BASF announced its first quarter 2014 results.
“We had a good start to the year in our chemicals business and in the Agricultural Solutions segment. We sold more. This more than compensated for the negative effects on sales from the comparatively weak U.S. dollar and currencies in emerging markets,” said Dr. Kurt Bock, chairman of the Board of Executive Directors, at the Annual Shareholders’ Meeting of BASF SE in the Congress Center Rosengarten in Mannheim. Sales declined considerably in the Oil & Gas segment, however. At €19.5 billion, BASF Group sales were down by 1% overall.
Income from operations (EBIT) before special items amounted to €2.1 billion, 3% below the level of the first quarter of 2013. While earnings in the Performance Products and Functional Materials & Solutions segments improved significantly, the contribution from the Oil & Gas segment fell considerably.
EBIT included a total of €109 million in special items in the first quarter of 2014. This was largely attributable to special income from the divestiture of shares in non-BASF-operated oil and gas fields in the British North Sea. EBIT therefore grew year-on-year by €80 million to reach €2.2 billion. EBITDA rose by €96 million to €3.0 billion. The financial result decreased by €57 million to minus €183 million.
Income before taxes and minority interests improved year-on-year by €23 million to €2.1 billion. Net income grew by €31 million to €1.5 billion. Earnings per share were €1.61 in the first quarter of 2014, compared with €1.57 in the same period of 2013.
“For 2014, we anticipate somewhat faster growth in the global economy than in 2013,” Bock said. “We expect to perform well in a market environment that remains volatile and challenging. We therefore stand by our outlook for 2014 despite unfavorable currency developments. We expect a slight rise in EBIT before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments.” Sales are likely to decrease slightly due to the divestiture of the gas trading and storage business planned for the middle of 2014. EBIT will likely considerably increase. The special income arising from the planned divestiture of the gas trading and storage business should make a significant contribution here.
BASF is evaluating an investment in a world-scale methane-to-propylene complex on the U.S. Gulf Coast. “The production of propylene would allow us to take advantage of low gas prices due to shale gas production, considerably improve our cost position and improve our backward integration in the United States,” said Bock. This would be BASF’s largest single-plant investment to date. Propylene is one of the most important basic chemicals in the petrochemical industry and is used in the production of a wide range of higher-value chemicals.
In the Chemicals segment, sales matched the level of the previous first quarter. Lower prices and negative currency effects were offset by increased volumes. Sales volumes grew, particularly as a result of stronger demand in the Intermediates division as well as higher volumes in the Petrochemicals division, especially in North America. Earnings decreased slightly, mainly due to margin pressure.
Sales in the Performance Products segment were at the level of the previous first quarter despite negative currency effects and slightly lower sales prices. This was attributable to higher sales volumes. Strict fixed cost management contributed to a considerable rise in earnings.
In the Functional Materials & Solutions segment, sales were slightly higher on account of increased volumes, thanks primarily to strong demand from the automotive industry. Negative currency effects reduced sales growth. In the Construction Chemicals division, sales declined slightly as a result of portfolio effects, as well. Earnings considerably surpassed the level of the first quarter of 2013. All divisions contributed to this.
Sales grew considerably in the Agricultural Solutions segment. This was mainly because of the strong start in the Northern Hemisphere. Negative currency effects were more than compensated for by raising volumes and prices. Earnings rose slightly thanks to these higher volumes and prices.
Sales in the Oil & Gas segment were considerably below the level of the previous first quarter.