Tous Actualités
Suivre
Abonner BASF

BASF

BASF: Weathering the storm/Second-quarter results

Ludwigshafen (ots)

* All segments post positive earnings
   * Product prices and margins under pressure
   * Higher earnings in Oil & Gas
   * Earnings in 2001 likely to be lower than in 2000
   * Share buy-back program to be accelerated
BASF has continued to weather difficult economic conditions. All
of BASF's segments posted positive earnings before special items in
the second quarter of 2001.
The Oil & Gas segment was particularly successful: Here, sales in
the second quarter increased almost 30 percent compared with 2000.
Income from operations before special items increased by more than 50
percent to EURO378 million.
In the Agricultural Products & Nutrition segment, second-quarter
sales in the Agricultural Products division were up more than 40
percent and income from operations before special items climbed
almost 17 percent to EURO133 million compared with the same period in
2000. A look at the results of the first half of 2001 shows the
strength of BASF's expanded agricultural products business: Both
sales and income from operations almost doubled compared with the
first half of 2000.
Chemical businesses are particularly hard hit by the currently
weak demand and the volatile prices for raw materials. Contrary to
previous estimates that the year's average price for Brent crude oil
would be around $25 per barrel, BASF was confronted with prices that
were up to $5 per barrel higher in the first half of the year. As a
result, the prices of naphtha and other important raw materials were
very high. Unusually volatile naphtha prices are continuing to put
BASF's margins under pressure.
Extraordinary efforts needed to achieve financial goal
From the basis of current economic conditions, BASF will achieve
its ambitious financial goal of increasing its income from operations
on the basis of ongoing business before special items by an average
of 10 percent per year in 2000 through 2002 only through
extraordinary efforts, according to Dr. Jürgen F. Strube, Chairman of
the Board of Executive Directors of BASF Aktiengesellschaft. At the
same time, he said, a significant economic upturn in the majority of
OECD countries by no later than the turn of the year will be
necessary. Under the current conditions of volatility we have to
accept that the good full-year results we achieved in 2000 will not
be reached this year," said Strube.
BASF's long-term goal is adding value through growth and
innovation. To achieve this goal, BASF's Board has implemented a
series of coordinated programs and initiatives.
As a result of these measures, BASF wants to achieve annual cost
advantages of EURO400 million from the streamlining of its
organization globally. BASF expects to save an additional EURO160
million by the end of 2002 by further optimizing its global
procurement of technical goods and services. Site and plant closures
will lead to cost savings of EURO190 million. In addition, BASF will
reduce capital expenditures in 2002 by EURO400 million in line with
the changed expectations in the market.
In addition to the measures and closures it has already announced,
BASF intends to reduce its global workforce by a further 1,200 in the
coming 18 months. The number of job reductions will therefore total
4,000.
To implement this package of measures, BASF recorded special items
of almost EURO450 million in the second quarter. These were related
mainly to current and future site and plant closures as well as
accelerated restructuring. In particular, EURO126 million are
associated with the site in Birkenhead, United Kingdom, which will
not be rebuilt following a fire.
BASF reaffirms its aim of buying back shares for EURO1.3 billion
by the end of the year. In the first half of 2001, BASF repurchased
about 410,000 shares for EURO19 million. The primary aim of the
program is to reduce BASF's equity ratio and costs of capital. BASF
will also continue its share buy-back program in 2002.
Well positioned in a weak economic environment
In the past months, BASF has made many changes to its portfolio.
These include the expansion of its agricultural products and vitamins
businesses, the sale of its pharmaceuticals business, as well as the
transfer of its polyolefins and textile dye activities to joint
ventures. For a meaningful comparison of BASF's business development,
it is necessary to look at "ongoing business before special items,"
explained Strube.
This is where BASF's progress becomes apparent and shows that the
company is in a relatively good position: Sales from ongoing business
in the second quarter increased 7 percent over the same period in
2000. Second-quarter income from operations on the basis of ongoing
business before special items was EURO746 million. Although this is a
decline of 15 percent compared with the relatively good quarter of
2000, it is nevertheless an indication of BASF's earnings power in a
weak economic environment.
Strube does not expect the economy situation to improve until next
year.
"Our goal is sustainable success and we know how to achieve it. We
will grow faster than the market, and following our long-term
strategy, will be more profitable than most of our competitors," said
Strube.
BASF is a transnational chemical company that aims to increase and
sustain its corporate value through growth and innovation. The
company's product range includes high-value chemicals, plastics,
colorants and pigments, dispersions, automotive and industrial
coatings, agricultural products and fine chemicals as well as crude
oil and natural gas. BASF's approach to integration, known in German
as "Verbund," is one of its particular strengths, ensuring cost
leadership and a unique competitive advantage. With sales of about
EURO 36 billion (circa $34 billion) and a workforce of 103,000
employees in 2000, BASF is one of the world's leading chemical
companies. BASF acts in accordance with the principles of Sustainable
Development. BASF shares are traded on the stock exchanges in
Frankfurt (BAS), London (BFA), Zurich (BAS), Paris (BA) and New York
(BF). The company's Internet address is www.basf.com.
Information on BASF's Half-Year Press Conference can be found on
the Internet at:
    English: www.basf.de/pcon
    German: www.basf.de/pk
You can download photos of BASF from the Internet at:
www.basf.de/pressphotos.
Forward-looking statements
This release contains forward-looking statements under the 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.

Contact:

Michael Grabicki
P 247e
Tel. +49 621 60-99938
Fax +49 621 60-20129
E-mail: michael.grabicki
Internet: www.basf-ag.de