OSLO: BASF, the world’s largest chemical firm by sales, expects operating profit to stagnate this year due to lower oil prices and the cost of launching an unusually high number of production sites.
The company, whose products include car coatings, foam chemicals, catalytic converters and mining chemicals, said the prospects of somewhat stronger global economic growth this year were nevertheless fraught with uncertainty.
Oil and raw material prices are volatile, as are currencies. The emerging markets are growing more slowly and the global economy is being dampened by geopolitical conflict,” BASF said after releasing fourth-quarter results.
The shares dropped 3 percent by 1024 GMT, having gained almost 25 percent so far this year before Friday, while the wider chemicals market was 0.3 percent lower.
At a 25 percent premium to price-earnings multiples in the sector the “shares have, in our view, clearly run ahead of themselves,” said Kepler Cheuvreux analyst Christian Faitz.
BASF said earnings before interest and tax (EBIT) in the last three months of 2014, adjusted for one-off items, edged 2.8 percent higher from a year earlier to 1.46 billion euros ($1.64 billion), above the 1.34 billion euros expected by analysts in a Reuters poll.
Revenues from petrochemicals, used as building blocks for more advanced materials, gained 10 percent in the fourth quarter on a buoyant U.S. business and a strong U.S. dollar.
The sales rise coupled with a strong performance in farming pesticides helped offset a 31 percent slump in operating income to 347 million euros at BASF’s Wintershall oil and gas business, which produces in Russia, Norway and Libya and other countries.
