BASF successful first quarter

‘Our long-term strategy is paying off. That's most apparent in turbulent times like the ones we're currently seeing in the financial markets. BASF's strategy is not to try to achieve improvements over just a few quarters. Instead, we strive constantly to keep ahead of the global competition over the long term', said BASF's chairman Dr Jürgen Hambrecht in his presentation of the company's figures for 2007 and the first quarter of 2008 at the first annual meeting of BASF SE on April 24, 2008, in Mannheim, Germany. Income before taxes and minority interests rose by approximately 14% to just under €2.2 billion. At 41%, the tax rate was at the same level as in the first quarter of 2007. Net income increased by 13% to almost €1.2 billion compared with the first quarter of 2007. Hambrecht remains confident for full year 2008 and expects global economic growth and growth in chemical production excluding pharmaceuticals of 2.8%. The company are basing their estimates on an average oil price of $90 per barrel and an average euro/dollar exchange rate of $1.50 per euro in 2008. ‘The strong start to the first quarter confirms our positive outlook for 2008. Assuming that there are no changes to our portfolio, we aim to increase sales and improve income from operations before special items slightly in 2008. We expect to grow faster than the chemical market each year, and we are confident of earning our cost of capital in any given year', said Hambrecht. Sales by location of company in Europe increased by 14% in the first quarter of 2008. Income from operations before special items rose by €195 million to almost €1.8 billion. The increase in the chemicals segment was due in particular to the significant increase in sales and earnings in Inorganics. Business in the Agricultural Solutions segment, in particular with fungicides, developed positively as a result of favorable weather conditions and a good start to the season. The Oil & Gas segment posted higher sales and earnings, in particular as a result of higher oil prices. Sales by companies in North America increased by 9% in dollar terms and decreased by 4% in euro terms. At €268 million, EBIT before special items was slightly higher than in the first quarter of 2007. Earnings increased significantly in the Plastics segment but declined in the Functional Solutions segment. Weaker cracker margins especially impacted earnings in the Chemicals segment. In Asia Pacific, companies recorded a sales increase of 17% in local currency terms and 7% in euro terms. EBIT before special items rose by €17 million to €224 million. The Plastics segment made an important contribution to this as a result of a significant increase in the volumes and sales of polyurethanes. Increasing demand and higher sales prices for vitamins were recorded in the Performance Products segment. Declines in the Chemicals segment were more than offset. In South America, Africa, Middle East first-quarter sales by location of company rose by 18% in local currency terms and by 10% in euro terms. EBIT before special items climbed €23 million to €76 million. Sales and earnings, in particular for fungicides, improved significantly in the Agricultural Solutions segment. In the Construction Chemicals division, activities developed favorably in the region. The same was also true in the Coatings division due to higher demand for architectural and automotive coatings.