October 21, 2010

 

BASF to earn more than US$11.13 billion for 2010

BASF's earnings before interest and tax (EBIT) for the full year, excluding one-time items, will rise to more than EUR8 billion (US$11.13 billion), it said Wednesday (Oct 20).

 

Global chemicals market leader BASF predicted a gain in 2010 operating profit by at least two thirds, better than expected, after a strong third quarter, stopping short of forecasting the same pace next year.

 

That would be a gain of more than 64% from 2009 and exceeding the average analyst estimate at Thomson Reuters I/B/E/S of EUR7.3 billion (US$10.16 billion).

 

The maker of insulation foams, coatings and catalytic converters also said it expects 2010 sales to reach about EUR63 billion (US$86.7 billion), up 24% from last year.

 

In the three months through September, EBIT excluding one-offs rose 77% to EUR2.2 billion (US$3.06 billion). That beat the Thomson Reuters I/B/E/S consensus of EUR1.9 billion (US$2.64 billion).

 

"For the fourth quarter, the company expects the good business development to continue," said BASF, which is due to publish full third-quarter financial results on October 28.

 

Its shares rose 1% to EUR51.12 (US$71.16) by 0804 GMT, outperforming the STOXX Europe 600 Chemicals' 0.3% decline.

 

"We will raise our estimates following on the strong third-quarter results and our (sell) recommendation is under review," said Merck Finck analyst Carsten Kunold.

 

BASF Chief Executive Juergen Hambrecht had said last month that third-quarter results would likely beat expectations. He also toned up his full-year outlook at the time but declined to provide figures.

 

Still, doubts prevailed over the strength of the economic rebound and its impact on demand for chemicals and plastics.

 

The head of Germany's Merck KGaA, the world's largest supplier of liquid crystals for flat panel displays, warned Tuesday (Oct 19) that this year's massive upswing in key chemical markets could prove transient.

 

BASF also said on Wednesday (Oct 20) that the positive development it is currently seeing may not continue next year.

 

The company said it sees uncertainties in general economic development due to the winding down of national stimulus programmes, high levels of national debt in many countries, volatile raw material and foreign exchange markets, and increasing trade barriers.

 

Saudi Arabia's Sabic, the leading firm in the industry by market value, beat third-quarter profit forecasts on higher plastic and petrochemical sales on Sunday (Oct 17).

 

Dutch chemicals group DSM last month set ambitious profit and sales growth targets, betting its exposure to fast-growing emerging markets and planned acquisitions will keep potential predators at bay.