BASF Beats Estimates with Crop Chemicals Lift
BASF became the latest chemicals company to get a boost from pesticides, helping it to a bigger-than-expected gain in quarterly operating income.
The German group, the world's largest chemicals company by sales, said on Friday that first-quarter earnings before interest and tax (EBIT), adjusted for one-off items, rose 10.1% to €2.21 billion ($2.88 billion), beating the €2.14 billion average estimate in a Reuters poll of analysts.
It also confirmed its full-year outlook for an unspecified increase in sales and adjusted EBIT.
The role of pesticides as a main contributor to chemical sector earnings become evident earlier this month as BASF's largest U.S. rivals, Dow Chemical and Dupont, reported strong results.
So far this year, bellwether agricultural commodities such as corn, wheat and soy have been trading well above last year's prices, despite a recent decline. This means farmers get a higher return on the money they spent on yield-boosting pesticides and fertilizer.
But weaker demand in other important customer markets such as automotive, electronics and construction, particularly in Europe, have dimmed specialty chemical makers' earnings prospects this year.
Diversified healthcare group Bayer on Thursday lowered forecasts for its plastics and chemicals unit.
BASF was no exception, as units focusing on highly specialist industrial chemicals and plastics posted declines in earnings.
"The market remains volatile," BASF said. Global economic growth would pick up only slightly in 2013, with no "straight-line trend" to be expected.
