BASF Presses Ahead with Capital Guidance for 2018

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Researched by Industrial Info Resources (Sugar Land, Texas)--Global chemicals major BASF SE (Ludwigshafen, Germany) is maintaining its financial outlook for 2018 despite a slight drop in net earnings for the first quarter. The outlook includes 4.0 billion euros (US$4.77 billion) in capital expenditures for the year. Industrial Info is tracking US$3.56 billion in BASF capital project activity, including US$1.6 billion worth in the U.S.

Click on the image at right for a graph showing BASF projects in North America.

For the just-ended quarter, BASF reported 1.68 billion euros (US$2 billion) in net income, down 2% from first-quarter 2017. Weighed down by negative currency effects mainly related to the U.S. dollar, sales revenue was euro 16.65 billion, down 1%. In North America, sales declined by 9%. Company executives said during BASF's quarterly earnings conference call that they still anticipate slightly higher sales in 2018, largely as a result of volume growth.

Merger and acquisition costs are expected to weigh down earnings before interest and taxes for 2018. BASF plans to complete its acquisition of Solvay S.A.'s (Brussels, Belgium) backward-integrated polyamide business in third-quarter 2018, said BASF Chief Financial Officer Hans Engel during the company's earnings conference call. Industrial Info is tracking $153.5 million in Solvay capital projects in North America, including a planned polyamides greenfield unit addition at the company's plant in Greenfield, South Carolina. Construction kickoff is planned for second-quarter 2018, with completion in third-quarter 2020. For more information, see Industrial info's project report.

During the conference call, BASF President of Finance Marc Ehrhardt noted the April 11 inauguration by Yara International ASA (Oslo, Norway) and BASF of a new world-scale ammonia plant in Freeport, Texas, adding, "The new plant allows us to take advantage of world-scale production economics and attractive raw material prices."

For more information on the ammonia plant, see Industrial Info's project report and April 13, 2018, article - Yara-BASF Opens Texas Ammonia Plant, More on the Way.

In Louisiana, BASF is expected to kick off construction this year of a 300,000 ton-per-year methylene diphenylene diisocyanate (MDI) unit at its Geismar complex, increasing total MDI capacity at the facility to 600,000 tons per year. Completion is expected in mid-2020. For more information, see Industrial Info's project report.

In Virginia, BASF continues to review plans for a powder specialty chemicals manufacturing unit at the Suffolk Acrylamide and Industrial Chemicals site. If the project moves ahead as planned, construction would kick off in first quarter 2019, with completion in first quarter 2020. For more information, see Industrial Info's project report.

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