BASF Reports Results for 2009, Looks to Future
March 7, 2010
LUDWIGSHAFEN, Germany – BASF has announced full-year and fourth-quarter results for 2009. BASF sales declined by 19 percent to EUR 50.7 billion in 2009. All segments posted lower sales with the exception of Performance Products and Agricultural Solutions. Income from operations (EBIT) before special items fell by 29 percent to EUR 4.9 billion. The Plastics segment improved earnings slightly and Agricultural Solutions achieved a new record. Earnings declined in the remaining segments, in some cases considerably. Overall, BASF fell just short of achieving its goal of earning a premium on its cost of capital due to the costs for the integration of Ciba.
After the dramatic drop in late 2008 and the further decline at the beginning of 2009, the capacity utilization of BASF’s plants was at a historic low in large parts of the business. Demand recovered over the course of the year, especially in Asia. Thanks to quick and decisive measures to adjust capacities and increase efficiency, BASF was able to stabilize and improve earnings from quarter to quarter.
BASF reported that cash provided by operating activities rose by EUR 1.3 billion to almost EUR 6.3 billion, a new record. This was primarily due to the company’s success in reducing net working capital. Free cash flow – after deduction of payments related to property, plant and equipment and intangible assets – was also very high at EUR 3.8 billion. Despite the Ciba acquisition, BASF still has a very solid equity ratio of 36 percent.
For the fourth quarter of 2009, BASF reported sales up 2.9 percent and EBIT before special items up 19 percent compared with the third quarter of 2009. Compared to the fourth quarter of 2008, sales were up eight percent and EBIT before special items was up 181 percent.
In 2010, BASF expects global industrial production to grow by just under five percent, albeit from a very low level. “The slow recovery is continuing. The fourth quarter of 2009 was encouraging and gives us grounds for confidence. The worst is behind us, even though dark clouds remain. 2010 will be a transitional year with uneven development from region to region. Overall, there are no signs of a self-sustaining, long-term recovery,” said BASF’s Chairman Jürgen Hambrecht.
BASF is seeing growth in most of its customer industries, which are, however, emerging from a deep recession. Here, the automotive, IT and electronics industries are leading the way.