Storm clouds are gathering on the horizon, as the somewhat weaker third-quarter results show, but German multinational chemical players BASF, Bayer, Evonik and Lanxess still expect to meet earnings forecasts for 2012, which in most cases foresee further improvement against the record 2011 results. Not least the comparison of Q4 2012 with the poor 2011 quarter will pad the bottom line.

BASF business holds up in Q3
BASF, the world's largest chemical company, "maintained its good performance" in the third quarter, CEO Dr. Kurt Bock told journalists in a telephone conference. Following a "solid first half," he said sales revenue increased by almost 7% to €19 billion, with earnings before interest taxes and amortization (EBITDA) up by more than 8% to €2.8 billion. Thanks especially to the resumption of the Oil & Gas division's exploration in Libya, volume sales rose 7%.While selling prices fell by 4%, more favorable currency translations padded the balance by 6%.
For the fourth quarter, Bock the Ludwigshafen group does not expect an upturn in the global economy. However, management still intends to top the 2011 record sales levels and operating income before special items. While visibility for the next few months is limited, due especially to the euro crisis and stagnation in China, Bock said opportunities could arise from stronger growth in the global economy and customer industries.

Bayer confident of meeting 2012 targets
In Leverkusen, Bayer CEO Dr. Marijn Dekkers said he is also confident of meeting the forecast year-on-year earnings growth of 4-5% in 2012, adjusted for currency and portfolio effects. This is despite a "difficult" third quarter, in which EBITDA before special items rose by only 2.2% to €1.84 billion on the back of sales growth of 5.5% to €9.7 billion. Bayer was pleased by the upward trend in its life sciences business, despite high litigation costs for oral contraceptives.
EBITDA of the HealthCare sub-group rose 5.8% to €1.3 billion, while the adjusted EBITDA margin fell from 29.2% to 27.5%. At CropScience, EBITDA before special items rose 14.5% to €189 million, but the margin deteriorated from 12% to 11.5%. Despite higher volumes and turnover, adjusted EBITDA of MaterialScience sank by 4.3% to €333 million. The margin receded by 1.5% to 11.1%, as high raw material costs could not be passed on in full.

Evonik "doing well" despite slowdown
"We are still doing well in difficult conditions," Evonik CEO Dr. Klaus Engel said in presenting the Marl group's Q3 results. In the three months from July to September, sales declined 8% to €10.4 billion but were stable when adjusted for the divestment of the carbon black business to private equity investors at the end of July 2011. EBITDA slipped back 2% to €731 million, due in part to the deconsolidation. The adjusted EBITDA margin improved "slightly" to 20.2%. For 2012 Engel sees operating results "probably" in line with the "excellent" 2011 level.
Adjusted EBITDA of the consumer, health and nutrition business rose by 2% to €822 million, while its EBITDA margin sank 0.7% to 26.7%. In the inorganic materials and coatings & additives activities, now called Resource Efficiency, adjusted EBITDA plunged by 17% to €540 million. Specialty Materials, including performance polymers and advanced intermediates, saw adjusted EBITDA fall 9% to €671 million and its margin slip 1.7% to €739 million. Engel said the shortfall caused by a fire in a plant for polyamide feedstock CDT was largely offset by insurance reimbursements.

Lanxess still optimistic after Q3 setback
At Lanxess, Q3 was strewn with stumbling blocks. Overall sales fell by 7.6% to €2.2 billion and EBITDA pre-exceptionals by 18% to €255million, due mostly to what CEO Dr. Axel Heitmann said was "massive destocking and increasing nervousness" by customers in the Performance Polymers segment, which has close ties to the automotive industry. EBITDA of the segment, by far the company's largest, fell by 28.5% to €152 million. By contrast, EBITDA of the small Advanced Intermediates business rose by 10.3% to €75 million. In Performance Chemicals, EBITDA was flat at €75 million.
The Leverkusen-based company still expects to partly achieve its earnings goals for 2012, Heitmann said. Here, the comparison of Q4 2012 with the dismal quarter of 2011 will have a bolstering effect. Less optimistic than a few months ago, however, Heitmann said management now expects growth to be at the "lower end" of 5-10% increase in EBITDA pre-exceptionals forecast earlier.