Despite Declining Demand, BASF Increases Sales and Earnings in the Third Quarter of 2014 - Seite 2

Outlook for the full year 2014

For the fourth quarter of 2014, BASF does not anticipate an upturn in demand. The company has adjusted its expectations for the global economy in 2014 as follows (previous forecast in parentheses):

• Growth of gross domestic product: 2.3 percent (2.5 percent)
• Growth in chemical production: 4.0 percent (4.4 percent)
• An average exchange rate of $1.35 per euro (unchanged)
• An average oil price (Brent) for the year of $105 per barrel ($110 per barrel)

Bock: "We assume that the environment will remain volatile and challenging. We nevertheless still aim to slightly raise our EBIT before special items for the year 2014." Sales are likely to decrease slightly as a result of the divestiture of the gas trading and storage business planned for this year in addition to negative currency effects.

Strategic sales and earnings targets for 2015

At the telephone conference, the company gave an update on the "We create chemistry" strategy and the related financial targets for 2015, which were originally published in 2011.

From today's point of view, BASF will not achieve its ambitious financial targets for 2015 (sales: EUR 80 billion; EBITDA: EUR 14 billion). The growth rates for gross domestic product, industry and chemical production for 2010 to 2015 are lower than originally expected:

• BASF now expects the average annual growth of global gross domestic product to be about 0.8 percentage points lower (prior assumption: 3.4 percent p.a., current assumption: 2.6 percent p.a.).
• Growth of industrial production is now assumed to be 3.4 percent p.a., versus a previous assumption of 4.6 percent p.a.
• The company now assumes the growth of chemical production to be 4.0 percent p.a. instead of 4.9 percent p.a. -- still growing well above GDP and industrial production.

Bock: "The reasons for this weak global economic development are obvious: reduced growth dynamics of emerging markets and a delayed recovery in the European economy." In addition, there has been higher than expected margin pressure for some basic products and partially in the Performance Products segment. This is why BASF has initiated a restructuring program in this segment, which will contribute about EUR 500 million to earnings from 2017 onwards.