In 4Q14, BASF Group achieved sales of €18.0 billion, almost reaching the level of the previous year (€18.1 billion). Sales volumes increased by 1%. The Catalysts division, as well as the Agricultural Solutions and Oil & Gas segments, mainly contributed to this increase. Positive currency effects (+2%) could not compensate for the mainly oil price related decline in sales prices (-4%). Income from operations (EBIT) before special items rose by €40 million to €1.5 billion compared to €1.4 billion in 4Q13. EBIT before special items rose significantly in the Chemicals and Agricultural Solutions segments compared with the same period a year earlier.
"We achieved our goal for 2014: we increased earnings – despite the disappointing economic development in Europe. We grew profitably. We further strengthened our chemicals business and in turn improved our margins. We have our costs firmly under control. This is an outstanding achievement of the entire BASF team," said Dr Kurt Bock, Chairman of the Board of Executive Directors of BASF SE.
Sales in 2014, at €74.3 billion, matched the level of the previous year (€74.0 billion). Sales volumes increased in all segments in 2014. Overall volumes grew by 4% while prices decreased by 3%, largely due to significant decreases in oil and gas prices. Negative currency effects dampened sales in almost all divisions. EBIT before special items grew by €280 million to €7.4 billion in 2014. This was primarily the result of a larger contribution from the chemicals business. EBIT was up €466 million from the previous year's level and reached €7.6 billion. Net income amounted to €5.2 billion, exceeding the previous year's level of €4.8 billion. Earnings per share rose from €5.22 to €5.61. Adjusted earnings per share was €5.44 compared with €5.31 in the previous year.
In the Chemicals segment, 4Q14 sales declined by 3% to €4.1 billion due to lower prices and volumes. EBIT before special items rose by €70 million to €580 million due to higher contributions from the Petrochemicals division. For the full year, sales in the Chemicals segment were €17.0 billion and matched the level of the previous year. Falling prices in all divisions were offset by higher sales volumes, especially in the Petrochemicals division. At €2.4 billion, EBIT before special items surpassed the level of 2013 by €185 million. This was predominantly on account of substantially larger contributions from the Petrochemicals and Intermediates divisions. The Monomers division, however, posted a considerable, margin-related decline in earnings.
Performance Products division
At €3.7 billion, 4Q14 sales in the Performance Products segment were slightly above the same period of the previous year. EBIT before special items was €217 million, the same level as in 4Q13. For the full year, sales were down by 1% to €15.4 billion. BASF was able to increase sales volumes with stable prices and, therefore, almost fully compensate for negative currency effects. EBIT before special items improved by €90 million to €1.5 billion. This was mainly because of the reduction in fixed costs due to restructuring and other measures.
Functional Materials & Solutions division
In the Functional Materials & Solutions segment, sales in 4Q14 rose by 8% to €4.4 billion due to higher volumes and positive currency effects. EBIT before special items decreased by €18 million to €220 million. For the full year, sales rose 3% to €17.7 billion due to significantly higher sales volumes. The increase was curbed by negative currency effects. Prices were stable overall. EBIT before special items rose by €127 million to €1.2 billion through considerable increases in the Catalysts and Coatings divisions.
Oil & Gas division
In the Oil & Gas segment, considerably higher volumes in 4Q14 could not compensate for significantly lower oil and gas prices. Sales declined by 3% to €4.0 billion. At €347 million, EBIT before special items was €155 million below the same period of the previous year. Full year sales grew by 2% to €15.1 billion in 2014, mainly through higher volumes in the natural gas trading business. Sharply falling oil and gas prices weakened sales growth. In the Exploration & Production business sector, the activities in Norway acquired from Statoil led to positive portfolio effects. EBIT before special items declined by €61 million to €1.8 billion as a result of slightly smaller contributions from both business sectors. Net income declined by €266 million to €1.5 billion.
"The outlook for the 2015 business year is subject to significant uncertainty. Oil and raw material prices are volatile, as are currencies; the emerging markets are growing more slowly; and the global economy is being dampened by geopolitical conflict. For 2015, we nevertheless anticipate somewhat stronger growth in the global economy, industrial production and the chemical industry than in 2014," said Bock. One reason for this is the lower oil price. For 2015, the company assumes the following economic conditions:
- Global economic growth: +2.8%.
- Growth in global chemical production (excluding pharmaceuticals): +4.2%.
- An average euro/dollar exchange rate of US$1.20 per euro (US$1.33 per euro).
- An average oil price (Brent) of US$60 to US$70 per barrel (US$99/bbl).
Adapted from press release by Rosalie Starling
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