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BASF Posts Record Year

Friday, February 25, 2011

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2010 was a record year for BASF, fueled by sales gains in every segment, including Catalysts and Coatings.

The world’s largest chemical company posted 2010 total sales of €63.9 billion (about $87.9 billion USD)—a 26% increase from 2009. Income from operations improved by 111%.

Share price reached an all-time high in December and rose more than 37% over the course of the year.

“We achieved record sales and earnings in 2010,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE. “In the chemicals business, in particular, we were able to take advantage of the strong economic recovery in 2010, which was more dynamic than we all initially expected.”

PSN_02.28_BASF

Photos: BASF

Sales in the Chemical segment topped 2009, and prices were increased
to keep pace with raw materials costs.

Libyan Unrest, Shortages

Amid the blue skies, however, were some clouds. Although 2011 has started off “very strong,” Hambrecht said the company remained “concerned about Libya,” now in the throes of massive civil unrest. BASF said it ”hopes that the situation will calm down soon.”

The company also reported “temporary delivery bottlenecks” in 2010 for some of its products, especially acrylates and solvents. “Product shortages were further intensified by the delays in starting up new plants in Asia and the Middle East, as well as a number of unscheduled plant shutdowns at our competitors,” the company reported.

Like every manufacturer in coatings-related industries, BASF also felt the sting of higher raw material prices. The company raised prices in its Chemical segment and in Performance Polymers, while keeping prices in the Polyurethanes division fairly stable. Despite higher volumes, earnings in the Coatings division fell due to rising materials costs.

Outlook

Overall, however, Hambrecht said he was optimistic about the first quarter and year of 2011. He said the company would hire about 2,900 additional employees this year—most in Asia and about 800 in Germany, where the company is based.

BASF aims to top its 2010 showing this year. “We also expect to earn a high premium on our cost of capital once again in 2011,” said Hambrecht.

PSN_02.28_BASF_Hambrecht
Board Chairman Jürgen Hambrecht hopes unrest in Libya won’t keep BASF from another record year.

Selected Segment Results

In the Chemicals segment, sales far exceeded the 2009 level, thanks to higher prices and volumes. Some products saw temporary supply shortages. The segment showed strong improvement in income from operations, due to increased margins (especially for basic products) and higher volumes.
 
The Plastics segment also posted a strong rise in sales, with a “noticeable revival of demand” and strong recovery in the automotive industry.
 
In the Functional Solutions segment, sales also topped 2009 levels, due to higher volumes and prices. Sales and sales volume increased in the Catalysts and Coatings divisions, mainly because of improved demand from the automotive industry. Sales growth in the Construction Chemicals division was weaker, but ”all three divisions made a considerable contribution to the segment’s strong improvement in income from operations,” BASF said.
 
Regional Numbers

Sales in North America rose by 41%, to €13.2 billion (34% in local currency terms). Nearly all segments posted considerable gains in sales volumes and sales compared with the previous year. Income from operations in 2010 reached a new record of €1.1 billion.

Sales in Europe grew by 16% over 2009, while sales in Asia Pacific increased by 46% to €11.6 billion (35% in local currency terms). Sales increased in all segments, particularly chemicals. Income from operations reached a record €1.3 billion, with Asia ”more and more becoming a stable contributor to BASF’s success.”
 
Sales in South America, Africa and the Middle East outstripped the 2009 level by 31% (19% in local currency terms) to €3.8 billion.

BASF’s portfolio ranges from chemicals, plastics, performance products and agricultural products to oil and gas. The company posted sales of about €63.9 billion in 2010 and had about 109,000 employees at the end of the year.

   

Tagged categories: BASF; Earnings reports; Polymers; Polyurethane

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