Homepage  Homepage     Search on site  Search on site     To write the letter  To write the letter     Site map  Site map
Agro Perspectiva
We are on: 
   
 


Home > News

BASF Group increases sales; earnings below prior-year quarter, in line with expectations

03.05.2019 11:15 "Agro Perspectiva" (Kyiv) "In the first quarter of 2019, BASF Group sales rose by 3% year on year to 16.2 billion," said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the companys Annual Shareholders Meeting held at Congress Center Rosengarten in Mannheim, Germany. Compared with the first quarter of 2018, income from operations (EBIT) before special items declined by 549 million to 1.7 billion. «As expected, this is primarily due to the considerably lower contributions from the Materials and Chemicals segments. In these segments, we had exceptionally high isocyanates margins and strong cracker margins in the first quarter of the previous year,» said Brudermüller. EBIT before special items also declined considerably in Other and the Nutrition & Care segment, while earnings matched the level of the previous first quarter in the Surface Technologies segment. By contrast, the Agricultural Solutions and Industrial Solutions segments recorded a considerable improvement in earnings.

Global economic growth in the first quarter of 2019 was shaped by geopolitical developments and trade conflicts, especially between the United States and China. The generally subdued market sentiment was reflected in the wait-and-see attitude of many customers. Consequently, BASF Group experienced weakening demand from key customer industries, especially the automotive sector.

Prices declined by 2% compared with the prior first quarter, which was attributable mainly to the businesses with isocyanates and cracker products. Higher prices in the Surface Technologies, Agricultural Solutions and Industrial Solutions segments could only partially offset the expected price decline in the Materials and Chemicals segments. Owing to the overall cautious ordering behavior of customers, sales volumes at the BASF Group were down by 4%. The sales growth was mainly driven by portfolio effects in the Agricultural Solutions segment resulting from the acquisition of significant businesses and assets from Bayer in August 2018. Currency effects also had a positive impact on sales in all segments.

At 26 million, special items in EBIT were positive overall in the first quarter of 2019, compared with minus 18 million in the prior-year quarter. Special income from divestitures in the Agricultural Solutions and Industrial Solutions segments exceeded integration costs, special charges from restructuring measures and other charges.

EBIT declined by 505 million compared with the first quarter of 2018 to 1.8 billion. Income before income taxes decreased by 520 million to 1.6 billion. The tax rate increased from 24.1% to 25.4%.

Income after taxes from continuing operations declined by 415 million to 1.2 billion. Income after taxes from discontinued operations, which comprise BASFs oil and gas activities, rose by 97 million to 274 million. This was largely attributable to significant volumes growth, especially in Russia, as well as the suspension of depreciation and amortization since the recognition of the disposal group in the third quarter of 2018.

Net income declined by 273 million to 1.4 billion. Earnings per share amounted to 1.53 in the first quarter of 2019 (first quarter of 2018: 1.83). Earnings per share adjusted for special items and amortization of intangible assets amounted to 1.65 (first quarter of 2018: 1.93).

In the first quarter of 2019, cash flows from operating activities amounted to 373 million, 858 million below the figure for the prior-year quarter. Free cash flow declined from 604 million in the prior-year quarter to minus 368 million, mainly as a result of lower cash flows from operating activities.

Merger of Wintershall and DEA

Following the approval of all relevant authorities, BASF and LetterOne completed the merger of Wintershall and DEA on May 1, 2019. «With Wintershall Dea we create the leading independent European exploration and production company with international operations in core regions. By combining the two German-based entities, BASF and LetterOne lay the basis for strong profitable growth for Wintershall Dea,» said Dr. Hans-Ulrich Engel, Vice Chairman of the Board of Executive Directors of BASF SE, in a conference call on the first quarter 2019 results.

Proposed dividend of 3.20 per share

The Board of Executive Directors and the Supervisory Board proposed to the Annual Shareholders Meeting that the dividend be raised by 0.10 to 3.20 per share. «The BASF share thus offers an attractive dividend yield of 5.3% based on the 2018 year-end share price of 60.40,» said Brudermüller. Following the adoption of the relevant resolution by the Annual Shareholders Meeting, a total of 2.9 billion will be paid out to shareholders of BASF SE on May 8.

Outlook for 2019 confirmed

BASFs expectations for the global economic environment in 2019 remain unchanged:

Growth in gross domestic product: 2.8%

Growth in industrial production: 2.7%

Growth in chemical production: 2.7%

Average euro/dollar exchange rate of $1.15 per euro

Average Brent blend oil price for the year of $70 per barrel

BASF confirms the sales and earnings forecast for the BASF Group made in the BASF Report 2018 and expects slight sales growth as well as a slight increase in EBIT before special items, which is likely to be at the lower end of the range of 1% to 10%. Return on Capital Employed (ROCE) is expected to be slightly higher than the cost of capital percentage, with ROCE slightly lower than in 2018.

Business development in the segments in the first quarter 2019

Sales in the Chemicals segment [comprising Petrochemicals and Intermediates] declined by 13% compared with the first quarter of 2018 to 2.5 billion. The Petrochemicals division in particular saw a considerable decline in sales, while the Intermediates division recorded a slight decrease. Sales development was driven by lower volumes and prices in both divisions.

Compared with the prior-year quarter, EBIT before special items decreased by 169 million to 306 million. Both divisions recorded lower earnings, particularly Petrochemicals. The development of EBIT before special items was largely due to lower margins in the Petrochemicals division, especially for steam cracker products, as well as the lower volumes in both divisions. In addition, fixed costs in both divisions rose slightly. In the Petrochemicals division, this was primarily attributable to higher maintenance expenses, while in the Intermediates division, the development of fixed costs was mainly negatively influenced by currency effects.

In the Materials segment [comprising Performance Materials and Monomers], sales of 2.9 billion were down by 15% compared with the first quarter of 2018. The sales decline was seen in both the Monomers and Performance Materials divisions and was primarily due to lower isocyanates prices in the Monomers division.

EBIT before special items declined considerably in both divisions, coming in at 323 million compared with 816 million in the previous first quarter.

This was mainly a result of lower isocyanates margins in the Monomers division. In the Performance Materials division, higher margins were unable to compensate for the lower volumes, primarily in the automotive sector. In addition, fixed costs in both divisions were slightly higher than in the prior-year quarter. This development was mainly due to currency effects.

In the Industrial Solutions segment [comprising Dispersions & Pigments and Performance Chemicals], sales of 2.2 billion were 2% lower than in the prior-year quarter. Sales in the Dispersions & Pigments division were on a level with the first quarter of 2018, while sales in the Performance Chemicals division declined slightly. The year-on-year decrease was primarily due to the transfer of BASFs paper and water chemicals business, which was previously reported under Performance Chemicals, to the Solenis group.

The Industrial Solutions segment increased EBIT before special items by 15% compared with the first quarter of 2018 to 264 million. This was primarily attributable to considerably higher EBIT before special items in the Performance Chemicals division as a result of higher prices, volumes growth and positive currency effects. The Dispersions & Pigments division also slightly increased EBIT before special items, mainly due to higher prices and positive currency effects. The segments EBIT included special income in the Performance Chemicals division from the transfer of BASFs paper and water chemicals business to the Solenis group.

Compared with the first quarter of 2018, sales in the Surface Technologies segment [comprising Catalysts, Coatings and Construction Chemicals] increased by 13% to 3.6 billion. There was particularly strong sales growth in the Catalysts division. Sales also rose considerably in the Construction Chemicals division and were on a level with the prior-year quarter in the Coatings division. The sales increase was attributable to higher prices in all divisions as well as positive currency effects and volumes growth in the Catalysts and Construction Chemicals divisions.

At 159 million, the segments EBIT before special items was on a level with the prior-year quarter. EBIT before special items in the Construction Chemicals division improved considerably, primarily due to higher margins. In the Catalysts division, earnings rose slightly as a result of sales growth. By contrast, the Coatings division recorded considerably lower EBIT before special items. This was mainly attributable to a weaker automotive business.

Sales of 1.6 billion in the Nutrition & Care segment [comprising Care Chemicals and Nutrition & Health] matched the level of the prior-year quarter. Considerably higher sales in the Nutrition & Health division were offset by slightly lower sales in the Care Chemicals division.

At 222 million, EBIT before special items was 13% below the 254 million reported in the first quarter of 2018. This was mainly attributable to higher fixed costs in the Nutrition & Health division, largely due to an insurance refund received in the prior-year quarter for production outages in 2017. In addition, margins declined in the animal nutrition business; as a result, earnings in the Nutrition & Health division decreased significantly overall. A considerable improvement in earnings in the Care Chemicals division, mainly from higher margins, had an offsetting effect.

Sales of 2.6 billion in the Agricultural Solutions segment were 53% higher compared with the first quarter of 2018. This was primarily attributable to portfolio effects from the acquisition of significant businesses and assets from Bayer in August 2018. BASF also achieved a higher price level in the legacy business while sales volumes were considerably lower year on year, mainly due to weather-related factors.

EBIT before special items of 740 million was 75% higher than in the first quarter of 2018. This was largely due to the contribution from the acquired businesses. EBIT included special income from divestitures in accordance with the conditions imposed by antitrust authorities within the scope of the acquisition of the Bayer businesses. In the first quarter of 2019, these exceeded the special charges for the integration of the acquired businesses.

Sales in Other increased considerably compared with the prior-year quarter. This was mainly due to the remaining activities of BASFs paper and water chemicals business, which were not part of the transfer to Solenis and have since been reported under Other. EBIT before special items was considerably below the figure for the first quarter of 2018. This was largely attributable to foreign currency results and valuation effects for our long-term incentive program.

Agro Perspectiva

< Ukrainian domestic market Mar eggs prices down to UAH22.7 per ten All news for
03.05.2019
Ukrainian 2019 Q1 poultry meat export up 38% >

07.10.2022  
11:35 World Bank improves forecast for growth of Ukrainian economy in 2023 to 3.3%
11:17 Asia-Pacific countries urged to rapidly transform agrifood systems as hopes fade for achieving the Sustainable Development Goals by 2030
11:11 Lower forecasts for 2022/23 global cereal output, utilization and trade
11:05 FAO Food Price Index drops for the sixth consecutive month
10:26 How sustainable forest management can enhance the worlds biodiversity
05.10.2022  
10:22 Turkeys pistachio production in MY 2022/23 is forecast to increase year-over-year to 210,000 MT
04.10.2022  
20:05 World Bank improves forecast for growth of Ukrainian economy in 2023 to 3.3%
12:11 Tackling food loss and waste: A triple win opportunity
28.09.2022  
08:47 EBRD expects Ukraines economy to contract by nearly a third in 2022
27.09.2022  
15:48 Farmers sowed 961,000 hectares of winter rapeseed
13.09.2022  
07:03 China vegetable oil imports plunge in 2021/22 but forecast to recover in 2022/23
05:00 India Imposes Export Restrictions on Certain Types of Rice
08.09.2022  
16:43 Famine in Somalia projected, lives of millions of people are at immediate risk, UN says
05.09.2022  
19:00 Lower cereal production outlook underpins downward revisions for utilization and stocks in 2022/23
18:55 World food commodity prices dip for fifth month in a row in August
31.08.2022  
08:55 BASF and Corteva Agriscience collaborate to deliver the future of weed control to soybean farmers
29.08.2022  
23:37 Ukraine and Moldova abolish permits for intl cargo transportation from Sept
14:57 Chile: Walnut production estimates in 165,000 MT in 2022/23 MY
25.08.2022  
14:12 Prices for rapeseed (non-GMO) at the western border of Ukraine fell to the level of USD530-550/t
09:55 The supply of wheat on the market is increasing
09:45 With higher food prices and pressing needs, UN team in Algeria calls for support for Sahrawi Refugees
19.08.2022  
07:06 The FAO Dairy Price Index averaged 146.4 points in July, down 3.8 points (2.5 percent) from June
06.08.2022  
15:38 FAO Food Price Index registered a steep drop in July
03.08.2022  
15:55 BASF enters power agreements for clean energy supply of more than 20 BASF sites across the United States
13:22 FAO to boost soil nutrient mapping in Central America and sub-Saharan Africa $20 million contribution from U.S.A. will catalyze more efficient use of fertilizers
12:21 Europe and Central Asia: Promoting green agriculture to transform local agrifood systems
11:23 Ukraine: Canada contributes USD 40 million to cover 2.4 million tonnes of storage
29.07.2022  
16:55 South Africa Fresh Orange Production and Exports Climb Higher
26.07.2022  
11:28 BASF transforms market towards certified, sustainably sourced coconut oil
23.07.2022  
02:43 Black Sea grain exports deal a beacon of hope amid Ukraine war - Guterres
07.07.2022  
12:43 Russia illegally exports 150,000-170,000 tonnes of grain from Ukraine per month - Ukrainian Ambassador to Turkey
28.06.2022  
08:35 Export prices for milling wheat again fell slightly
27.06.2022  
09:50 No concrete agreements on holding talks with participation of Ukraine, Russia, Turkey, UN on grain export MFA
20.06.2022  
20:32 Coca-Cola to cease production and sales in Russia
14.06.2022  
16:27 Afghanistan: FAO and the World Bank step up their response to the worsening food security $195 million emergency project aims to provide critical life-saving and livelihood assistance to smallholder farmers
13:32 Ukraine calls on other countries to abandon export restrictions - trade representative
13.06.2022  
12:26 India bans wheat exports to ensure sufficient domestic food grain supply
03.06.2022  
10:28 Thailand Sugar Production and Exports Continue to Rebound
02.06.2022  
11:11 Global rapeseed supplies in 2022/23 are projected to a record 100.5 MMT
31.05.2022  
12:51 Global soybean production in 2022/23 is forecast at a record 394.7 MMT
24.05.2022  
09:05 Global soybean production in 2022/23 is forecast at a record 394.7 MMT
17.05.2022  
15:00 Ukraine rapeseed production is forecast to rise despite the ongoing hostilities
10:49 2021/22 Indonesia Palm Oil Exports Slashed
16.05.2022  
15:45 Astarta Completed Spring Planting 2022
15.05.2022  
16:37 2022/23 Grain Consumption Exceeds Production, Stocks Tighten
11.05.2022  
14:31 EBRD to play key role in support of Ukraine, President says
09.05.2022  
11:15 Vegetable oil and maize prices slightly decrease after recent surge, while rice, meat, dairy and sugar prices slightly increase and global trade prospects dim
29.04.2022  
14:03 BASF achieves strong EBIT before special items despite significantly higher energy and raw materials prices
28.04.2022  
17:52 EU takes steps to suspend all duties on imports from Ukraine
16:27 BASF to wind down activities in Russia and Belarus except for business that supports food production

Also available: 


NewsNews - News - News - News - News - News
BriefWeekly Reports - Free article
SubscriptionTariff - News&Reports
AdvertisingMagazine - Site
ConferencesForum AGRO-2013 - DAIRY WORLD-2008 - FERTILIZERS-2010
Statistics
For our clientsAgroNewsDaily - Ukrainian Grain&Oilseed Market - Fertilizers - Milk Monthly - Milk Weekly
About usAbout project - Contact
2002 -2022 © Agrarika, ltd.
tel.: +380 44 5934543; +380 44 5934540
e-mail: client@agroperspectiva.com