BASF expect moderate growth in 2004

Published: 22 March, 2004

BASF's figures for 2003 clearly show that the tremendous hard work by the company's employees worldwide has been successful: BASF have strengthened their position as the world's leading chemical company. In a difficult market environment, sales increased by 3.6% to €33.4 billion. Excluding currency effects, the growth would have been substantially higher and sales would have reached €35.7 billion.

The forecast made last November for income from operations (EBIT) before special items was exceeded: it increased in 2003 by about 4% to almost €3 billion. Cash provided by operating activities reached a record level of €4.9 billion.

EBIT in 2003 contained special charges of €335 million. These special charges were primarily related to restructuring measures taken to increase efficiency as part of the Ludwigshafen Site Project.

Sales and earnings increased substantially in the Agricultural Products & Nutrition and Oil & Gas segments. In the Chemicals, Plastics and Performance Products segments, earnings were below the previous year's level, but sales in some divisions increased.

'Even in very challenging times, BASF is and will remain a company that investors can count on for financial strength, a strong potential for innovation and reliability', said Dr Jürgen Hambrecht, chairman of the board of executive directors of BASF Aktiengesellschaft at the company's Annual Press Conference in Ludwigshafen on March 17, 2004.

According to Hambrecht, the medium-term prospects for the global economy are now somewhat more favourable. 'Throughout the world, the economy seems to have bottomed out. Upward movement is increasing; the growth markets in Asia and the United States are fuelling the global recovery process.'

The company's forecast for 2004 is based on the following scenario:

* An improved investment climate and a gradually improving consumer climate;

* An average oil price of $28/barrel in 2004, and

* A US dollar that continues to be volatile and weak.

In parallel with the growing demand among industrial customers, BASF expect that global economic activity in the chemicals industry will pick up the pace somewhat. Once again, the main impulses will come from Asia and to some extent from the United States. In general, moderate growth is expected.

The figures for January and February 2004 indicate sales and EBIT at the strong level seen in the previous year. Hambrecht said: 'Based on the conditions I have just mentioned, we expect slightly higher sales and an increase in EBIT in 2004'.

However, there are uncertainties in the future. For example, the strong euro is acting as a noticeable brake on European exports. Oil and raw material prices will remain at unexpectedly high levels and will therefore also retard growth.'

Hambrecht stated: 'Nevertheless, instead of only seeing the downside, we want to look ahead to the remainder of 2004 with somewhat greater confidence. We will devote our fullest energies to those areas that lie within our control. We will continue with our measures to reduce costs and increase efficiency, as well as our efforts to reduce operational assets. In 2004, as announced, we will reduce capital expenditures to the level of depreciation.'

Printer friendly version

Email this article to a friend