BASF Reports 9% Rise in 2012 Sales, Gains in Nearly All Divisions

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Researched by Industrial Info Resources (Sugar Land, Texas)--German chemical company BASF SE (Ludwigshafen, Germany) posted a $2.4 billion fourth-quarter profit, which was in line with analyst expectations. The world''s biggest chemical company reported $25.7 billion in quarterly sales, up nearly 9% from 2011.

On quarterly basis, the sales figures rose in all divisions except functional solutions. Plastics rose 12%, oil & gas sales improved 39%, and earnings before interest, tax and one-time items (EBITDA) were up 80%, signaling a recovery from 2011''s Libyan impact. Oil production in the country had been halted between February and October in 2011 because of political unrest.

For 2012, BASF increased sales to $102.8 billion, up 7% compared with 2011. Net income fell by $1.7 billion to $6.4 billion, due in part to the higher earnings contribution from oil & gas, and thus the significantly higher taxes.

"The Oil & Gas and Agricultural Solutions segments achieved new records, while development in our chemicals business was weaker than in 2011," BASF Chairman Kurt Bock said in a statement. Bock said that despite weakening profitability, the company aimed for growth to exceed 2012 levels in sales and EBITDA.

"We want to improve results in all operative segments in 2013," Bock said. "The expected increase in demand, together with measures to improve operational excellence and raise efficiency, will contribute to reach these targets." BASF also released its forecasts on the economy. The company forecast world economic growth will accelerate to 2.4% from 2.2% last year, with chemical production growing even faster at 3.6%.

"BASF increased capex [capital expenditure] spending robustly 22% during 2012, and we expect this high level of spending to continue," said Bob Buhr, an analyst at Societe Generale in London, in a note to clients. "The substantial increase in capex is characteristic of the entire chemical industry at present, as European companies seek to expand operations in North America, where feedstock costs are generally lower, and in Asia and Latin America, where demand trends are expected to remain higher than in Europe."

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