A boom in coatings and higher prices helped offset still-struggling construction activity to deliver a whopping $25% first-quarter sales increase in to BASF, the world’s largest chemical company.
The company reported a “powerful start to 2011,” with strong sales and earnings as well as higher prices and volumes, especially in the chemicals business. Sales volumes rose in nearly all segments, compared with the first quarter of 2010.
Sales grew to €19.4 billion (about $28.1 billion US), and earnings soared by 40% to €2.7 billion (about $3.9 billion US). Gross profit on sales surged by 25.1%, to €5.5 billion (about $7.9 billion US).
Coatings: Rising Demand
Demand for products in BASF’s Coatings division rose in all regions, and “sales grew significantly overall,” BASF reported.
The company posted higher sales volumes in automotive OEM coatings, automotive refinish coatings and architectural coatings, although sharply increased raw materials prices put a crimp in earnings. Nevertheless, earnings slightly exceeded the high level of the previous first quarter, due to good demand.
|Coatings and chemical sales both grew significantly in the first quarter, BASF reported.|
In South America, Africa and the Middle East, sales climbed 20% year-on-year in local-currency terms and 25% in euro terms. In the Catalysts and Coatings divisions, sales grew substantially and earnings increased by €27 million ($39 million US) to €91 million ($131.8 million US).
Construction: East Surges, West Slumps
Robust construction activity in the emerging markets of Asia, South America and Eastern Europe helped blunt the effect of the continuing slump in North America and parts of Europe, where “there was no sign of a recovery in construction activity,” BASF reported.
Overall, higher volumes and positive currency effects delivered slight sales growth for the Construction Chemicals division, but first-quarter earnings dipped below 2010 levels. Raw materials costs contributed to the decline, the company said.
Chemicals: Strong Showing
All divisions in the Chemicals segment posted substantial sales increases, and the segment overall reported a 27% sales increase. The gains came from significantly higher sales prices in several business, greater volumes, positive currency effects, and good plant capacity utilization.
The segment consists of the Inorganics, Petrochemicals and Intermediates divisions, with a portfolio that ranges from basic chemicals, glues and electronic chemicals to solvents and plasticizers, as well as starting materials for paints, coatings and other products.
Sales in Intermediates increased substantially in all sectors, including coatings, and earnings soared. Demand outstripped supply for Butanediol (BDO), a valuable chemical intermediate used in the production of high performance polymers, solvents and fine chemicals.
Sales in Plastics and Performance Products improved substantially over the first quarter of 2010.
Unrest in Libya prompted BASF to suspend oil and gas production there, diminishing volumes in the company’s Oil & Gas segment.
The Japanese earthquake, however, has so far had no impact on the company’s business, BASF said.
The company also announced:
- The Chinese government has granted approval for BASF to build a Methylene Diphenyl Isocyanate (MDI) facility in Chongqing. The chemical, used in manufacturing polyurethanes, has recently come under closer scrutiny in the United States for its health and safety risks.
- BASF plans to acquire a 15% stake in South Stream AG, a joint-venture pipeline project that would carry Russian natural gas to Bulgaria, Italy and Austria.
- BASF is exploring opportunities for investment in new production of acrylic acid, butyl acrylate and superabsorbent polymers in Brazil.