BASF Reports Increased Earnings in 2nd Quarter
BASF’s business developed positively in the second quarter of 2014. At EUR 18.5 billion, sales rose by 1% 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 Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE, Ludwigshafen, Germany. Sales prices decreased slightly. On balance, portfolio measures increased sales by 1%. Continuing negative currency effects (minus 4%) and a considerable decline in sales in Other dampened sales growth for the BASF Group.
Business Development in the Segments
In the Chemicals segment, sales were up 3% 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 EUR 75 million and increased to EUR 570 million, mainly as a result of higher margins in the Petrochemicals division.
Sales in the Performance Products segment declined by 3% 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 EUR 41 million to EUR 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 EUR 63 million to EUR 356 million. This was largely owing to higher volumes and reduced fixed costs.
In the Agricultural Solutions segment, sales declined by 4% compared with the second quarter of 2013. Sales in the Oil & Gas segment exceeded the level of the previous second quarter by 13%. Sales volumes increased sharply, especially in the Exploration & Production business sector.
Investments and Cost Reductions
Just a few days ago, BASF inaugurated a new production plant for mobile emissions catalysts in Środa Śląska 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 EUR 500 million from 2017 onward. One-time costs are EUR 250 to 300 million.
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