The world's number two vitamin maker BASF boosted second quarter earnings in its agricultural and nutrition segment, despite flat sales from across the group's businesses.
The unit, which supplies carotenoids, vitamins and enzymes to animal and human food markets, showed no sales growth in the second-quarter (€1.5 billion) over the previous year's level, partly due to negative currency effects, but EBIT before special items climbed by 61 per cent to €209 million. Prices at BASF went up 3 per cent in the second quarter to compensate for market conditions.
Restructuring helped boost earnings across several units, such as fine chemicals where sales dropped despite an increase in volume. However charges of €58 million, associated with the restructuring and integration of BASF's latest acquisition in the agricultural products division, impacted pre-tax profit which fell 5.3 per cent on the previous year to €774 million.
Overall group sales declined by 1.6 per cent to €8.2 billion during the quarter, attributed by BASF to the hefty drop in the value of the US dollar since last year's quarter, despite an increase in sales volumes by 3.2 per cent and higher prices.
The company, which calls itself the world's biggest chemicals firm, also saw net income plummet by 61 per cent to €195 million as a result of higher income taxes, mainly due to a one-time effect of €124 million related to corporate income tax.
Good performance in the first quarter however lifted first half sales to €17 billion or 2.8 per cent higher than in the first half of 2002. Adjusted for currency effects, sales would have been €18 billion or an increase of 8.3 per cent, added BASF.
EBIT before special items for the first half of 2003 was almost €1.8 billion or 8.3 per cent higher than in the same period of 2002. All operating divisions were in the black.
The outlook for the year does not promise much growth however."Considerable risks must be overcome if we are to achieve the same level of sales and earnings as in 2002. In particular, these risks are associated with volatile oil prices, the uncertain development of the US dollar and persistent stagnation in important economies. Major efforts are therefore needed to match last year's achievements," warned Dr Jurgen Hambrecht, chairman of BASF board of directors.