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BASF bouncing back?

By David Reed, UT EditorLudwigshafen, Germany-A massive 143-percent leap in income from its plastics businesses-including polyurethanes-has resulted in a 52.6-percent rise in total income for BASF Group’s second quarter, ending 30 June. But margins remain under pressure as raw material costs are still rising fast, the firm emphasised in a 4 August news release.Polyurethane sales, at €854 million, were 16 percent higher than in the second quarter of 2003, while first-half data showed a strong 13-percent rise in sales of polyurethanes, to €1630 million. Income data was not released for the polyurethanes business, but BASF commented that volumes and sales increased in almost all polyurethane-related product lines worldwide. “Prices could increasingly be raised over the course of the quarter,” the firm reported, adding that “high raw materials prices, in particular for benzene, toluene and propylene, continue to exert pressure on margins.”The US systems house Foam Enterprises, which was acquired in March 2004, has been successfully integrated,” BASF added. The group’s total sales in the second quarter rose to €9314 million, up 12.9 percent on the same period last year. At the same time, group income (EBIT, earnings before interest and taxes) reached €634 million, a whopping 225 percent up on the same period of last year. This increase reflects a number of factors, the firm said, including cost-reduction measures and lower German taxation. Total employment in the group fell 3.8 percent, to 85 124, the statement added.The firm’s chemicals business, which includes its amine catalysts and butanediol activities, was also a strong performer: sales up 22 percent to €1748 million, EBIT up 158 percent, to €328 million; while Performance products, which includes BASF’s coatings activities, saw more modest increases: sales up just 6 percent to €2029 million, EBIT up 57 percent to €214 million.Looking ahead, the firm said that it expected most growth in the near future to come from Asia and North America; they accounted for over 45 percent of the firm’s business in the second quarter, in terms of customer location, BASF’s data showed. At the same time, the German firm commented that “we expect prices of [our] raw materials to remain high, and in some cases to increase even further. We will continue our efforts to adjust our selling prices to this development,” BASF concluded.”

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