Costs a concern for Hambrecht

Raw materials costs are the main barrier to BASF’s smooth progress in 2005, says chairman Jürgen Hambrecht. Reporting an 11% increase in first-quarter sales to €10billion, with high capacity utilisation contributing to ‘significant’ increases in margins and earnings in the chemicals and plastics sectors.

Almost all of the growth in sales was due to price increases, although sales volumes were higher in the first quarter. Earnings before special items climbed by 33%, to €1.6billion.

The contribution of the Basell polyolefins joint venture with Shell was particularly important. BASF is planning to divest its share in this business, with an announcement expected imminently.

For the coming year, Hambrecht expects global chemicals production to grow by some 3%, with wide variations from region to region. Oil prices are likely to remain high, with the average forecast price of Brent crude around $45 per barrel. However, Hambrecht expects earnings to increase to match or even exceed last year’s record figure.

‘Demand for our products remains strong,’ Hambrecht says. ‘We are attempting to counter very high raw materials costs, which are continuing to rise in some cases, with further price increases. We are also rigorously implementing our restructuring measures to ensure our long-term competitiveness.’