BASF remained on its path to success in the second quarter of 2005 and again posted very strong earnings. Sales rose 14% to €10.6 billion compared with the second quarter of 2004; income from operations (EBIT) before special items climbed 31% to €1.7 billion. Cumulative sales in the first half of 2005 amounted to €20.7 billion, or almost 13% more than in the same period of the previous year. In the first half, BASF increased EBIT before special items by 32% to €3.2 billion compared with 2004. Sales growth was primarily due to urgently needed price increases. Although raw material costs were volatile and rose continuously, BASF succeeded in gradually raising its margins to the necessary level. The good volume growth of 3% in the second quarter and 2% in the first half builds on the already strong level posted in 2004 and fits with the company's 'value over volume' concept. During his presentation of the quarterly results on August 3, 2005, BASF Chairman Dr Jürgen Hambrecht thanked all employees for their outstanding performance in a difficult economic environment: 'Prices for raw materials, and for crude oil in particular, have reached unprecedented levels. Economic growth remains weak in many parts of Europe. The geopolitical situation remains tense.' Hambrecht expects the chemical industry to continue on a growth path in the second half of the year. At approximately 3%, however, he anticipates production growth for the full year to be slower than in the record year 2004, which represents a very high baseline for further growth. The strongest impulses for growth are again likely to continue to come from North America and Asia. 'The coming months therefore offer both opportunities and risks. Our aim is to capitalise on the opportunities and to assess the risks correctly. We want to complete our major capital expenditure projects on schedule and to continue with our successful measures for restructuring and achieving additional cost savings. At the same time, we are working hard to further expand our market position as The Chemical Company', said Hambrecht. Overall, Hambrecht is confident when looking to the future, and the company has raised its outlook for the full year 2005. 'We are expecting significantly higher sales and an increase in EBIT before special items compared with our already strong performance in 2004.' This forecast assumes that economic growth is not impacted by unexpected events such as terror attacks, dramatic increases in raw material prices or currency fluctuations.
