BASF post strong results in 2Q 2007

'Our significant earnings growth demonstrates that BASF have reached a higher level of sustainable earnings', said Dr Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft when presenting BASF's latest results. BASF have entered the second half of 2007 in stronger form than ever. The demand for chemical products is high, and there are no signs of a summer slowdown. Hambrecht expects the economy to continue to develop positively. For 2007, he anticipates global economic growth of approximately 3.5%, although with large variations from region to region. BASF's chairman expects an average euro/dollar exchange rate of $1.35 per euro in 2007. Due to the rise in oil prices, the company have increased their assumption for the average price of Brent crude in 2007 to $65 per barrel. Risks are seen as lying in the renewed significant rise in the price of oil, the weak US dollar, and tension in conflict areas around the world. 'In our outlook for 2007, we confirm our optimistic expectations: We are confident that we will grow faster than the chemical market. In 2007, we expect significantly higher sales than in 2006. Scheduled plant turnarounds, in particular in the Petrochemicals division, are likely to reduce earnings by €150 million in the second half of 2007. In addition, we plan to further increase spending on research and development. We nevertheless expect full-year EBIT before special items to at least match the previous year's record level,' said Hambrecht. Second-quarter sales in the Chemicals segment climbed 50% due to higher sales volumes and prices and the contribution from the acquired catalysts business. EBIT before special items also rose significantly by more than 70%, with a considerable contribution from the Petrochemicals division. In the Plastics segment, sales increased by 10% in the second quarter thanks to higher volumes and sales prices. Earnings rose by 15%. This was due to significantly higher earnings in the Styrenics division. In the Performance Products segment, strong sales growth of 37% and earnings growth of 24% was due primarily to the inclusion of activities acquired in the previous year. The Construction Chemicals division grew very strongly in Europe. In the Agricultural Products & Nutrition segment, sales increased by 3% compared with the second quarter of 2006; EBIT before special items rose by more than 44%. Higher sales volumes in the Agricultural Products division more than compensated for negative currency effects. The Fine Chemicals division posted a significant increase in EBIT before special items, in particular due to a reduction of fixed costs. Sales and earnings in the Oil & Gas segment declined compared with the very high level of the second quarter of 2006 due to lower prices and currency effects. BASF's sales increased in all regions in the first half of 2007. The strongest growth in percentage terms was seen in South America, Africa, Middle East and in Asia. In Europe, companies posted total sales of €17.4 billion in the first half. This corresponds to an increase of 14%. EBIT before special items rose by 6% to €3.1 billion. This was due to the acquired businesses and organic growth in the chemical businesses, in particular in Petrochemicals. Companies in North America increased sales by 26% in dollar terms and by 18% in euro terms in the first half. EBIT before special items declined by 3% to €544 million. This was due to the shutdown of the TDI plant in Geismar, Louisiana, for a number of weeks, as well as currency effects and the impact of divestitures in the Agricultural Products division. The acquired businesses and strong earnings in the Petrochemicals division were unable to offset this fully. Growth remains strong in Asia Pacific, where BASF increased sales by 34% in local currency terms and by 27% in euro terms. EBIT before special items also rose considerably by 58% to €380 million. The investments in the Verbund sites in Kuantan, Malaysia, and Nanjing, China, are paying off. In Africa and the Middle East, sales rose in particular thanks to the contribution of the Catalysts and Construction Chemicals divisions. The region South America, Africa, Middle East also made a positive contribution. Here, BASF increased sales by 57% in local currency terms and by 51% in euro terms. EBIT before special items rose almost threefold. This was due primarily to the agricultural products business in South America. In Africa and the Middle East, sales rose in particular thanks to the contribution of the Catalysts and Construction Chemicals divisions.