BASF Sales, Earnings Grow Considerably in 3Q 2017

BASF Group recorded significant sales and earnings growth in the third quarter of 2017. “The positive demand development continued in the third quarter of 2017. We achieved solid volume growth, even compared with the strong prior-year quarter,” said Dr. Kurt Bock, chairman of the Board of Executive Directors of BASF SE.
 
BASF Group sales rose by 9% compared with the prior-year quarter to €15.3 billion. This was primarily attributable to good volume development as well as significantly higher sales prices in the Chemicals segment. Sales were also lifted by the Chemetall business, acquired in December 2016.
 
The strong contribution from the Chemicals segment lifted income from operations (EBIT) before special items by €244 million to €1.8 billion. BASF recorded a slight decrease in EBIT before special items in the Oil & Gas segment and a considerable decline in the remaining segments and in Other, mainly as a result of higher raw materials prices.
 
Third-quarter EBIT included net special items of €198 million, after minus €52 million in the prior-year quarter. This was mainly due to special income in the Performance Products segment from the transfer of BASF’s leather chemicals business to the Stahl group. As a result, EBIT rose from €1.5 billion to €2 billion.
 
Net income rose by €448 million to €1.3 billion. Earnings per share were €1.45 in the third quarter of 2017, compared with €0.97 in the prior-year quarter.
 
In the first three quarters of 2017, cash provided by operating activities rose by €1.8 billion year-on-year to €7.6 billion. This is mainly due to the rise in net income. Free cash flow rose from €2.9 billion to €5 billion in the first nine months of 2017.
 
“For the second half of 2017, we now expect the BASF Group’s EBIT before special items to considerably exceed the level of the second half of 2016,” said Bock. “We are maintaining our forecast for sales, EBIT before special items and EBIT for full-year 2017: We expect them to increase considerably. The same now also applies to EBIT after cost of capital, for which we previously anticipated a slight increase.”
 
Sales in the Chemicals segment rose by 25% compared with the prior-year quarter to approximately €4 billion. This was largely due to higher prices in all divisions, especially in monomers. BASF also significantly increased sales volumes. EBIT before special items rose by over €600 million to €1.1 billion.
 
In the Performance Products segment, sales increased by 2% compared with the third quarter of 2016 to just under €4 billion as a result of volumes growth in all divisions. Price increases in the Dispersions & Pigments and Care Chemicals divisions were largely offset by significant price declines in the Nutrition & Health division. EBIT before special items declined by €88 million to €385 million. This was largely attributable to a further drop in vitamin prices as well as ongoing pressure on margins in a number of business areas due to higher raw materials prices.
 
Sales in the Functional Materials & Solutions segment were up 7% on the third quarter of 2016, at around €5 billion. This was attributable to higher prices as well as the Chemetall business, which was acquired from Albemarle in December 2016. Sales volumes rose in every division except Catalysts, where BASF posted a considerable decline in precious metal trading volumes. At €397 million, EBIT before special items was down €100 million on the prior-year quarter. Earnings were dampened primarily by lower margins resulting from higher raw materials prices.