BASF posts solid Q2 results but sees slower

28th July 2011, Comments 0 comments

German chemical giant BASF said Thursday that its second quarter net profit gained nearly 23 percent amid a supportive economic environment, but forecast a slowdown in the second half of 2011.

The world's biggest chemical group posted a net profit of 1.45 billion euros ($2.1 billion), roughly in line with analyst forecasts compiled by Dow Jones Newswires of 1.5 billion euros.

"It was a very solid quarter," BASF chief executive Kurt Bock told a telephone news conference, especially "compared with exceptional dynamics in the first quarter," he added.

In the first half of the year, BASF's net profit shot up by 74 percent to 3.9 billion euros.

In late February however, unrest in Libya forced BASF to curtail oil production activities there, driving operating profits at the group's Oil and Gas division below the level of the second quarter of 2010, a report said.

Group sales nonetheless gained an annualised 14 percent in the quarter to 18.5 billion euros, in line with expectations.

"Our figures show that we took advantage of tailwinds" provided by a favourable economic climate, Bock said before expressing confidence for 2011 as a whole.

The BASF statement quoted Bock, who took over in May, as voicing caution however owing to the euro's strong value against the dollar and debt crises in the eurozone and the United States.

"We continue to be concerned about the development of the euro as well as the debt situation in some European countries and the United States," he said.

High oil prices had also weighed on new orders, Bock added.

Shares in BASF plunged quickly on the remarks, losing 5.65 percent to 62.14 euros in afternoon trading with the DAX index of German blue-chips down 1.45 percent.

"Expectations for chemical groups, and not only BASF, were very high," noted Markus Mayer, an analyst at UniCredit who explained that a slowdown forecast for the third quarter had arrived sooner than expected.

BASF nonetheless still expects "significant sales growth" this year compared with the 2010 figure of 68.9 billion euros and higher core earnings before interest and taxes (EBIT) than last year's figure of 8.1 billion euros.

Among key projects at BASF are the completion of a joint plastics venture with the British group Ineos, the integration of German speciality chemicals company Cognis, and the development of a polyurethane plant in Europe and a site in China.

© 2011 AFP

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