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BASF Sales Beat Estimates Sustaining Profit, Buoyed by Pricing

Published: February 24, 2012 | 9:44 am
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BASF SE, the world’s largest chemicals maker, reported fourth-quarter sales that beat analysts’ estimates and profit in line after price increases for drug and food ingredients helped make up for a drop in orders for chemicals and plastics.

Earnings before interest, tax and items such as costs from acquisitions and restructuring fell 15 percent to 1.51 billion euros ($2 billion), Ludwigshafen, Germany-based BASF said today. Analysts had predicted 1.52 billion euros, according to the average of 12 estimates compiled by Bloomberg. BASF proposed to pay a dividend of 2.5 euros a share.

Chief Executive Officer Kurt Bock, who in November raised a sales target for the end of the decade, is pushing forward with a plan to lessen the company’s exposure to economic swings and focus on innovation-driven growth. Earlier this week BASF agreed to buy Merck KGaA’s battery electrolyte unit to add technology used for lithium ion batteries and in electromobility.

Fourth-quarter sales gained 10 percent to 18.07 billion euros, beating a 16.95 billion analyst estimate. Net income rose to 1.13 billion euros, also beating a prediction of 931 million euros. BASF predicted higher earnings and sales for this year, saying the global economy will pick up speed toward the second half of 2012.

Recent acquisitions have accelerated the shift toward specialty chemicals at BASF, which uses refined oil products and natural gas as a base for petrochemicals. Those in turn are used in products ranging from plastics to shampoo and car paint ingredients. The German company bought Cognis for $3.8 billion in 2010 to boost its cosmetic ingredients operations, and dye- maker Ciba the year before for $5 billion.

The chemical maker may resume bigger acquisitions after saying last week that it had completed the integration of Cognis. The company will also screen units for profitability and potential and may divest activities should they not measure up, the CEO said in November.

BASF’s earnings were impacted by the deconsolidation of its styrene operations, which it transfered into a joint venture with Ineos Group Holdings last year. The new plastics company, called Styrolution, has annual sales of more than 5 billion euros.

businessweek

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