BASF’s Sales and Earnings in 4Q 2016 Considerably Above Prior-Year Quarter

In 2016, BASF achieved the growth and earnings goals it set for itself. The chemicals business grew successfully and profitability improved further. As expected, earnings in Oil & Gas did not match the previous year’s level.
 
“As the year progressed, we were able to increase BASF’s growth. Our sales volumes rose from quarter to quarter. Particularly in Asia, we continually increased our sales volumes in the chemicals business. This shows that the high investments we made in research and development and new production capacity in recent years are paying off,” said Dr. Kurt Bock, chairman of the board of executive directors of BASF SE.
 
In the fourth quarter of 2016, sales increased by 7% to €14.8 billion compared with the same quarter of 2015, mainly due to higher volumes. For BASF Group, as well as the chemicals business, which comprises the Chemicals, Performance Products and Functional Materials & Solutions segments, volumes rose by 6%. Income from operations (EBIT) before special items was €1.2 billion, €157 million higher than in the prior-year quarter. Considerably higher earnings in Chemicals, Functional Materials & Solutions and Oil & Gas more than compensated for lower earnings in Agricultural Solutions and Other.
 
For the full year 2016, sales decreased by 18% to €57.6 billion. This was mainly due to the divestiture of the gas trading and storage business as part of the asset swap with Gazprom at the end of September 2015. This business had contributed €10.1 billion to sales in 2015. In total, portfolio effects lowered sales by 15%. In addition, lower raw material prices led to a drop in sales prices (minus 4%). The company was able to continually raise sales volumes over the course of the year. Compared with the previous year, volumes increased by 2%, and in the chemicals business, by 4%. Currency effects slightly dampened sales (minus 1%).
 
At €6.3 billion, EBIT before special items was €430 million below the prior-year level. This was largely a consequence of a decline of about €850 million in the Oil & Gas segment, mainly resulting from falling prices and the divestiture of the natural gas trading and storage business. The activities transferred to Gazprom had contributed around €260 million to EBIT before special items in 2015.
 
At €4.1 billion, net income exceeded the previous year’s level of €4.0 billion. Earnings per share increased from €4.34 to €4.42.
 
“We are cautiously optimistic for 2017,” Bock said. “We want to grow further, with all segments contributing to this growth. The global economy will presumably grow about as fast as in 2016. In light of significant political uncertainty, volatility will remain high.” A considerable slowdown in growth in the European Union is expected. For the United States, a slight upturn in growth is anticipated. Growth in China is likely to continue to slow further. And it is expected that the recession in Brazil and Russia will end.
 
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