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Letter to the Editor
Thursday August 5
BASF North American Results Show Improvement for First Half of 2004
BASF's North American financial results showed improvement in the first half of 2004 with substantial year-over-year growth in sales and earnings.In the second quarter, sales in North America increased by 11 percent to EUR 2.2 billion (about $2.7 billion). Income from operations before special items rose almost 300 percent to EUR 204 million (about $250 million). In the first six months of 2004, sales in North America increased 5 percent to EUR 4.1 billion (about $5 billion). Income from operations before special items increased 250 percent to EUR 284 million (about $346 million) during the same period. First-half results are typically stronger than second-half results in North America due to the seasonality of the Agricultural Products business.
Most divisions in North America reported year-over-year increases in sales as a result of higher volumes and selling prices. The Chemicals and Plastics segments recorded the largest percentage increases in sales and earnings before special items. Contributing to the increases were five acquisitions by these business segments in 2003 and 2004.
"Our first-half results show that we are making clear and substantial progress in North America. However, we still have more work to do. In the near term, we will continue to increase prices to compensate for very high raw material prices. We also will continue to focus on reducing our fixed costs through our restructuring program," said Klaus Peter Loebbe, Chairman and Chief Executive Officer of BASF Corporation, BASF's North American affiliate.
BASF is continuing to implement its North American restructuring program and expects to achieve its goal of reducing costs by at least $250 million by 2006. Based on progress to date, the company expects to achieve $175 million in savings in North America in 2004.
The program involves optimizing service functions, manufacturing site operations and business processes. The streamlining of service functions, which resulted in the elimination of approximately 1,000 positions, has been largely completed.
The OEM coatings business continued implementation of product and process quality improvements in the second quarter that will reduce staffing by more than 40 positions by year-end 2004.
In September, BASF will relocate its North American headquarters from Mount Olive, N.J., to a substantially smaller facility in Florham Park, N.J.
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