BASF SE (BASFY.PK)

Q2 2012 Earnings Call

July 26, 2012 5:00 am ET

Executives

Magdalena Moll - Senior Vice President of Investor Relations

Kurt W. Bock - Chairman of the Board of Executive Directors

Compare to:
Previous Statements by BASFY.PK
» BASF Management Discusses Q1 2012 Interim Results - Earnings Call Transcript
» BASF's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» BASF Management Discusses Q3 2011 Results - Earnings Call Transcript

Hans-Ulrich Engel - Chief Financial Officer, Member of Board of Executive Directors, Chairman of BASF Corporation and Chief Executive Officer of BASF Corporation

Analysts

Tony Jones - Redburn Partners LLP, Research Division

Martin Roediger - CA Cheuvreux, Research Division

James Knight - Exane BNP Paribas, Research Division

Norbert Barth - Baader Bank AG, Research Division

Jaideep Pandya - Berenberg Bank, Research Division

Chris Counihan - Crédit Suisse AG, Research Division

Neil C. Tyler - JP Morgan Chase & Co, Research Division

Lutz Grueten - Commerzbank AG, Research Division

Paul Richard Walsh - Morgan Stanley, Research Division

Andreas Heine - Barclays Capital, Research Division

Christian Faitz - Macquarie Research

Andrew Benson - Citigroup Inc, Research Division

Richard Logan - Goldman Sachs Group Inc., Research Division

Ronald Koehler - MainFirst Bank AG, Research Division

Peter Clark - Societe Generale Cross Asset Research

Jeremy Redenius - Sanford C. Bernstein & Co., LLC., Research Division

Thomas Gilbert - UBS Investment Bank, Research Division

Jean De Watteville - Nomura Securities Co. Ltd., Research Division

Laurent Favre - BofA Merrill Lynch, Research Division

Peter Spengler - DZ Bank AG, Research Division

Nadeshda Demidova - equinet AG, Research Division

Martin Evans - JPMorgan Cazenove Limited, Research Division

Presentation

Operator

Good morning, ladies and gentlemen. This is the Chorus Call conference operator. Welcome to the BASF Interim Report Second Quarter Results 2012. [Operator Instructions]

The presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described here in. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation supply and demand. BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements, due to the inherent uncertainty of estimates, forecast 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 that 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.

Magdalena Moll

Yes, thank you, Jason, and good morning, ladies and gentlemen. On behalf of BASF, I would like to welcome you to our second quarter 2012 conference call. We are pleased with the business development in the first half 2012, where we exceeded the exceptionally high sales and earnings before special items of the first half of 2011.

With me on the call is today to explain the results are: Kurt Bock, our Chairman and Chief Executive Officer; and Hans-Ulrich Engel, our Chief Financial Officer. Kurt will summarize the key financials, highlight important milestones of the quarter and conclude with the outlook for the full year 2012. Hans will subsequently review the segment results of the second quarter in detail for you. Afterwards, both gentlemen will be happy to take your questions.

We have posted the charts and the speech, as well as the press documents on our website, www.basf.com/share.

And now I would like to hand over the call to Kurt.

Kurt W. Bock

Thank you, Maggie, and good morning, and welcome also from my side. The world economy experienced a turbulent first half of 2012, and we saw uncertainty increase in all regions. The deepening of the euro debt crisis overshadowed the global business sentiment in the second quarter. Concerns were also raised by the slower growth in China. All in all, chemical demand weakened more than expected earlier this year, both in the developed and the emerging markets.

In this challenging environment, BASF was able to deliver a solid second quarter. At EUR 19.5 billion, sales were 6% higher than a year ago. Our top line benefited from the weaker euro.

In agricultural solutions, we experienced excellent demand for our innovative products and delivered an outstanding quarter, the best second quarter ever.

In Oil & Gas, our strong growth was supported by improving production volumes in Libya. In our chemical businesses, however, volumes could not be maintained compared to the very strong level of the previous year's second quarter. During the course of Q2, we saw a swing towards lower raw material prices. This triggered cautious customer behavior and order delays. Overall, prices were stable.

EBITDA came in at EUR 3.1 billion, up 4% from last year. EBIT before special items at EUR 2.5 billion, significantly exceeded last year's second quarter. Special items in EBITDA amounted to EUR 261 million, and included the restructuring charges, as well as the impairment of an Oil & Gas yield development project in Norway. The tax rate increased to 39%, mainly due to non-compensable oil taxes in Libya, this broadened our net income.

Adjusted earnings per share decreased by 9% to EUR 1.60. Overall, the first half of 2012, we were able to exceed exceptionally high sales and earnings before special items of the first half of the previous year.

In the second quarter, we achieved several important milestones. With its robust local industries, India is set to become a pillar of growth in Asia Pacific. In order to ensure local supply for growing markets and industries, we have decided to invest EUR 150 million in a chemical production site in Dahej, on the West Coast of India. The new site will be an integrated hub for polyurethane manufacturing, and house our production facilities for care chemicals and polymer dispersions for Coatings and Paper. The start up is planned for 2014.

Read the rest of this transcript for free on seekingalpha.com