BASF Reports Earnings Growth in 2Q 2017

BASF reported its second quarter 2017 results. Group sales rose by 12% to €16.3 billion compared with the second quarter of 2016. This was largely attributable to higher prices and volumes. Amid higher raw material costs, the company raised sales prices by 7%; this was mainly driven by higher prices in the Chemicals segment. Sales volumes increased by 3%.
 
Income from operations (EBIT) before special items in the second quarter rose by 32% year-on-year to €2.3 billion. The sharp rise was primarily a result of the substantially improved earnings in the Chemicals and Oil & Gas segments. This increase was dampened by lower earnings in the Performance Products, Functional Materials & Solutions and Agricultural Solutions segments.
 
 “The positive demand trend continued in the second quarter of 2017. We increased our year-on-year sales volumes for the fifth consecutive quarter. Compared with the same quarter of last year, we considerably improved our sales and earnings,” said Dr. Kurt Bock, chairman of the Board of Executive Directors of BASF SE.
 
At €1.5 billion, net income exceeded the previous second-quarter level by €404 million. Earnings per share were €1.63 in the second quarter of 2017, compared with €1.19 in the same quarter of the previous year.
 
Cash provided by operating activities improved from €2.3 billion in the second quarter of 2016 to €3.0 billion in the second quarter of 2017. Free cash flow amounted to €2.1 billion, compared with €1.3 billion in the same quarter of the previous year. This improvement was largely the result of higher net income.
 
Because of the positive macroeconomic development in the first half of the year, BASF now takes a somewhat more positive overall view of the underlying conditions for 2017.
 
“We continue to expect a considerable increase in sales for the full year – by at least 6%. Given the considerable earnings increase in the first six months of the year, we now expect a considerable increase in EBIT before special items of at least 11% for 2017,” said Bock.
 
Sales in the Chemicals segment rose by 25% compared with the second quarter of 2016 to reach €4.0 billion. This was largely the result of significantly higher prices, especially in the Monomers division. Sales in the first half of the year increased by 30% to €8.2 billion. EBIT before special items increased by €1.2 billion to €2.1 billion, mainly driven by higher margins and volumes.
 
In the Performance Products segment, sales of €4.1 billion exceeded the previous second quarter’s level by 4% due to price increases as well as volumes growth in all divisions. In the first half of the year, sales of €8.4 billion were 6% higher than in the prior-year period. EBIT before special items decreased by €147 million to €920 million.
 
Second-quarter sales in the Functional Materials & Solutions segment grew by 12% to €5.3 billion. Sales in the first half of the year rose by 15% to €10.5 billion. Compared with the same period of the previous year, EBIT before special items declined by €38 million and amounted to €953 million.