BASF Signals Sales, Profit Beat on Chemical Demand Rebound

(Bloomberg) -- BASF SE, the world’s largest chemical company, posted better-than-expected preliminarily earnings for the fourth quarter amid a rebound in demand for plastics.

BASF sees adjusted earnings before interest and taxes rising to 1.1 billion euros ($1.3 billion) and sales climbing to 15.9 billion euros in the three months through December, the company said Wednesday. Both figures were higher than the year-earlier period and beat analysts’ estimates.

BASF’s upbeat report suggests that the chemical industry is emerging from a broad slowdown across sectors from automotive to construction. Like polyurethane maker Covestro AG, which raised its guidance late last year, BASF is likely seeing margins improving in some of the basic materials that form the backbone of so many everyday goods and components.

BASF rose as much as 2.1% in Frankfurt trading, valuing the Ludwigshafen, Germany-based company at about 62 billion euros.

The results indicate BASF is set for its biggest earnings upgrades since the end of the global financial crisis, said Sebastian Bray, an analyst at Berenberg.

“The big questions around dividend, capex and the margin performance of downstream segments will likely remain until at least the full results on Feb. 26,” Bray said by email.

Plastics Boost

Materials, chemicals and industrial solutions, comprised of additives used in plastics, car parts and electronics, helped bolster earnings, BASF said. Weak points included coatings sales and the company’s crop-chemical and seed division.

The company said it expects full-year adjusted Ebit to come in at 3.56 billion euros, up from its forecast of as much as 3.3 billion euros in October.

Any improvement in oil-and-gas markets should enable BASF to move ahead with the planned initial public offering of its Wintershall Dea energy arm, said Bray, the Berenberg analyst.

Proceeds from the sale would help Chief Executive Officer Martin Brudermueller as he embarks on a phase of significant investments, including building a new chemical plant in China.

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