By Natascha Divac
FRANKFURT--German chemicals company BASF SE (BAS.XE) reported on
Friday a lower-than-expected increase in second-quarter net profit,
citing lower growth in some markets and continuing volatility in
raw material prices.
Except for the Chemicals unit, all of the company's segments
posted considerable declines in earnings, BASF said, pointing to
sharp price declines as a result of the marked drop in oil
prices.
Net profit rose slightly to 1.27 billion euros ($1.39 billion),
from EUR1.26 billion in the year-earlier period, but fell short of
analyst expectations of EUR1.36 billion. Second quarter sales rose
3% to EUR19.1 billion, supported by a sharp increase in volumes in
the oil and gas segment.
The company managed to post a slight increase in adjusted
earnings before interest and taxes, which rose 2% to about EUR2
billion. The figure was still slightly below forecasts of EUR2.1
billion.
"Overall quality of results was not so good ...," said Peter
Spengler of DZ Bank. After a solid first quarter, the market was
too optimistic in terms of second quarter expectations, he
said.
BASF shares traded 3.1% lower at EUR80.27 at 0852 GMT.
The steepest decline in earnings was recorded in the company's
Performance Products segment, which makes products like adhesives,
pigments and ingredients for skin care products. The unit's ebit
before special items dropped about 30% to EUR304 million, with BASF
attributing the decline to a still-difficult market environment for
paper chemicals. The startup of new plants, reduction of inventory,
and negative currency effects also resulted in an increase in fixed
costs, it said.
Ebit before special items in the Chemicals segment fell about 4%
to EUR548 million, as lower raw material costs led to a sharp drop
in prices, especially in the Petrochemicals division.
The company nevertheless backed its 2015 outlook, saying it
still aims to slightly increase sales and post ebit before special
items at the level of the previous year. However, it reduced its
forecast for global economic growth.
"For the full year 2015, we now expect somewhat weaker growth
for the global economy as well as global industrial and chemical
production than was foreseen six months ago," BASF Chief Executive
Kurt Bock said.
Write to Natascha Divac at Natascha.Divac@wsj.com
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