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BASF Q2 earning flies in North America

10 Aug '05
6 min read

After special charges of €70 million, EBIT was €1.6 billion in the second quarter. The charges were primarily related to restructuring measures.

Net income increased to a lesser extent than pre-tax earnings. This was due to the level of noncompensable oil production taxes, which are tied to the oil price. These taxes more than doubled in the second quarter, increasing to €267 million. Net of this effect, the tax rate was at the same level as in the second quarter of 2004 at approximately 34 percent.

Earnings per share increased 14 percent to €1.48. The decline in the number of shares outstanding as a result of share buybacks had a positive effect.

Successful projects in all regions
BASF is continuing with its restructuring measures and is optimizing its portfolio in all regions.

Second-quarter sales by location of company in Europe totaled €6.2 billion. This corresponds to an increase of 11 percent. EBIT before special items rose 28 percent in Europe.

There was very positive news from the Ludwigshafen site in the second quarter. After three years, the Site Project has been successfully completed, thus significantly improving the site's competitiveness. At the same time, costs in Ludwigshafen were permanently reduced by €480 million per year.

In North America, sales rose by more than 17 percent. In local currency terms, sales increased by 23 percent. This was due equally to higher prices and higher volumes. The increase in EBIT before special items by 65 percent to €351 million is evidence of the success of the company's measures to restructure its business in North America. BASF has already achieved its targeted savings of $250 million, one year ahead of schedule.

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