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Letter to the Editor

BASF AG Reports 17% Decline in 4Q Sales

LUDWIGSHAFEN, Germany -- BASF AG posted a wider-than-expected fourth- quarter net loss, largely due to charges related to plant closures, but the German chemicals company predicted a sharp profit increase in 2002.

BASF reported a fourth-quarter net loss of 469 million euros ($408 million), compared with a net profit of 227 million euros in the same period a year earlier. Forecasts had been for a net loss between 160 million euros and 363 million euros in the final quarter.

The company said that in full 2001 all of its business segments were, in fact, profitable on an operating level before special items, despite high raw material prices and economic recession. The company said its full-year net profit more than quadrupled, rising to 5.86 billion euros, compared with a profit of 1.24 billion euros a year earlier, largely due to gains from the divestment of its pharmaceuticlas business.

BASF added that it is confident of being among the first chemical companies to benefit from an economic recovery but it warned that sales from its continuing operations are likely to remain flat this year.

The company said special charges of more than one billion euros -- including 747 million euros for site and plant closures -- weakened profit from operations to 1.22 billion euros, compared with 3.07 billion euros in 2000. Full-year operating profit before special items from its ongoing operations came in at 2.29 billion euros, a 33 percent slide from the year before.

BASF said special charges were offset by a 6.12 billion euros extraordinary pretax gain from the sale of its pharmaceuticals business, however, which resulted in a 3.9 billion euros rise in pretax income before minorities of 6.73 billion euros, compared with 2.83 billion euros a year earlier.

The company posted a 17 percent sales decline in the fourth quarter to 7.68 euros billion, which was better than the 7.14 billion euros analysts had expected and an improvement on the 22 percent sales decline of the third quarter.

Sales for the full year slid 9.6 percent, hit by a 26 percent decline in sales at its plastics and fibers division. Full-year sales at its chemicals division were almost flat. Overall, sales from its continuing operations rose 3 percent.

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