BASF Confirms Gloomy Outlook
April 29 2016 - 03:50AM
Dow Jones News
MANNHEIM, Germany—-German chemicals giant BASF SE reported an
18% rise in net profit for the first quarter of 2016, which was
primarily the result of lower tax rates at its oil and gas
division, while confirming a gloomy outlook for the full year.
Net profit for the period ended March 31 was 1.4 billion euros
($1.6 billion), compared with €1.17 billion during the same period
a year earlier, beating analysts' forecasts. Analysts had predicted
a net profit of €1.07 billion, according to a recent poll conducted
by The Wall Street Journal.
The smaller tax burden compared with the year prior was
connected with lower deferred taxes on BASF's oil and gas
operations in Norway, due to currency exchange rates, and less
earnings from abroad.
However, BASF's closely watched earnings before interest and
taxes before special items fell by 8%, to €1.91 billion, weighed
down by lower earnings at the oil and gas and basic chemicals
businesses.
The oil and gas unit—wholly owned subsidiary Wintershall Holding
GmbH—posted an 85% plunge in EBIT before special items, to €66
million, due to lower global oil and gas prices and the company's
divestiture of its gas trading and storage business through an
asset swap with Russia's Gazprom last year. EBIT before special
items at the basic chemicals division fell by 36%, to €465 million,
a result of lower margins for petrochemicals and higher fixed costs
from the start up of new plants.
Revenue fell 29% to €14.21 billion, due in large part to the
loss of the gas trading and storage business. Lower global oil
prices also contributed to declining sales prices, particularly at
the basic chemicals unit, the company said.
All of BASF's business areas posted sales declines. But the
specialty chemicals divisions saw earnings increase slightly, in
part a result of reduced fixed costs at the Performance Products
unit and higher contributions from plastics and construction
chemicals at the Functional Materials and Solutions unit.
BASF reiterated its guidance for the full year, saying it
expects group sales to decline "considerably," while EBIT before
special items should be "slightly below" the 2015 level of €6.74
billion. The company nonetheless proposed an increased shareholder
dividend of €2.9 a share for 2015, compared with €2.8 the year
prior.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
April 29, 2016 03:35 ET (07:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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