Thursday November 11
BASF 3Q Net Profit Triples on Higher Sales and PricesBASF AG reported that the company nearly tripled its net profit in the third quarter as sales rose strongly and the company raised prices to cover the higher cost of oil.
According to a press release, BASF's successful first half of 2004 ran seamlessly into the third quarter. There were no signs of the usual summer lull in business. Capacity utilization of BASF's plants improved due to strong demand. The high oil price, which has increased even further, allowed the company to pass on some necessary price increases to the market.
Compared with the third quarter of 2003, sales increased 20 percent to EUR 9.3 billion, and income from operations (EBIT) before special items rose 160 percent to more than EUR 1 billion.
Cumulative sales in the first nine months of 2004 amounted to EUR 27.7 billion. This was an increase of more than 11 percent compared with the same period of 2003. EBIT before special items in the first nine months climbed 55 percent to EUR 3.4 billion.
Dr. Juergen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft, announced that ongoing initiatives and programs to increase efficiency and reduce costs would be continued.
"We cannot afford to take a break from our restructuring efforts. Tough global competition means that we have to constantly improve our productivity, especially in those areas with low growth rates," he said. "For the full year 2004, we confidently expect a significant increase in sales and EBIT before special items. We therefore anticipate that we will earn a premium on our cost of capital."
BASF's Chief Financial Officer, Dr. Kurt Bock, pointed out that the third quarter of 2004 was the thirteenth quarter in succession in which sales volumes had increased compared with the previous year. For Bock, this indicates that BASF is growing faster than the market.
The increase in Q3 sales by about EUR 1.6 billion to a record high of EUR 9.3 billion was due to higher volumes, and for the first time in a while, to price increases for many products in the portfolio.
Negative currency effects were primarily due to the depreciation of the dollar against the euro. Adjusted for the exchange rate effect, sales increased by 25 percent.
The increase in EBIT before special items by EUR 651 million to more than EUR 1 billion was due to higher volumes as well as a reduction in fixed costs.
Special charges of EUR 96 million were primarily due to structural measures to increase productivity and were incurred in particular in the Chemicals and Agricultural Products & Nutrition segments.
EBIT after special items increased by 156 percent to EUR 958 million.
Compared with the same period in 2003, net income climbed EUR 217 million to EUR 337 million. BASF has reduced the number of outstanding shares through its share buyback program. As a result, earnings per share almost tripled.
In the third quarter of 2004, BASF again increased its sales and earnings in all regions and gained market share worldwide.
"I am particularly pleased by the good performance of our entire chemical activities in all regions. This was primarily due to strong volumes, higher sales prices and our global restructuring and cost reduction measures," said Hambrecht.
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