Business strong in first quarter - BASF increases sales and earnings
Ludwigshafen, Germany (ots)
- Volume growth in all segments
- Chemicals activities improve significantly
- Cash flow increases further
- High raw materials have negative impact
- Outlook for full year 2004: Higher EBIT before special items
expectedBASF again showed that it can maintain a good course, even in stormy economic weather. "We perform consistently thanks to our clear strategy for long-term success, as demonstrated by the good start in the first quarter of 2004," said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft when commenting on the company's first-quarter figures at the Annual Meeting on April 29, 2004.
Compared with the strong first quarter of 2003, sales increased by 2.5 percent. Sales growth was due to significantly higher volumes. Overall, price levels are still unsatisfactory, although prices were increased in individual product lines. Excluding negative currency effects, sales climbed 8.4 percent.
Compared with the same period in 2003, earnings improved in all segments with the exception of Oil & Gas. At EUR1,138 million, income from operations (EBIT) before special items climbed 21 percent compared with the strong first quarter of 2003.
Successful restructuring measures continued
Thanks to successful restructuring measures, significant cost reductions were achieved, in particular in the Chemicals, Plastics and Performance Products segments. In the Agricultural Products & Nutrition segment, EBIT before special items improved further as a result of higher sales volumes of crop protection products, especially in South America. The Oil & Gas segment again made the largest contribution to EBIT, although there was a sales related decline in earnings because the price of oil was lower in euro terms.
Special items are related to restructuring measures that will be implemented in the further course of the year, for example NAFTA restructuring Phase II. EBIT after special items increased by over 10 percent to EUR1,038 million.
The financial result was minus EUR60 million compared with minus EUR103 million in the first quarter of 2003. The interest result improved in particular as a result of the lower level of net debt. Income before taxes and minority interests increased by 17 percent to EUR978 million.
The tax rate remained at the previous year's level of 44 percent. In the first quarter, income taxes for oil production that are non-compensable with German taxes were EUR138 million compared with EUR161 million in the first quarter of 2003.
Net income rose 17% to EUR515 million. Earnings per share were EUR0.93 compared with EUR0.78 in 2003.
Cash provided by operating activities rose 8 percent to EUR963 million. The higher level of net income contributed to this increase. Despite the significant expansion of our business, additional financing for net working captial was below the previous year's level.
Optimistic outlook for the full year 2004
"The first three months of 2004 offer grounds for confidence, even though the first quarter is not generally representative of the further course of the year because of seasonally higher contributions from the Agricultural Products division and from the Oil & Gas segment," said Hambrecht. BASF anticipates demand for its products to remain strong. "Driven by the dynamically growing economies in the Far East - especially in China - and by solid growth in North America, we are seeing synchronized growth in the global economy for the first time in years. All these factors are reflected in our order books. Europe, and Germany especially, is sadly lagging behind," he continued.
Although Hambrecht expects a negative impact on business due to persistently high and volatile raw materials costs and a relatively weak dollar, he remains optimistic with regard to his prognosis for 2004 overall: "I expect that we will achieve slightly higher sales and increase EBIT before special items."
EBIT before special items increases in all regions
All regions reported an increase in EBIT before special items in the first three months of 2004. In Europe, sales by location of company increased by 1.5 percent in the first quarter. Sales rose in all segments with the exception of Oil & Gas. EBIT before special items climbed EUR63 million to EUR889 million.
Sales by location of company in the NAFTA region declined 2.1 percent. In dollar terms, sales increased by 14 percent, with all segments contributing to this growth. The improved earnings situation in the Chemicals and Agricultural Products & Nutrition segments led to a significant increase in EBIT before special items, which rose by EUR51 million to EUR80 million. BASF is not satisfied with this level of earnings and will therefore continue to implement the measures it has introduced to improve profitability.
In South America, first-quarter sales by location of company increased in local currency terms by 39 percent, in particular due to strong sales of crop protection products. EBIT before special items more than doubled to EUR73 million.
In local currency terms, companies in the Asia, Pacific Area, Africa region increased sales by 20 percent; all segments contributed to this increase. EBIT before special items rose by EUR39 million to EUR96 million.
BASF is the world's leading chemical company. Our goal is to grow profitably and further increase the value of our company. We help our customers to be more successful through intelligent system solutions and high-quality products. BASF's portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. Through new technologies we can tap into additional market opportunities. We conduct our business in accordance with the principles of sustainable development. In 2003, BASF had sales of more than EUR33 billion (circa $42 billion) and over 87,000 employees worldwide. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA), New York (BF), Paris (BA) and Zurich (AN). Further information on BASF is available on the Internet at www.basf.com.
The following information can be found on the Internet at:
- Interim report (from 7.30 a.m. CEST) www.basf.de/interimreport(English) www.basf.de/zwischenbericht(German)
- News release (from 7.30 a.m. CEST) www.basf.de/pressrelease (English) www.basf.de/presseinformation(German)
- Speech Dr. Jürgen Hambrecht - live transmission (from 10.00 a.m. CEST) www.basf.de/shareholdermeeting (English) www.basf.de/hauptversammlung (German)
Forward-looking statements This release contains forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, 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. Such factors include those discussed in BASF's Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this release.
ots Original Text Service: BASF AG Internet: http://www.presseportal.de
Contact:
Michael Grabicki
Phone: +49 621 60-99938
Fax: +49 621 60-92693
michael.grabicki@basf-ag.de
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