Global rebound boosts BASF and Bayer

The global economic rebound helped German chemical giants BASF and Bayer post major rises in profits Thursday fuelled by growing demand across the board.

Global rebound boosts BASF and Bayer
Photo: DPA

However, Bayer said it would put hundreds of millions of euros aside to settle US legal action focused mainly on genetically modified rice.

BASF, the world’s biggest chemical group, announced that its profits had jumped 23 percent to €15.8 billion ($21.8 billion) and Bayer posted a 16.1 percent gain to €8.58 billion.

A pick-up in activity worldwide lead to sustained demand for chemical and pharmaceutical products, and BASF said “there was hardly any sign of the usual seasonal slowdown.

“Nearly every business benefited from this. Growth impetus came from all regions,” the group noted.

Net profit leapt five-fold to €1.25 billion and chairman Jürgen Hambrecht said that for 2010 as a whole: “We aim for sales of around €63 billion and income from operations before special items of more than €8 billion.”

At Bayer, core earnings before special items gained 10.5 percent to €1.66 billion in the third quarter, exceeding analysts’ expectations.

But the maker of Aspirin booked €436 million in provisions for US court cases, including €386 million to settle legal action involving its Crop Science division that stemmed from genetically modified rice.

Bayer was told in April to pay $48 million dollars to US rice farmers and distributors affected by European Union restrictions on rice imports in 2006 following the discovery of genetically modified rice in US products.

The rice came from experimental plants dubbed LL601 that were developed by the French group Aventis, which was later bought by Bayer.

Although the rice was never sold, the strain contaminated traditional rice crops and Bayer faced complaints by a total of 6,600 farmers and distributors, and sought a deal that would avoid further legal action.

Meanwhile, Bayer said it had also booked €50 million in charges at its HealthCare division “for further anticipated defence costs in connection with YAZ/Yasmin,” its blockbuster oral contraceptive.

Thousands of Americans have accused the products of causing thrombosis. Bayer is not alone in dealing with issues related to genetically modified products meanwhile.

In September, BASF found the cause of a co-mingling of seeds from two strains of GM potatoes in Sweden, which a director said: “occurred because Amadea and Amflora plants were in close proximity to each other.”

BASF said it “will ensure complete separation of the production systems” in the future.

Those problems aside, the German chemical companies looked with optimism to the rest of the year.

Bayer said it still expects “adjusted sales growth of over five percent” and aimed to raise core earnings before special items to more than €7 billion.

Its shares showed a gain of 0.69 percent to €55.26 in early trading on the Frankfurt stock exchange, while BASF was down by 0.82 percent at €51.79.

The DAX index of German blue-chips was 0.40 percent higher overall.


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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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