BASF Management Discusses Interim Q1 2012 Results - Earnings Call Transcript


Interim Q1 2012 Earnings Call

April 27, 2012 2:30 AM ET


Magdalena Moll – Head, IR

Hans-Ulrich Engel – CFO

Manfredo Rubens – President, Finance


Thomas Gilbert – UBS

Jeremy Redenius – Sanford Bernstein

Tony Jones – Redburn

Norbert Barth – Baader Bank

Lutz Gruten – Commerzbank

Martin Rodiger – Cheuvreux

Richard Logan – Goldman Sachs

Ronald Kohler – MainFirst

Jaideep Pandya – Berenberg

Annett Weber – BHF Funds

Paul Walsh – Morgan Stanley

Andrew Benson – Citi

Jeffery – HSBC

Peter Clark – Societe Generale

Laurent Favre – Merrill Lynch

Markus Mayer – Kepler

Martin Evans – JPMorgan



Good morning ladies and gentlemen. This is the conference operator. Welcome to the BASF Interim Report First Quarter Results 2012. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (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 the 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 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 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.

Magdalena Moll

Yes thank you very much, 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. We have posted the speech and the charts as well as all the press documents on our website

And with that, I would like to hand over to Hans.

Hans-Ulrich Engel

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, 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, 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, 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.

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