BASF SE ( BASFY.PK)

Q3 2011 Earnings Call

October 27, 2011 5:00 AM ET

Executives

Magdalena Moll – SVP, IR

Kurt Bock – Chairman

Hans-Ulrich Engel – CFO

Analysts

Tony Jones – Redburn

Martin Rödiger – Cheuvreux

Mutlu Gundogan – RBS

Jaideep Pandya – Berenberg

Neil Tyler – JP Morgan

Thomas Gilbert

Laurent Favre – Merrill Lynch

Peter Spengler – DZ Bank

Ronald Köhler – MainFirst

Andrew Benson – Citi

Lutz Grüten – Commerzbank

Jenny Barker – Nomura

Andreas Heine – UniCredit

Jan Hein de Vroe – ING

Annett Weber

Richard Logan – Goldman Sachs

Jeremy Redenius – Sanford Bernstein

Peter Clark – Société Générale

Norbert Barth – WestLB

Paul Walsh – Morgan Stanley

Presentation

Operator

Good morning, ladies and gentlemen. This is the Chorus Call Conference operator. Welcome to the BASF Interim Report Third Quarter Results 2011. As a reminder, all participants are in listen-only mode and the conference is being recorded. (Operator Instructions)

This 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 herein. 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, 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 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 the Investor Relations. Please go ahead, madam.

Magdalena Moll

Thank you, Jason and good morning, ladies and gentlemen, and welcome. On behalf of the entire BASF team, I’m delighted that you could join us for third quarter 2011 conference call. BASF, again, delivered good results in Q3. In today’s conference call, we would like to provide you with further details and our performance in the third quarter, share with you our updated economic forecast and confirm our outlook for the full year 2011.

With me on the call today to explain the results are Kurt Bock, our Chairman of the Board of Executive Directors; and Hans-Ulrich Engel, our Chief Financial Officer. After the presentation, the two gentlemen will be available to take your questions. We have posted the numbers and charts which will be discussed during this call as well as the press documents in our Web site at basf.com/share.

I will now hand over to Kurt Bock.

Kurt Bock

Thank you, Maggie and good morning also from my side, ladies and gentlemen. As you certainly noticed, we changed the time of our call from the afternoon to the morning. I hope this doesn’t make it too much of an early bird session for some of you but there was an overwhelming demand of getting some guidance already in the morning and not having to be waiting in the afternoon.

So where are we? BASF, again, posted good results in Q3 2011. Sales rose by 12% to EUR17.6 billion compared to the same quarter last year. Successful price increases in all our segments contributed 14 percentage points to sales growth. Another 5 percentage points came from the acquired Cognis businesses.

Volumes, on the other hand were slightly below the very strong third quarter of the previous year due to 25% lower volumes in the Oil & Gas business as a result of the suspension of our oil production in Libya in the beginning of this year. Currencies, in particular the weakening of the U.S. dollar had a negative sales effect of 4%.

Volumes in our chemical activities were stable year-over-year. Adjusted for special effect resulting from the optimization of our supply chain of cracker products in North America, volumes in our chemical activities increased by 1% compared to last year. Hans will explain this in more detail in a minute.

EBIT before special items amounted to EUR2 billion and that was 11% below the very strong result of Q3 2010. Adjusted to Libya which contributed EUR355 million in last year’s quarter, EBIT before special items increased by 6% compared with last year. At EUR1.2 billion net income came in slightly below the previous year figure. Adjusted earnings per share were EUR1.52 and matched the level of last year.

In the last month, we achieved further important milestones to optimize our portfolio. On October 1, Styrolution, the 50/50 joint venture between BASF and INEOS began operating independently from its parents. With pro forma sales of EUR6.4 billion in 2010, Styrolution is the global market leader in industry. Given the higher value of our assets, we received a payment of EUR600 million at the beginning of October.

The new joint venture will be consolidated at equity and as of Q4, the equity income will be reported in the financial result. In addition, the disposal result will be booked as a special item in the EBIT of other in the fourth quarter of this year. At the end of September, we also reached an agreement with EuroChem to sell our fertilizer activities in Antwerp. The total transaction volume – value is in the range of EUR700 million. Divestment is subject to approval by the appropriate antitrust authorities and we expect closing by the end of the first quarter of 2012.

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