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High oil prices bolster record BASF profits

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High oil prices bolster record BASF profits
Photo: DPA
10:43 CEST+02:00
BASF, the world's biggest chemical company, posted record profit results for the second quarter on Thursday, boosted by high oil prices.

Net profit jumped by 27 percent to €1.3 billion ($2.02 billion), while operating profit, which the group uses in its forecasts, gained 19 percent to €2.4 billion, a statement said. Sales rose by 11 percent to €16.3 billion.

Analysts polled by Dow Jones Newswires had expected net profit of €1.103 billion and sales of €15.629 billion. BASF maintained its full-year forecasts for sales and core earnings before exceptional items.

"Despite the challenging economic environment with high raw material costs, we are confident that we will achieve the goals we have set for 2008," chairman Jürgen Hambrecht said.

The group's oil and gas division posted a 41 percent jump in sales, and core earnings before exceptional items gained 44 percent. Agricultural activities including pesticides turned in a 21 percent sales increase and core earnings that leapt by 51 percent.

In the chemicals division however, sales gained 18 percent but core profit fell by 34 percent. Sales of plastic products edged up by four percent, but profit lost 14 percent, in large part the result of economic conditions in North America, the company said.

In the first half of the year, BASF sales gained 10 percent to €32.2 billion, while core earnings before special items rose by 15 percent to around €4.8 billion.

"Demand for our products remains strong," Hambrecht said. "However, sales prices have to be increased considerably in some cases in order to pass on significantly higher raw material costs."

The head of chemical group BASF also said he would be attending the opening ceremony of the Beijing Olympics and defended the policies of China, where the group has a strong presence.

"In the past months, the preparations for the Olympic Games have been the subject of intensive public debate that has often involved fundamental and often unfair criticism of the Chinese government," Hambrecht told a telephone news conference.

"The level of freedom in China is certainly not comparable with that in Europe or Germany," added Hambrecht. "But we should nevertheless recognize the enormous progress that China has made in its economic, social and political development."

Hambrecht had already spoken out in April, during the controversy over the situation in Tibet, when he argued against a boycott of the games. BASF says it employs 5,500 people in China, operating 29 wholly owned subsidiaries and nine joint ventures there.

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