LUDWIGSHAFEN, Germany, Nov 11, 2004 (BUSINESS WIRE) -- BASF (BF) (FWB:BAS) (UK:BFA):
-- Further strong increase in sales and EBIT before special items
-- Sales prices increased to reflect higher raw materials costs
-- Risks due to high raw materials prices
-- Outlook for full year 2004:
- Significant increase in sales and EBIT before special items
- Premium will be earned on cost of capital
BASF continued on its successful course in the third quarter of 2004 and again posted excellent interim results. The successful first half of 2004 ran seamlessly into the third quarter. There were no signs of the usual summer lull in business. Capacity utilization of BASF's plants improved due to strong demand. The high oil price, which has increased even further, allowed the company to pass on some necessary price increases to the market.
Compared with the third quarter of 2003, sales increased 20 percent to EUR 9.3 billion, and income from operations (EBIT) before special items rose 160 percent to more than EUR 1 billion.
Cumulative sales in the first nine months of 2004 amounted to EUR 27.7 billion. This was an increase of more than 11 percent compared with the same period of 2003. EBIT before special items in the first nine months climbed 55 percent to EUR 3.4 billion.
Outlook for full year 2004: significant increase in EBIT before special items
Dr. Juergen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft, announced that ongoing initiatives and programs to increase efficiency and reduce costs would be continued. "We cannot afford to take a break from our restructuring efforts. Tough global competition means that we have to constantly improve our productivity, especially in those areas with low growth rates," he said.
Hambrecht summarized his outlook as follows: "For the full year 2004, we confidently expect a significant increase in sales and EBIT before special items. We therefore anticipate that we will earn a premium on our cost of capital."
Sales and earnings growth
BASF's Chief Financial Officer, Dr. Kurt Bock, pointed out that the third quarter of 2004 was the thirteenth quarter in succession in which sales volumes had increased compared with the previous year. For Bock, this shows that BASF is growing faster than the market.
The increase in third-quarter sales by about EUR 1.6 billion to a record high of EUR 9.3 billion was due to higher volumes, and for the first time in a while, to price increases for many products in the portfolio.
Negative currency effects were primarily due to the depreciation of the dollar against the euro. Adjusted for the exchange rate effect, sales increased by 25 percent.
The increase in EBIT before special items by EUR 651 million to more than EUR 1 billion was due to higher volumes as well as a reduction in fixed costs.
Special charges of EUR 96 million were primarily due to structural measures to increase productivity and were incurred in particular in the Chemicals and Agricultural Products & Nutrition segments.
EBIT after special items increased by 156 percent to EUR 958 million.
The tax rate was approximately 56 percent and was thus slightly higher compared with the previous year. The tax rate was significantly higher than in the second quarter. This was primarily due to noncompensable oil production taxes, which increased to EUR 197 million in the third quarter as a result of the high oil price.
Compared with the same period in 2003, net income climbed EUR 217 million to EUR 337 million. BASF has reduced the number of outstanding shares through its share buyback program. As a result, earnings per share almost tripled.
Chemical activities successful in all regions
In the third quarter of 2004, BASF again increased its sales and earnings in all regions and gained market share worldwide. "I am particularly pleased by the good performance of our entire chemical activities in all regions. This was primarily due to strong volumes, higher sales prices and our global restructuring and cost reduction measures," said Hambrecht.
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 EUR 33 billion (circa $42 billion). 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.
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.