BASF Announce Solid Start to the Year for Its Agriculture Business
The Agricultural Solutions segment had a very successful start to 2012. Sales growth was particularly driven by higher sales volumes and prices. Currency effects also had a positive impact on sales. Earnings increased significantly.
27 April 2012 --- BASF had a solid start to 2012. Sales were higher than in the very good first quarter of the previous year and rose 6% to €20.6 billion ($27.2 billion).
The Agricultural Solutions segment had a very successful start to 2012. Sales growth was particularly driven by higher sales volumes and prices. Currency effects also had a positive impact on sales. Earnings increased significantly.
Income from operations (EBIT) before special items decreased as expected and, at €2.5 billion (down 7%), was slightly below the same quarter of the previous year.
“Increased raw material costs could not be fully passed on in all business areas, which put pressure on our margins. Our Agricultural Solutions segment increased earnings significantly,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF, at the Annual Shareholders’ Meeting in the Congress Center Rosengarten in Mannheim.
Compared with the first quarter of the previous year, EBIT grew by 22% to €3.1 billion. Special items in EBIT resulted primarily from gains of €645 million on the disposal of the fertilizer business. EBITDA rose by €525 million to €3.9 billion.
At minus €73 million, the financial result was €903 million lower than in the same quarter of 2011. In the previous year, the financial result included special income of €887 million from the sale of shares in K+S Aktiengesellschaft.
After a weak fourth quarter in 2011, BASF’s business recovered in the first quarter of 2012. However, higher raw material costs could only be partly passed on. The company expects global economic growth to continue over the course of 2012. Uncertainty on the financial markets dampens growth prospects. Positive stimulus for the chemical industry will mainly come from the emerging markets.
Excluding the effects of acquisitions and divestitures, BASF aims to increase sales volumes. Bock stated: “We strive to exceed the 2011 record levels in sales and income from operations. Our forecast will be especially supported by the resumption of our crude oil production in Libya as well as by growing volumes in the chemicals business. In the first half of 2012, we are unlikely to match the extraordinarily good levels of the same period of the previous year.” For the second half, however, BASF expects an increase in sales and earnings compared with the second half of 2011. The company aims to earn a high premium on its cost of capital once again in 2012.
