BASF Increases 2013 Sales, Earnings, is Cautiously Optimistic for 2014

BASF increased sales and earnings in 2013 compared with the previous year.

“2013 was again a demanding year, with a lot of headwind for our industry. Nevertheless, we achieved our goal: We sold more, worked more closely together with our customers and enhanced our portfolio,” said Dr. Kurt Bock, chairman of the Board of Executive Directors of BASF SE at the Annual Press Conference in Ludwigshafen.

Sales of BASF Group in the fourth quarter of 2013 were €18.1 billion, slightly above the same period of the previous year. Volumes increased in all segments. Sales prices were slightly lower overall in the fourth quarter; negative currency effects lowered sales in all divisions. Acquisitions contributed to sales growth, particularly in the Oil & Gas and Agricultural Solutions segments. Income from operations (EBIT) before special items improved in all operating segments in the fourth quarter and increased by €223 million to €1.5 billion. EBIT rose by €584 million to €1.6 billion.

For the full year, sales rose by just under 3% to reach €74.0 billion. A considerable, mainly volumes-driven sales increase in the Oil & Gas and Agricultural Solutions segments was largely responsible for this development. Sales slightly declined in the chemicals business, which includes the Chemicals, Performance Products and Functional Materials & Solutions segments, despite higher sales volumes. This was mainly on account of negative currency effects. EBIT before special items in 2013 rose by €543 million to €7.2 billion. In addition to the successful business with crop protection products and a higher contribution from the Functional Materials & Solutions segment, this increase was also due in large part to the earnings improvement in Other.

Net income amounted to €4.8 billion, slightly above the previous year’s level. Earnings per share rose from €5.25 to €5.27. Adjusted earnings per share amounted to €5.37, €0.27 under the previous year.

“At €7.9 billion, operating cash flow reached a record level,” said Dr. Hans-Ulrich Engel, chief financial officer of BASF.

“We do not expect strong tailwinds this year either. Nevertheless, we are cautiously optimistic with regards to global economic development. The world economy is expected to grow slightly faster in 2014 than in 2013, despite continuing volatility,” said Bock. For the global chemical industry, the company anticipates growth rates comparable with the previous year’s level and forecasts somewhat higher growth in key customer industries such as the transportation, consumer goods and electronics industries. This will likely have a positive effect on BASF’s business.

“Overall, we expect to perform well in a market environment that remains challenging in 2014,” Bock added. “We aim to increase our sales volumes excluding the effects of acquisitions and divestitures.” Nonetheless, sales are likely to decline slightly compared with 2013, due to the divestiture of the gas trading and storage business planned for the middle of 2014. BASF expects a slight increase in EBIT before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments. The company predicts a considerably higher EBIT for the BASF Group than in 2013, partially due to special income arising from the divestiture of the gas trading and storage business. “We aim to considerably increase EBIT after cost of capital and therefore again earn a high premium on our cost of capital.”

In the Chemicals segment, fourth-quarter sales decreased by 5% to €4.2 billion. Higher sales volumes in all divisions could not compensate for lower prices and adverse currency effects. EBIT before special items rose by €65 million to €510 million, primarily as a result of substantially higher earnings in Petrochemicals. Sales for the full year declined by 5% compared with the previous year to €17.0 billion on account of lower prices and negative currency effects. EBIT before special items rose by €11 million to €2.2 billion.

Sales in Performance Products in the fourth quarter were stable at around €3.7 billion. Higher volumes compensated for lower prices and negative currency effects. EBIT before special items increased by €33 million to €216 million due to higher volumes and improved margins. Despite higher volumes, sales for the full year decreased by 1% to €15.5 billion. Compared with 2012, EBIT before special items decreased by €56 million to €1.4 billion.

Fourth-quarter sales in the Functional Materials & Solutions segment decreased by 1% to €4.1 billion. Higher volumes were offset by negative currency effects. Healthy demand from the automotive industry led to the volume growth. EBIT before special items increased by €10 million to €238 million thanks to higher earnings in the Catalysts and Coatings divisions. For the full year, sales rose by 1% to almost €17.3 billion primarily due to higher volumes. EBIT before special items of about €1.1 billion was €138 million above the previous year.