German chemicals group BASF said it performed well last year and is confident of further growth in 2002 despite difficult trading conditions. All of the company's divisions performed well, despite high raw material prices and the recession.
Operating profits from ongoing businesses and before special items were €2.3 billion, underlining the strength of BASF's business operations. In 2001, sales from ongoing business increased by over 3 per cent to almost €32 billion.
"The current forecasts as to when the recovery will begin vary greatly. Early indicators increasingly give grounds for guarded optimism. However, in the first months of 2002, we have not yet seen signs of a strong recovery in our order books," explained Dr. Juergen F. Strube, chairman of BASF's Board of Executive Directors. He added: "I am nonetheless confident. If the positive signals being sent by the indicators prove to be correct, then we will be among the first companies to benefit from the economic recovery. BASF has the right market position and a strong product portfolio."
BASF's stated goal is and remains to increase its corporate value through growth and innovation, Strube said. "In 2002, our goal is to generate significantly higher earnings than in the previous year from roughly the same level of sales from ongoing business."
He was cautiously optimistic with regard to 2002: "Our measures for restructuring and improving efficiency form the basis for the increase in income from operations that we are striving to achieve in 2002. A recovery in the economy will also assist us in reaching this goal." Nevertheless, 2002 would still be a difficult year, he said. "We hope that demand for products from the chemical industry will increase in the second half of the year. And we will use the time until the upturn to further improve our efficiency."
BASF's decision last year to act quickly to counter the effects of recession resulted in special charges of €747 million, which included costs for site and plant closures. As a result, earnings in 2001 were burdened by special items of over €1 billion. However, these measures, together with synergies in the agricultural products division and the streamlining of the company's global organisation, are expected to reduce costs by €1 billion by 2003. The first fruits are already visible; in 2001, BASF achieved cost savings of about €250 million, Strube said. In the current year, the company aims to achieve two-thirds of the targeted amount.
Special charges were offset by extraordinary income of over EUR 6 billion from the sale of the pharmaceuticals business. As a result of this high special income, income before taxes and minority interests was €6.7 billion - some €3.9 billion more than in 2000.
Despite the severe economic downturn, sales in the chemicals segment remained at the previous year's level. Earnings were reduced due to high raw material costs and a decline in demand in key customer sectors as a result of the economic slowdown. In the plastics & fibres segment, decreasing demand coupled with low selling prices reduced sales and earnings.
Sales from ongoing business in the performance products segment were slightly above the previous year's level. The economic slowdown in the major markets in North America and in Europe, however, led to a decline in income from operations before special items of about one-third compared with the previous year, the company said.
The agricultural products & nutrition segment developed positively in a challenging environment. The fine chemicals division performed successfully and increased income from operations before special items.