BASF Management Discusses Q1 2012 Interim Results

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BASF Management Discusses Q1 2012 Interim Results
Good morning ladies and gentlemen. This is the conference operator. Welcome to the BASF Interim Report First Quarter Results 2012. As a reminder,www.hair-and-co.co.uk/assets/pdfs/reason.html, all participants are in listen only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. Actual financial performance of the entities described herein could differ materially from that projected in the forward looking statements due to inherent uncertainty of estimates,fence-tech.co.uk/assets/newspics/infosr.html, forecasts and projections and financial performance may be better or worse than anticipated.Given these uncertainties, readers should not put undue reliance on any forward looking statements. Forward looking statements represent estimates and assumptions only as of the date of they were made. The information contained in this presentation is subject to change without notice, and BASF does not undertake any duty to update the forward looking statements, and the estimates and assumptions associated with them except to the extent required by applicable laws and regulations.Ladies and gentlemen, at this time I would like to turn the conference over to Magdalena Moll, Head of Investor Relations. Please go ahead, madam.Yes thank you very much,www.victorbowl.com/Documentation/StarterKit/images/doubt.html, Jason and good morning, ladies and gentlemen. On behalf of BASF team, I would like to welcome you to our first quarter 2012 conference call. BASF had a good start into the year 2012.With me on the call today to explain the results are Hans Ulrich Engel, our Chief Financial Officer and Manfredo Rubens, President of the Finance Division. Hans will summarize the key financials, highlight important milestones of the first quarter and review the segment results for you. Afterwards Hans and (inaudible) will be happy to take your questions.Since we have our annual channel meeting immediately after this call, we have limited today's conference call to one hour.And with that, I would like to hand over to Hans.Thank you very much Maggie. Ladies and gentlemen good morning and thank you for joining us. After rather slow fourth quarter 2011, we have seen a significant improvement in business activities since the beginning of the year. however in line with our assumptions, demand in our chemical activities could not match the level of the exceptional lease drawn first quarter 2011 which benefited from high consumption and restocking effects. The market environment for agricultural solutions as well as the oil and gas businesses on the other hand was quite favorable leading to a good start in to 2012. In the first quarter we increased sales by 6% to 20.6 billion euros. Overall volumes were flat. Volumes in our chemical activities declined by 5% due to lower demand as well as the modification of an earning's neutral swap for better products. We were able to successfully raise prices by 5%. Higher raw material costs could not be fully passed on to the market.EBITDA amounted to 3.9 billion euros,foresightled.zippaserv.co.uk/cart/paypal-express-checkout/overcoatgfhg.html, up 16% versus the first quarter of last year. EBITDA as well as EBIT were positively impacted by the disposal gain of our fertilizer activities in Belgium and France in the amount of 645 million euros. EBIT before special items came in at 2.5 billion euros,cbtraining.zippaserv.co.uk/Styles/dmxEditor/jvhuvex.html, 7% below the record first quarter of last year. Net income was 1.7 billion euros, 28% lower than a year ago. Last year's results included a capital gain of close to 900 million euros from the sale of our stake in K+S. Adjusted earnings per share were 1.57 euro in Q1 2012 after 1.94 euro in Q1 2011.In the first quarter we achieved important milestones. We significantly strengthened our activities in battery materials through several small acquisitions. In January we announced the acquisition of a stake in Sion Power, the global leader in the development of lithium sulfur batteries. In February, we bought Ovonic,fence-tech.co.uk/assets/newspics/inside.html, the global leader in nickel metal hydrate battery technology. We also signed a purchase agreement for Merck's electrolyte activities. The transaction was closed last week. And just yesterday we announced the acquisition of Novolyte Technologies, the manufacturer of electrolyte formulations for lithium batteries. With production sites in Europe, the United States and Asia Pacific region, we are now positioned as the global supplier in the electrolyte formulation business. Last but not least, our battery material plant in Ohio is on track to start operation in Q4 this year. All these above, support our goal to become the leading supplier of batter materials.Last month we signed an agreement with Petronas for the expansion of our existing joint venture in Kuantan, Malaysia and the construction of a number of new downstream plants at Petronas new integrated rapid complex in south (inaudible) next to Singapore. The projects are to be implemented between 2015 and 2018. In total, we planned joint investments of 1 billion euros.Finally, at the end of Q1 we completed the sale of our fertilizer activities. We realize the disposal gain of 645 million euros which was booked as special item in other.Now I will explain the financial performance of our business segment in more detail. The basis of comparison is the first quarter 2011. In the chemical segment, we generated higher sales. The Styrolution joint venture contributed positively to the topline because feedstock sales to the joint venture are now reported as third party sales which are shown as structural effect. Volumes dropped mainly due to an earnings neutral swap agreement for propylene which became effective in Q3 of 2011. On a comparable basis, volumes increased slightly. Due to ongoing high raw material prices,www.blakarkmedia.com/formscripts/hou/hgyfcz.html, EBIT before special items did not reach the high level of Q1, 2011. In petrochemicals, sales increased significantly. Prices for cracker product moved up by a year. Prices for all other product lines were below the very high prior year levels. Margins declined because we could not fully pass on the high raw material costs to our customers. Overall,www.northeastineurope.org.uk/helpers/state.html, EBIT before special items was considerably lower.In intermediate, sales decreased slightly. Demand was high from key customer industries,www.gateandfence.co.uk/scripts/border/parka.html, such as plastics and coatings but did not match the very good level of the previous year. Thus volumes and margins declined. Consequently EBIT before special items came in lower. Sales in inorganics was stable. EBIT before special items did not match the very good level of Q1 2011 mainly due to lower margins in basic products.In our plastic segment, sales decreased. Price increases could not compensate for considerably lower volumes. The record margins for polymer precursors and polyurethanes generated in Q1 2011 could not be sustained. Earnings was substantially below the excellent level of the previous year.In performance polymers,townandcountryok.com/DesktopModules/HTML/Images/event.html, sales were slightly lower. Slow textile fiber demand in Asia led to lower volumes and margins for capital (inaudible). On the other hand, continuously strong demand from the automotive industry particularly in North America lifted sales in engineering plastics. Home sales exceeded the prior year quarter based on healthy demand from the construction and packaging industries. However, EBIT before special items grew up substantially mainly to a margin decrease. Sales in polyurethanes were down moderately. Sales for the appliance and construction industries weakened but demand from the automotive sector remained robust. The scheduled turnaround of our guide negatively impacted volumes. We continue to pursue our value before volume strategy and successfully implemented price increases for TDI and MDI. As a result, we saw margins in both TDI and MDI recovered during the quarter. EBIT before special items was significantly below prior year given lower volumes to margins.Sales in performance product was stable. Demand for several product lines was lower than a year ago. In the prior year ago, we benefited from tight markets in several products. However,www.capricornmortgages.co.uk/img/thumbnails/jacket.html, price increases in positive currency effects compensated for lower volumes. As we could not fully pass on high raw material costs, margins were softer and EBIT before special items declined.Dispersions Pigments sales rose significantly driven by higher volumes and prices. Pigment sales were strong in North America, but softer in Asia and Europe. Due to higher costs of idle capacities and an unfavorable product mix effect,www.northeastineurope.org.uk/helpers/step.html, EBIT before special items fell short of the prior year.In Care Chemicals, sales decreased. The challenging competitive environment let to lower volumes overall. Specialties however continue to perform strongly. Hence price increases could not fully offset higher raw material costs, EBIT before special items fell significantly.Sales in nutrition and health increased slightly due to continued good demand in nearly all businesses, some are short lower volumes. Margins and vitamins were affected by higher raw material costs which could not be passed on fully. EBIT before special items was down on softer margins.In Paper Chemicals, we made substantial progress in our restructuring efforts. We were able to increase sales although the market remained challenging. EBIT before special items improved benefiting from higher selling prices and fixed cost reductions.Sales in performance chemicals slightly increased. To compensate for higher raw material costs, we raised prices. In a competitive market environment, volumes were below the previous year. As a consequence,www.boultonsskiphire.co.uk/examples/theme/husjf.html, EBIT before special items decreased.In our functional solutions segment,gates.zippaserv.co.uk/image-upload/style/plasrt.html, we slightly increased sales. Demand from the automotive industry, especially from premium car manufacturers improved further. Lower precious metal prices and volumes however, had an offsetting effect. EBIT before special items improved. Sales in catalyst dropped slightly due to lower prices in volumes and precious metal trading while we experienced high demand for mobile emissions and chemical catalysts. EBIT before special items increased due to the good volume growth in mobile emissions and chemical catalysts.Sales in construction chemicals grew by 7%. Demand in Asia and South America remained favorable and North America showed a first positive development.Business in Europe was affected by the cold weather and continuing weakness in Southern Europe. We increase prices in all regions. EBIT before special items slightly increased in this seasonally weak quarter.In coatings,gates.zippaserv.co.uk/image-upload/style/plmjhvs.html, sales were up due to the continued high demand in particular, from premium car manufacturers as well as good business in Asia and North America. In decorative paints, sales declined due to lower volumes. We realized price increases across all regions and for all major product lines. EBIT before special items almost matched the good level of the previous year.
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