Ludwigshafen, Germany - BASF had another record year in 2007, thanks to organic growth and "very positive development" of acquired businesses, with sales of almost Euro 58 000 million and income from operations (EBIT) before special items of more than Euro 7600 million in 2007.
Income from BASF's plastics business - polyurethanes, styrenics and performance polymers - increased by Euro 44 million to Euro 1236 million, the group said. Sales for 2007 in its plastics division rose by Euro 721 million to Euro 13 496 million, a 7-percent volume and 3-percent price increase, BASF said.
In polyurethanes specifically, sales rose by Euro 317 million to Euro 5166 million, a volume increase of 9 percent and a price rise of 2 percent, with negative currency effects of - 4 percent.
Sales in the polyurethanes business "rose significantly in all regions except North America," BASF said. But unscheduled plant shut-downs of the group's MDI (methylene diphenyl diisocyanate) and TDI (toluene diisocyanate) plants in Geismar, Louisiana, and the weak dollar, contributed to lack of growth in the region, the group commented.
In Asia Pacific, by contrast, start up of the MDI and TDI plants in Caojing, China, in 2006 contributed to the rise in earnings, BASF commented. Generally new capacity started up in 2006/7 aided higher sales in Asia Pacific and in Europe, the group said.
Higher sales volumes contributed to a further rise in operating income, and BASF said it was "largely able to pass on significantly higher raw material and energy costs in the form of higher sales prices."
Characterising polyurethanes as a market with "dynamic global growth and persistently high raw material and energy prices," BASF stressed that "it will call for concentrated effort to match the very strong earnings level of 2007 due to new plant start-ups."
BASF expects business to develop positively in 2008, said chairman Dr Juergen Hambrecht, at the group's 21 Feb results press conference.
BASF's business planning assumes a moderate slowdown in global economic growth and global chemical production to 2.8 percent, with declining interest rates in the US and moderate knock-on effects in Europe, and an average exchange rate of $1.45 per euro. Other assumptions include average oil price of $78 per barrel, Hambrecht pointed out.
But he listed possible risks for 2008, including: continuing uncertainty due to the global credit crisis; unfavourable developments in the construction and automotive industries; increasing imbalance in exchange rates; continuing high prices of raw materials, in particular oil; and an aggravation of geopolitical tensions.
"Assuming that there are no changes to our portfolio, we aim to increase sales and improve income before special items slightly in 2008. We aim to grow faster than the chemical market each year, and we are convinced that BASF will earn at least its cost of capital in any given year," Hambrecht concluded.
PIC: Juergen Hambrecht, BASF chairman, speaking at the results meeting 21 Feb.