BASF Strengthens Earnings on Increasingly Strong Global Sales

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Researched by Industrial Info Resources (Sugar Land, Texas)--On Friday, global chemical giant BASF SE (PINK:BASFY) (Ludwigshafen, Germany) announced earnings results for the first quarter of the company's 2011 fiscal year. As the global economy continues to strengthen, BASF's sales and earnings have continued to increase. The company's sales were up 25% the first quarter of 2010. Net income of €2.41 billion ($3.47 billion) was up 134% year over year.

Sales were up across all product areas, with BASF's Chemicals segment showing 27% growth in sales from 1Q10 and an increase in earnings before interest and taxes (EBIT) of €304 million ($436.4 million). In a conference call regarding the earnings, BASF Chief Financial Officer Dr. Hans-Ulrich Engel said, "In the Chemicals segment, we increased sales substantially due to ongoing high demand and price increases, which we implemented to offset high raw material cost. EBIT before special items reach a record level."

The company's Plastics segment showed a 27% rise in sales from the corresponding quarter of 2010, with EBIT rising €114 million ($163.7 million). Engel said that much of the increased demand for plastic products came from the strengthening automotive industry.

Sales were up across all global regions:

• Europe - sales of €11.15 billion ($16 billion), up 24% from 1Q10
• North America - sales of €3.85 billion ($5.4 billion), up 22%
• Asia Pacific - sales of €3.39 ($4.9 billion), up 33%
• South America, Africa, Middle East - sales of €971 million ($1.4 billion), up 25%

One notable area of weakness for the U.S. and Western Europe was BASF's Construction Chemicals segment. While there was growth in demand in the emerging economies in Asia, Eastern Europe and South America, there was no growth in construction activity in North America and parts of Europe.

On the whole, the positive figures bode well for the strengthening global economy. With fingers in virtually every industrial sector, including health & nutrition, oil & gas, paper, construction, automobiles and agriculture, the across-the-board increase in sales suggests increased confidence and forward movement in industries across the globe.

Industrial Info is tracking nearly $7 billion inactive BASF projects across the world. The company is continuing investment in its facility in Geismar, Louisiana, and is in the planning stages for a formic acid unit addition to increase production capacity. Construction is tentatively scheduled to kick off in spring 2012. Information on this and other BASF projects can be found in Industrial Info's North American Project Database.

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