Asian business boosts BASF Q1 profit

The world's leading chemical company, BASF, posted Thursday a better than expected first quarter profit on the back of strong demand from Asian economies and inventory build up.

Asian business boosts BASF Q1 profit
Photo: DPA

BASF said its three months to March net profit jumped 174 percent from a year earlier to €1.03 billion ($1.36 billion) on sales up 26 percent to €15.5 billion.

“We have thus almost achieved the level of the very good quarters before the crisis,” group chairman Jürgen Hambrecht said in a statement, while remaining cautious for the rest of the year.

Analysts polled by Dow Jones Newswires had expected net profit to jump 134 percent and sales to come in with a 19 percent increase.

BASF did not raise its full year targets but still expects an increase in sales and a marked increase in core earnings, which reached €3.6 billion in 2009, a statement said.

All of the group’s regions posted double digit increases in first quarter sales, with Asia up 73 percent to €2.5 billion.

Industrial demand has rebounded, especially in the automotive, electronic and electrical industries, and was generally widespread, although “Europe is bringing up the rear,” Hambrecht said.

Core earnings before special items gained 98 percent to €1.95 billion in the first quarter, mainly owing to higher capacity utilisation, BASF said.

The German group’s US rival, Dow Chemical, posted on Wednesday a 15-fold increase in net profit to $552 million, also exceeding market expectations.

Looking ahead, the BASF chief was cautious however, noting that “the recovery remains shaky” owing to the continuing financial and debt crisis, the unwinding of stimulus programmes and volatile raw materials markets.

Hambrecht expected the economic recovery “to become slower and increasingly uneven” this year.

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German chemical giant BASF to make car battery parts near Tesla Berlin site

German chemical giant BASF says it will build a factory making key components for electric car batteries in Brandenburg state, not far from Tesla's first European "Gigafactory" just outside Berlin.

German chemical giant BASF to make car battery parts near Tesla Berlin site
Photo: DPA

Set for a site in Schwarzheide, 100 kilometres (62 miles) from the planned Tesla plant, BASF's factory “will produce cathode active materials with an initial capacity enabling the supply of around 400,000 full electric vehicles per year,” the company said in a statement.

It did not immediately say how many jobs would be created.

The Brandenburg unit will work in tandem with a plant in Finland producing precursors for the cathodes, the part of a battery cell that passes current to the rest of the electrical circuit.

Both are scheduled to come online in 2022.

READ ALSO: Protests as Tesla receives approval for factory purchase near Berlin

The project “is part of our first joint European project on battery cell production,” German Economy Minister Peter Altmaier said in a statement.

Several European Union member states, led by Germany and France, have offered billions in subsidies to build up an “Airbus of batteries”, seeing the globally competitive pan-European aircraft builder as a model for future industries.

Batteries make up around 40 percent of the value of an electric car, but are currently made by companies in South Korea, China and Japan.

Although Europe's industrial giants fear for their business models built in the combustion engine age, none was prepared to take the plunge into cell-making without government help.

Across Germany in Kaiserslautern, France's Peugeot now plans a two-billion-euro ($2.2 billion) battery cell production site that will supply batteries for up to 500,000 vehicles a year by 2024.

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