First Quarter 2012/Annual Meeting: BASF With Solid Start to the Year
Published: Apr 27, 2012
LUDWIGSHAFEN, GERMANY and MANNHEIM, GERMANY--(Marketwire - April 27, 2012) - BASF had a solid start to 2012. Sales were higher than in the very good first quarter of the previous year and rose 6 percent to EUR20.6 billion. Income from operations (EBIT) before special items decreased as expected and at EUR2.5 billion (down 7 percent) 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 percent to EUR3.1 billion. Special items in EBIT resulted primarily from gains of EUR645 million on the disposal of the fertilizer business. EBITDA rose by EUR525 million to EUR3.9 billion.
At minus EUR73 million, the financial result was EUR903 million lower than in the same quarter of 2011. In the previous year, the financial result included special income of EUR887 million from the sale of shares in K+S Aktiengesellschaft.
Income before taxes and minority interests decreased by EUR333 million in the first quarter of 2012 to EUR3.0 billion. At 39.6 percent, 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 EUR687 million to EUR1.7 billion. Earnings per share were EUR1.88 in the first quarter of 2012, compared with EUR2.62 in the same period of 2011. Adjusted for special items and amortization of intangible assets, earnings per share amounted to EUR1.57 (first quarter of 2011: EUR1.94).
With cash provided by operating activities at just under EUR1.6 billion, BASF has been able to further reduce its net debt by EUR1.5 billion to around EUR9.4 billion since the beginning of the year.
BASF in North America off to a solid start
Sales in North America declined by 4 percent in U.S. dollars, remaining at the level of the previous first quarter in euro terms. "Overall, BASF in North America continued its strong performance and almost met the results of the record first quarter 2011," said Hans Engel, CEO of BASF Corporation, the company's North American subsidiary. "The earnings were impacted by higher raw material costs and a turnaround of our site in Geismar, Louisiana."
At the end of the first quarter of 2012, BASF shares traded at EUR65.59, an increase of 21.7 percent 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.
The Board of Executive Directors and the Supervisory Board proposed to the Annual Shareholders' Meeting that a dividend of EUR2.50 per share be paid for the 2011 business year. Bock said: "We are thus standing by our ambitious dividend policy of increasing our dividend each year or at least maintaining it at the previous year's level."
Bock thanked Dr. Stefan Marcinowski, who is retiring following 15 successful years on the Board of Executive Directors of BASF. Marcinowski joined BASF 33 years ago as a chemist in the main lab with further stations in his career as head of the public relations department and three years abroad in Brazil. Bock also wished much success to Wayne T. Smith, who will join the Board as of the end of the Annual Meeting.
Outlook for 2012
After a weak fourth quarter in 2011, BASF's business recovered in the first quarter of 2012. However, higher raw material costs could only be partly passed on. The company expects global economic growth to continue over the course of 2012. Uncertainty on the financial markets dampens growth prospects. Positive stimulus for the chemical industry will mainly come from the emerging markets. BASF's expectations for the global economy in 2012 remain unchanged:
- Growth of gross domestic product: 2.7 percent
- Growth in industrial production: 4.1 percent
- Growth in chemical production: 4.1 percent
- An average euro/dollar exchange rate of $1.30 per euro
- An average oil price of $110/barrel
Excluding the effects of acquisitions and divestitures, BASF aims to increase sales volumes. Bock stated: "We strive to exceed the 2011 record levels in sales and income from operations. Our forecast will be especially supported by the resumption of our crude oil production in Libya as well as by growing volumes in the chemicals business. In the first half of 2012, we are unlikely to match the extraordinarily good levels of the same period of the previous year." For the second half, however, BASF expects an increase in sales and earnings compared with the second half of 2011. The company aims to earn a high premium on its cost of capital once again in 2012.
BASF Corporation, headquartered in Florham Park, New Jersey, is the North American affiliate of BASF SE, Ludwigshafen, Germany. BASF has more than 16,000 employees in North America, and had sales of $19.9 billion in 2011. 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, social responsibility and environmental protection. Through science and innovation we enable our customers in almost all industries to meet the current and future needs of society. Our products and system solutions contribute to conserving resources, ensuring healthy food and nutrition and helping to improve the quality of life. We have summed up this contribution in our corporate purpose: We create chemistry for a sustainable future. BASF posted sales of about EUR73.5 billion in 2011 and had more than 111,000 employees as of the end of the year. Further information on BASF is available on the Internet at www.basf.com.
You can obtain further information from the internet at the following addresses:
First-Quarter Report (from 1:00 a.m. EDT)
Press release (from 1:00 a.m. EDT)
Live Transmission - Telephone Conference for Analysts and Investors as well as information about BASF shares
(from 2:30 a.m. EDT)
Live Transmission Speech Dr. Kurt Bock
(from 4:00 a.m. EDT)
Speech Dr. Kurt Bock - print version
(from 4:30 a.m. EDT)
Note to Editors:
You can download press photos from the internet at the following links:
Current press photos from the Annual Meeting
(from 1:00 p.m. CEDT)
General corporate press photos
Current TV footage
This release contains forward-looking statements based on current experience, 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 prove to 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.
John C. Schmidt
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