with the same quarter of the previous year. Higher
volumes in the segments Chemicals, Functional Materials &
Solutions and especially Oil & Gas could more than compensate
for lower prices and negative currency effects. Sales declined
considerably in Other. EBIT before special items grew by
€273 million to €1.3 billion mainly due to higher
contributions from the chemicals business and from the Oil &
Gas segment.
In Asia Pacific sales
rose by 1 percent in local-currency terms, but were down 5 percent
in euro terms owing to negative currency effects and slightly
declining sales prices. Sales decreased considerably in the
Chemicals segment. EBIT before special items fell by
€24 million to €172 million. Considerably lower earnings
in the Chemicals and Agricultural Solutions segments contributed to
this.
Sales in South America,
Africa, Middle East grew by 6 percent in
local-currency terms, but fell by 7 percent in euro terms. Sales
volumes declined slightly. Highly negative currency effects could
only be partially offset by increased prices. EBIT before special
items decreased by €9 million to €68 million, mainly due
to the Oil & Gas segment.
BASF - The Chemical Company
BASF Corporation, headquartered in Florham Park, New Jersey, is the North
American affiliate of BASF SE, Ludwigshafen, Germany. BASF has nearly 17,000 employees in
North America, and had sales of
$19.3 billion in 2013. For more
information about BASF's North American operations, visit
www.basf.us.
BASF is the world's leading chemical company: The Chemical
Company. Its portfolio ranges from chemicals, plastics, performance
products and crop protection products to oil and gas. We combine
economic success with environmental protection and social
responsibility. Through science and innovation, we enable our
customers in nearly every industry to meet the current and future
needs of society. Our products and solutions contribute to
conserving resources, ensuring nutrition and improving quality of
life. We have summed up this contribution in our corporate purpose:
We create chemistry for a sustainable future. BASF had sales of
about €74 billion in 2013 and over 112,000 employees as of the end
of the year. Further information on BASF is available on the
Internet at www.basf.com.
On July 24, 2014, you can obtain
further information from the internet at the following
addresses:
Interim Report (from 7:00 a.m.
CEST)
basf.com/interimreport (English)
basf.com/zwischenbericht
(German)
Global Press Release (from 7:00 a.m.
CEST)
basf.com/pressrelease (English)
basf.com/pressemitteilungen
(German)
Live Transmission (from 9:00 a.m.
CEST)
basf.com/pcon (English)
basf.com/pk
(German)
Speech – Print version (from 9:00 a.m.
CEST)
basf.com/pcon
(English)
basf.com/pk (German)
Live Transmission – Telephone conference for analysts and
investors (from 11:00 a.m.
CEST)
basf.com/share (English)
basf.com/aktie (German)
Press Photos
basf.com/pressphoto-database
(English)
basf.com/pressefoto-datenbank
(German)
TV Footage
tvservice.basf.com/en
(English)
tvservice.basf.com
(German)
Forward-looking statements
This release
contains forward-looking statements. These statements are based on
current estimates and projections of BASF management and currently
available information. They are not guarantees of future
performance, involve certain risks and uncertainties that are
difficult to predict, and are based upon assumptions as to future
events that may not be accurate. Many factors could cause the
actual results, performance or achievements of BASF to be
materially different from those that may be expressed or implied by
such statements. BASF does not assume any obligation to update the
forward-looking statements contained in this release.
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SOURCE BASF Corporation