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BASF confirms outlook for 2012 despite growing economic risks

LUDWIGSHAFEN, Germany -- July 26, 2012 -- BASF’s business performed solidly in the second quarter. The company improved sales by 6% to €19.5 billion and income from operations (EBIT) before special items increased by €253 million to €2.5 billion. While sales volumes declined in the chemicals business, which comprises the Chemicals, Plastics, Performance Products and Functional Solutions segments, the main contribution came from the strong performance of the Agricultural Solutions and Oil & Gas segments. In the first half of 2012, sales were €40.1 billion, 6% more than in the same period of the previous year. At over €5 billion, EBIT before special items matched the level of the first half of 2011.

·               2nd quarter 2012:

o                    Sales up 6% and EBIT before special items up 11% compared with previous year’s quarter

o                    Strong business in Agricultural Solutions

o                    Significant decrease in growth in China

o                     

·               Outlook full year 2012: increase in sales and earnings targeted

At the presentation of the company’s second-quarter results, Dr. Kurt Bock, Chairman of the Board of Executive Directors, commented on the growing economic risks: “Our customers are continuing to act cautiously and are reducing their inventories, also in expectation of falling prices due to declining raw material costs.” In addition, the Chinese growth engine has started to stall leading to a decrease in BASF’s sales in local-currency terms in Asia in the second quarter, as they also did in the first quarter of 2012, explained Bock.

BASF confirms outlook for full year 2012

A look at the economic developments in the past months and at the order books have led BASF to become more cautious about its expectations for the global economy in 2012 than originally expected at the beginning of the year (previous forecast in parenthesis):

·               Growth of gross domestic product: 2.3% (2.7%)

·               Growth in industrial production: 3.4% (4.1%)

·               Growth in chemical production: 3.5% (4.1%)

·               An average euro/dollar exchange rate of $1.30 per euro

·               An average oil price of $110/barrel in 2012

 

BASF does not expect an upturn in demand in the second half of 2012 compared with the first six months of the year. Pressure on margins will continue, although it may be somewhat lessened due to slightly lower raw material costs.

Bock said: “It remains our goal to increase sales and earnings compared with the second half of 2011. Our forecast is especially supported by the resumption of our crude oil production in Libya. It is unlikely that the earnings from our chemicals business will match the level of the previous year. We still aim to exceed the 2011 record levels in sales and EBIT before special items.”

 

www.basf.com

 

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