Driven by recovering demand for petrochemicals, plastics and ingredients for cosmetics, BASF SE reported profits and sales that beat analyst estimates in Q1-10. Net profit increased to €1.03 bln (US$1.4 bln) from €375 mln, while sales totaled €15.5 bln. Demand in Asia and South America helped revenue increase across all divisions except the agrochemical and oil and gas units. Earnings before interest and tax before special items was €1.95 bln. The company plans to cut at least €1 bln in costs by 2012. Also, the merger of Ciba Specialty Chemicals into BASF, completed in April, is expected to generate annual savings of €450 mln by 2012 through the elimination of as many as 3,800 jobs.
As demand from the automotive and other segments increases, inventories depleted during the financial crisis are being rebuilt. Hence the company feels very confident of higher sales and a significant increase in earnings in 2010. BASF has to return to the capacity usage rates at its plants seen in 2008 before the onset of the economic crisis. Scheduled plant shutdowns for maintenance during Q2-10, including the temporary closure of the entire Nanjing, China site, may cost the company €100 mln.
BASF is preparing a bid for Germany’s Cognis GmbH at approximately €3 bln. BASF continues to seek buyers for its styrenics business as well as its leather and textile chemicals unit.