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BASF, the world’s biggest chemical maker by sales, held on to its full-year earnings guidance after a strong performance from its oil, gas and agricultural units helped offset a second-quarter slowdown in chemicals and in China.
BASF on Thursday lowered its forecast for global economic growth this year but said the company still aims to exceed last year’s record sales and earnings before interest and taxation.
Sales rose 5.5 per cent to €19.5bn ($24bn) in the second quarter and earnings before interest, tax and one-time items rose 11 per cent to €2.5bn, exceeding a consensus estimate of €2.4bn compiled by Bloomberg. However, net profit declined 16 per cent to €1.2bn and earnings per share fell from €1.59 to €1.34.
BASF said it does not expect an upturn in demand in the second half of the year, adding that the margin pressure it suffered in the first half would continue but at a slightly weaker level due to lower raw materials costs.
The company now expects the global economy to expand by 2.3 per cent this year, compared to a previous forecast of 2.7 per cent.
“It remains our goal to increase sales and earnings compared with the second half of 2011. Our forecast is especially supported by the resumption of our crude oil production in Libya,” Kurt Bock, chief executive, said. “It is unlikely that the earnings from our chemicals business will match the level of the previous year.
“Our customers are continuing to act cautiously and are reducing their inventories, also in expectation of falling prices due to declining raw material costs.”
BASF, whose portfolio ranges from absorbent material for babies nappies, to home insulation foams and automotive catalysts, has seen a significant cooling of growth in China, where the government implemented measures to cool the economy.
“The Chinese growth engine has started to stall,” the company said adding that it would therefore slow a planned workforce increase this year.
Its chemicals sales declined slightly and earnings fell significantly as a result of falling margins and the scheduled maintenance shutdown of several plants
But the oil and gas segment enjoyed growing volumes in natural gas trading and the restart of oil production in Libya. In agriculture, first-half earnings before special items exceeded the whole of last year’s total .
BASF’s shares were flat at €56.07.