BASF continues to grow profitably
BASF continued on its growth path in the third quarter of 2005. This was confirmed by a further improvement in the figures presented at the company’s Fall Press Conference in Ludwigshafen. The strong business performance seen in the first half of the year maintained its momentum in the third quarter. The summer lull was less pronounced than expected. With strong demand on the one hand, and very high and very volatile oil prices on the other, necessary price increases could be passed on to the market only to a limited degree. Compared with the same quarter of 2004, sales increased by 11 percent to €10.4 billion. Income from operations (EBIT) before special items rose by 13 percent to more than €1.3 billion. Cumulative sales for the first nine months of the year rose by more than 12 percent to €31 billion. BASF’s profitable growth is underlined by the fact that EBIT before special items increased by 26 percent to €4.5 billion. BASF’s Chief Financial Officer, Dr. Kurt Bock, took special note of the company’s net income of €808 million: “That is more than double the figure of €366 million that we posted in the same quarter of 2004.” At €2.5 billion, net income in the first nine months of 2005 exceeded the strong level for full year 2004 by almost half a billion euros. The sales growth was primarily due to necessary and, in some cases, overdue price increases in all the company’s chemical segments. With these price increases, BASF responded to massively higher raw material prices, which resulted in additional costs of more than €1 billion in the first nine months of the year. After special items of €65 million, third-quarter EBIT rose by 17 percent to €1,262 million. The level of special items was comparable to that in previous quarters. Special items were related to restructuring measures and programs to increase efficiency at a number of sites. The financial result increased by €303 million to €176 million. About two-thirds of this increase was due to special income from the sale of the stake in Basell, which was completed on August 1, 2005. The increase in earnings per share to €1.55 from €0.67 was due to the company’s continued share buyback program and the associated reduction in the number of shares outstanding. In the third quarter of 2005, BASF bought back shares for €250 million. From January through to the end of October 2005 (cutoff: October 27), the company bought back shares for €1,228 million at an average share price of €54.24. As a result, BASF has repurchased 19.3 percent of its shares since starting its share buyback program in 1999. At €1,285 million, payments related to tangible and intangible fixed assets in the first nine months of 2005 were lower than in the same period of 2004 and, as planned, below the corresponding level of depreciation and amortization.