BASF shows significant growth in 2018

Lahore – Following a successful 2017 business year, BASF has had a good start to the year 2018. “Last year, we achieved significant growth and were able to further increase our profitability. Moreover, we laid important groundwork for the future development of our company – in terms of both people and strategy,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the 2017 Annual Report in Ludwigshafen.

In the fourth quarter of 2017, BASF Group posted sales of €16.1 billion, which represents growth of 8% compared with the same quarter of 2016. Prices rose by 9%. BASF’s sales volumes increased by 4%; this was driven by all segments with the exception of Oil & Gas. By contrast, negative currency effects were significantly higher and reduced sales by 5%. Income from operations (EBIT) before special items in the fourth quarter was €1.9 billion, up by 58% from the same period of the prior year. The significantly higher earnings in the Chemicals, Agricultural Solutions and Oil & Gas segments as well as in Other compensated for lower earnings in the Functional Materials & Solutions and Performance Products segments.

Economic activity picked up in many countries worldwide in 2017. “We took advantage of this upturn and markedly increased our full-year 2017 sales and earnings compared with the previous year,” said Bock. Thanks to good demand, BASF sold greater volumes in all divisions and considerably increased its profitability. Higher prices, especially in the Chemicals segment, also contributed to this. Overall, BASF’s sales grew by 12% to €64.5 billion. One contributing factor was the Chemetall business acquired at the end of 2016, which offers tailor-made solutions for metals surface treatment.

BASF’s earnings rose even more sharply, by around one-third. The company achieved EBIT before special items of €8.3 billion, with a significant contribution coming from the Chemicals segment. Higher margins and volumes in the basic chemicals and intermediates businesses more than offset the lower margins in some of BASF’s specialties businesses. Earnings in the chemicals business – which comprises the Chemicals, Performance Products and Functional Materials & Solutions segments – were significantly higher than in the previous year. EBIT before special items in this business was €7.3 billion, up by 26% versus the
prior-year figure.

Earnings per share increased from €4.42 to €6.62, equivalent to a rise of 50%. Adjusted for special items and amortization of intangible assets, earnings per share amounted to €6.44, compared with €4.83 in the previous year. With regard to the development in the regions, Bock said: “We were particularly pleased with our strong growth in Asia, where our investments in recent years have paid off. Thanks to higher margins and increased volumes, we were able to double our earnings in Asia to €2.2 billion, making it the most profitable region for BASF.”

For 2018, BASF expects the global economy and chemical production to grow at roughly the same pace as in 2017. Further growth is expected in all regions and BASF anticipates a continuation of the recovery already underway in Brazil and Russia. In addition to these generally positive baseline conditions, however, BASF also sees increased market volatility. Furthermore, the U.S. dollar is having a negative impact on sales and earnings.

For its outlook, BASF assumes the following economic conditions for 2018 (prior-year figures in parentheses): Global economic growth of +3.0% (+3.1%);     Growth in global chemical production of +3.4% (+3.5%); An average euro/dollar exchange rate of $1.20 per euro ($1.13 per euro); An average oil price (Brent) of $65 per barrel ($54 per barrel). “In this environment, we want to continue to grow profitably and achieve a slight increase in BASF Group’s sales and EBIT before special items in 2018,” said Bock.