In the second quarter of 2017, BASF Group sales rose by 12% to €16.3 billion compared with the second quarter of 2016. This was largely attributable to higher prices and volumes. Amid higher raw material costs, the company raised sales prices by 7%; this was mainly driven by higher prices in the Chemicals segment. Sales volumes increased by 3%. Currency effects had a positive impact on sales and, like portfolio effects, accounted for a 1% increase.
   Income from operations (EBIT) before special items in the second quarter rose by 32% year-on-year to €2.3 billion. The sharp rise was primarily a result of the substantially improved earnings in the Chemicals and Oil & Gas segments. This increase was dampened by lower earnings in the Performance Products, Functional Materials & Solutions and Agricultural Solutions segments. The negative impact on earnings caused by the North Harbor accident at the Ludwigshafen site in October 2016 was compensated for by an insurance payment of €100 million, an amount which was predominantly booked in the Chemicals segment.
   At €1.5 billion, net income exceeded the previous second-quarter level by €404 million. Earnings per share were €1.63 in the second quarter of 2017, compared with €1.19 in the same quarter of the previous year. Adjusted for special items and amortization of intangible assets, earnings per share amounted to €1.78 (same period of 2016: €1.30).
   Cash provided by operating activities improved from €2.3 billion in the second quarter of 2016 to €3.0 billion in the second quarter of 2017. Free cash flow amounted to €2.1 billion, compared with €1.3 billion in the same quarter of the previous year. This improvement was largely the result of higher net income.

Outlook for the year 2017
Because of the positive macroeconomic development in the first half of the year, BASF now takes a somewhat more positive overall view of the underlying conditions for 2017. The company’s expectations for the global economic environment in 2017 are as follows (previous forecast in parentheses):
Growth in gross domestic product: 2.5% (2.3%)
Growth in industrial production: 2.5% (2.3%)
Growth in chemical production: 3.4% (unchanged)
Average euro/dollar exchange rate of $1.10 per euro
($1.05 per euro)
Average Brent blend oil price for the year of $50 per barrel
($55 per barrel)
   “We continue to expect a considerable increase in sales for the full year – by at least 6%. Given the considerable earnings increase in the first six months of the year, we now expect a considerable increase in EBIT before special items of at least 11% for 2017,” said Bock.
   “For the second half of 2017, we expect a slight increase in EBIT before special items in comparison to the same period of 2016. This forecast takes into account the good development in the Chemicals segment in the first half of 2017, which will likely lose momentum, as well as the weaker than originally expected oil price and U.S. dollar. These factors have a negative impact on BASF’s earnings,” said Bock.

 

 
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