Positive second quarter earnings for BASF
During the second quarter of this year, all of BASF's segments posted positive earnings before special items. The Oil & Gas segment did particularly well with sales increasing almost 30 per cent compared with 2000. In the Agricultural Products & Nutrition segment, second-quarter sales in the Agricultural Products division were up more than 40 per cent and income from operations before special items climbed almost 17 per cent to E133 million ($119 million) compared to 2000.
In Chemical businesses, the higher than expected year's average price for Brent crude oil resulted in unusually volatile naphtha prices which are continuing to put BASF's margins under pressure. Given the current economic conditions, BASF is expecting to achieve its aim of increasing its income from operations before special items by an average of 10 per cent per year, from 2000 through to 2002. It is not, however, expecting to achieve the same good full-year results as 2000.
The group has meanwhile implemented a series of co-ordinated programmes and initiatives including achieving annual cost advantages of E400 million by streamlining the organisation globally. BASF expects to save an additional E160 million by the end of 2002 by further optimising its global procurement of technical goods and services. Site and plant closures will lead to cost savings of E190 million, and there will be a reduction in capital expenditures in 2002 of E400 million in line with changed expectations in the market. The group is also intending to reduce its global workforce by a further 1,200 in the coming 18 months bringing the total number of job losses to 4,000. To implement this package of measures, BASF recorded special items of almost E450 million in the second quarter, related mainly to current and future site and plant closures as well as accelerated restructuring. In particular, E126 million is associated with the site in Birkenhead in the UK, which will not be rebuilt following a fire.
