BASF 2Q Net Profit Beats Views, Confirms Key Outlook

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By William Launder

Of DOW JONES NEWSWIRES

FRANKFURT -(Dow Jones)- Chemicals giant BASF SE (BAS.XE) Thursday confirmed key parts of its full-year targets as it reported a forecast-beating jump in second-quarter net profit on growth in most of its units.

The world's biggest chemicals company by sales said its net profit for the latest quarter ending in June soared to EUR1.18 billion from EUR343 million in the year-earlier period. A Dow Jones Newswires survey of 11 analysts had predicted second-quarter net profit coming in at EUR988 million.

BASF confirmed that it still eyes a "considerable" rise in earnings before interest and taxes, a premium on its cost of capital and plans to pay a higher dividend for 2010. BASF paid a EUR1.70 dividend per share for 2009.

Chief Executive Juergen Hambrecht warned, however, that the economic recovery is expected to continue at a moderate pace for the remainder of 2010, with consolidation of government budgets and winding down of stimulus programs dampening demand. The company further warned of volatile raw chemicals markets, overcapacity and political issues weighing on industry performance.

Quarterly sales were EUR16.21 billion, compared to EUR12.5 billion in the year-earlier period.

Sales in BASF's chemicals division climbed 64% during the quarter to EUR2.97 billion and plastics saw a 48% increase in quarterly sales to EUR2.58 billion on a pickup in the economy since last year. BASF said higher prices and currency effects further boosted its bottom line result for the second quarter.

Earnings before interest and taxes, or EBIT, for the quarter were EUR2.08 billion, from EUR772 million in the year ago period and beating analysts' expectations of EUR1.9 billion. EBIT before accounting for special items during the quarter was EUR2.2 billion.

BASF said it's still on track to close in November on its acquisition of German chemicals company Cognis GmbH, which it agreed to acquire in June in a EUR3.1 billion deal aimed at gaining access to the high-margin personal care and cosmetics businesses.

BASF said previously that routine plant shut-downs are expected to cost EUR100 million in the second quarter,

BASF shares closed 2.2% lower Wednesday at EUR45.33, while the broader German DAX closed down 0.5%. The stock has gained more than 30% of its value over the past 12 months.

By William Launder, Dow Jones Newswires; +49(0)6929725515; william.launder@dowjones.com