BASF reports strong 2010, while Cognis buy improves outlook
The company said that full year sales in 2010 increased by 26 per cent to €63.9bn, while EBIT profit rose by an impressive 68 per cent to €8.1bn. Sales increases were experienced in all regions.
The sale growth momentum has also been sustained throughout the course of the year, a factor that was underlined by the fourth quarter sales, which rose by 25 per cent to €16.4bn – the highest quarterly sales figure for the year.
Fourth quarter profits hit by costs
However, the fourth quarter EBIT of €1.8bn was below the level of growth for the previous quarters, which the company attributed to increased costs that included higher incentive payments, employee bonus payouts and restructuring costs. These additional costs added up to approximately €200m.
Although the comparisons reflected a difficult year in 2009, as industrial production slacked off in the face of economic downturn, the acquisition of Cognis is set to add around €3bn in sales in the course of 2011, while synergies should start to positively impact profitability in the coming years.
The Cognis acquisition reflects the company’s ambition to expand its already leading market position in the chemicals sector, particularly expanding its reach in fine chemicals – a move that now sees its position in the personal care segment growing in importance.
Recovery in 2010 was stronger than expected
“We achieved record sales and earnings in 2010. In the chemicals business, in particular, we were able to take advantage of the strong economic recovery in 2010, which was more dynamic than we all initially expected,” said Dr. Jurgen Hambrecht, CEO.
Looking ahead to the full year 2011, BASF is forecasting sales growth of 3.2 per cent, boosted by the fact that chemical production is expected to increase by around 5.2 per cent.
However, looking ahead to the future, the company did indicate its concern over political instability in the Middle East, where BASF does have significant exposure, with Hambrecht making specific reference to Libya.