August 1, 2007
BASF posts strong sales results in Q2 2007
Press release
BASF announced Aug 1 that its Q2 2007 sales registered EUR14.7 billion, up 19 percent compared with the same period last year.
The company posted income from operations (EBIT) before special items of EUR2.0 billion, up 6 percent on-year.
Cumulative sales in the first half of 2007 amounted to EUR29.3 billion, up 18 percent compared with the same period in 2006.
During the first half of this year, EBIT before special items rose by approximately 10 percent to EUR4.1 billion.
"Our significant earnings growth demonstrates that BASF has reached a higher level of sustainable earnings," said Dr Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft.
For 2007, Hambrecht anticipates global economic growth of approximately 3.5 percent, despite large variations from region to region.
BASF's chairman also expects an average euro/US dollar exchange rate of US$1.35 to EUR1 in 2007. Due to the rise in oil prices, the company has increased its assumption for the average price of Brent crude in 2007 to US$65 per barrel.
Risks are seen to come from the renewed significant rise in oil prices, the relatively weak US dollar, and tension in conflict areas around the world.
The company should see significantly higher sales in 2007 than last year, but scheduled plant turnarounds are likely to reduce earnings by EUR150 million in this year's second half, said Hambrecht.
Hambrecht also revealed plans to further increase spending on research and development.
BASF's chief financial officer, Dr Kurt Bock, commented, "Cash provided by operating activities developed very positively in the second quarter. The cumulative value for the first half was in excess of EUR2.7 billion compared with EUR2.2 billion in the first half of 2006."
In the Agricultural Products & Nutrition segment, sales increased by 3 percent compared with the second quarter of 2006, while EBIT before special items rose by more than 44 percent. Higher sales volumes in the Agricultural Products division more than compensated for negative currency effects.
The Fine Chemicals division posted a significant increase in EBIT before special items, particularly due to a reduction of fixed costs.
BASF's sales increased in all regions during the first half of 2007, with the strongest growth in percentage terms seen in South America, Africa, the Middle East and Asia.
In Europe, total sales registered EUR17.4 billion during the first half, up 14 percent on-year. EBIT before special items rose by 6 percent to EUR3.1 billion, due to acquired businesses and organic growth in the chemical businesses, particularly in Petrochemicals.
For North America, sales rose by 26 percent on-year in dollar terms and by 18 percent in euro terms during the first half. EBIT before special items declined by 3 percent to EUR544 million, due to shutdown of the US TDI plant in Geismar, Louisiana, for several weeks, as well as currency effects and the impact of divestitures in the Agricultural Products division. Acquired businesses and strong earnings in the Petrochemicals division were unable to offset this fully.
Growth remained strong in the Asia-Pacific, where BASF increased sales by 34 percent in local currency terms and by 27 percent in euro terms. EBIT before special items also rose considerably by 58 percent to EUR380 million. BASF attributed this to successful investments in the Verbund sites in Kuantan, Malaysia, and in Nanjing, China.
For South America, Africa and the Middle East, BASF's sales rose by 57 percent in local currency terms and by 51 percent in euro terms compared with the same period last year. EBIT before special items rose almost threefold, mainly due to the company's agricultural products business in South America.
EUR1=US$1.3650 (Aug 1)
For more information, contact Stella Chiu (Hong Kong) at
Tel: +852-2731-1228
Fax: +852-2734-9645
Mobile: +852-9269-7471
E-mail: ngachi-stella.chiu@basf.com
Website: www.basf.com
