BASF starts new year with considerable rise in sales and earnings
“BASF has had a good start to the year 2017,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE. “The demand trends we observed over the course of 2016 continued in the first quarter of this year.”
Group’s sales rose by 19%
BASF Group’s sales rose by 19% in the first quarter of 2017 to EUR16.9 billion. In all segments, the positive volume trend seen in previous quarters was maintained and led to growth of 8% in sales volumes. Furthermore, BASF achieved significantly higher sales prices (up 8%), especially in the Chemicals segment. Currency effects and the Chemetall business acquired from Albemarle in December 2016 also contributed to the increase in sales.
EBIT was 29% higher
BASF Group’s income from operations (EBIT) before special items was 29% higher at EUR2.5 billion. Of this amount, EUR2.0 billion was generated by the chemicals business, which comprises the segments Chemicals, Performance Products and Functional Materials & Solutions. Earnings in the chemicals business thus grew by 37%.
Outlook for 2017 confirmed
“We remain cautious when it comes to our outlook for the full year. We still see considerable risks with regard to macroeconomic development and the political environment,” said Bock. “We confirm our 2017 forecast for BASF Group sales and earnings. We expect considerable sales growth for the BASF Group in 2017. According to our definition, that equates to an increase of at least 6% in sales. We want to achieve slightly higher EBIT before special items compared with 2016. In this case, ‘slight’ means a change of 1-10%; we expect the increase will be toward the top end of that range.”
Development of the segments
In the Chemicals segment, sales rose by 36% compared with the previous first quarter to EUR4.1 billion, largely as a result of higher prices in the Petrochemicals and Monomers divisions. Sales were furthermore supported by the higher level of sales volumes in all divisions. Currency effects slightly boosted sales. Due to higher margins and volumes, EBIT before special items grew by EUR501 million compared with the first quarter of 2016 and reached EUR958 million. The negative impact on earnings in the first quarter of 2017 caused by the accident at the North Harbor of the Ludwigshafen site was offset by an initial insurance payment for the damages occurring in the fourth quarter of 2016. Fixed costs were up year-on-year, due primarily to the startup of new plants.
Sales in the Performance Products segment grew by 9% versus the first quarter of 2016 and amounted to EUR4.3 billion. This was mainly the result of increased volumes in the Dispersions & Pigments, Care Chemicals and Performance Chemicals divisions. The segment experienced positive currency effects in all divisions and slightly raised sales prices overall. Portfolio effects dampened sales development. EBIT before special items declined by EUR40 million compared with the solid level of the previous first quarter due to lower margins and higher fixed costs and came in at EUR515 million.
In the Functional Materials & Solutions segment, sales grew by 18% year-on-year at EUR5.2 billion. This was predominantly the result of a sharp rise in sales volumes, primarily driven by higher demand from the automotive industry. Sales development was also supported by the Chemetall business acquired from Albemarle in December 2016, along with slight price increases and currency effects. Compared with the previous first quarter, EBIT before special items rose by EUR75 million to reach EUR531 million, thanks in particular to the volume growth and the Chemetall acquisition.
From a regional perspective, BASF was able to considerably improve sales and earnings in Asia Pacific in particular. Volumes in that region rose substantially in all segments; sales prices increased, especially in the Chemicals segment. Business in China was the main driver of this development.