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The German headquartered chemical manufacturer reported sales up 7% in the fourth quarter of 2016, with the company achieving the growth and earnings goals it set for itself in the full year.
According to BASF, its chemicals business grew successfully and profitability improved further in 2016, particularly in Asia. In the fourth quarter of 2016, sales increased 7% to €14.8 billion compared with the same quarter of 2015, mainly due to higher volumes. For BASF Group, as well as the chemicals business, which comprises the Chemicals, Performance Products (which includes the Leather Chemicals Business Unit) and Functional Materials & Solutions segments, volumes rose 6%. Income from operations (EBIT) before special items was €1.2 billion, €157 million higher than in the prior-year quarter.
However, for the full year 2016, sales decreased 18% to €57.6 billion, attributed to the divestiture of the gas trading and storage business as part of the asset swap with Gazprom at the end of September 2015. This business had contributed €10.1 billion to sales in 2015. In total, portfolio effects lowered sales by 15%. In addition, lower raw material prices led to a drop in sales prices (-4%). The manufacturer said it was able to continually raise sales volumes over the course of the year; compared with the previous year, volumes increased 2%, and in the chemicals business by 4%. Currency effects are reported to have slightly dampened sales (-1%). According to BASF, at €4.1 billion, net income exceeded the previous year’s level of €4 billion. Earnings per share increased from €4.34 to €4.42.
In the Performance Products segment, which includes chemicals for leather, sales in the fourth quarter declined 1% to €3.6 billion. EBIT before special items rose slightly to €231 million supported by improved margins. At €15 billion, full-year sales were 4% below the level of the previous year; primarily attributable to falling sales prices and the divestitures completed in 2015. EBIT before special items increased by €379 million to €1.7 billion, mostly due to significantly reduced fixed costs thanks to restructuring measures and strict fixed cost management, in addition to improved margins, according to the Company.
BASF expects its 2017 sales to rise considerably, supported by slightly higher sales in the Performance Products segment and by considerable increases in the remaining segments.comments powered by Disqus