On May 4, at the BASF Annual General Meeting held at the Rose Garden Conference Center in Mannheim, Germany, Dr. Berkeley, the Chairman of the Executive Board of BASF Europe, commented on the company’s first-quarter earnings growth: “We are pleased to see 2018. BASF's achievements in the first quarter, we have a good start this year. '
In the first quarter of 2018, BASF Group's EBIT before special items was EUR 2.5 billion, which was a year-on-year increase of EUR 55 million. This was mainly attributable to the significant increase in revenue from chemicals and oil and natural gas operations. Sales decreased by EUR 211.0 million year-on-year. , for 16.6 billion euros, due to the negative exchange rate factor (-8%) impact of each business area. Higher sales price (+5%), especially the two business areas of chemicals and functional materials and solutions, And the increase in sales (+2%) had a positive impact on sales. In addition to the feature product business area, sales in other business areas have increased.
EBIT increased by 70 million euros year-on-year to 2.5 billion euros; income before income tax and minority shareholders’ equity increased by 36 million euros to 2.3 billion euros year-on-year. The tax ratio increased from 22.9% to 24.7%, mainly in relation to higher taxes in Norway The country’s corporate income increased. Net income decreased by 30 million euros from the same period in 2017 to 1.7 billion euros. Earnings per share for the first quarter of 2018 were 1.83 euros, compared with 1.86 euros for the same period in 2017. Adjusted for the amortization of special items and intangible assets After that, earnings per share were 1.93 euros (in the first quarter of 2017, it was 1.97 euros).
The cash flow from operating activities in the first quarter of 2018 reached 1.2 billion euros, an increase of 398 million euros over the same period of last year. This was mainly due to the lower proportion of net working capital, the main growth factor was from accounts receivable, and the main offsetting factor was from the lower Amortization and depreciation of intangible assets and properties, production equipment and equipment. Free cash flow in the first quarter of 2018 increased by 66 million euros year-on-year to 604 million euros. Increased cash flow from operating activities and lower property, production facilities, equipment and The cost of intangible assets is the main factor in the increase of free cash flow.
At the annual general meeting of shareholders, Dr. Berkeci confirmed the outlook for the entire year of 2018. He will withdraw from the Executive Board of BASF Europe after the meeting, and Dr. Bo Lele will take over as Chairman of the Board of Directors. Barry Le has entered BASF Europe since 2006. The company's executive board of directors, and served as vice chairman of the board of directors since 2011, and has been the chief technology officer since 2015. After the annual shareholders meeting, Dr. Hans-Ulrich Engel, current chief financial officer of BASF Europe, will serve as the executive board of directors. Vice President.
Proposed dividend of 3.10 euros per share
BASF Europe's executive board and board of supervisors have proposed an increase in dividends at the annual general meeting of shareholders. Each share increased 0.10 euros to 3.10 euros. Based on the closing share price of 91.74 euros at the end of 2017, BASF shares once again provided a high dividend return of 3.4%. Annual shareholders meeting After adopting relevant resolutions, a total of 2.8 billion Euros will be paid to shareholders of BASF Europe on May 9. Berkeley told shareholders at the Rose Garden Convention Center in Mannheim: 'BASF’s dividend policy represents reliability and sustainability. This is our consistent commitment. '
2018 outlook confirmation
BASF’s forecast for the global economic environment in 2018 remains unchanged:
Global Economic Growth: +3.0%
Global industrial production growth: +3.2%
Global Chemical Production Growth: +3.4%
Average EUR/USD exchange rate: 1 EUR to 1.20 USD
Average crude oil price (Brent): $65 per barrel
BASF confirmed the forecast for the Group's sales and revenues for the year 2018 in the 2017 annual report: BASF Group's sales and pre-tax income excluding special items will increase slightly, and EBIT will decline slightly. Bokaci said: 'We It is hoped that before 2018, BASF Group's EBIT without special items will receive a slight increase. Do not underestimate this goal, because in 2017 BASF has already achieved a good performance.
Performance of Business Areas in the First Quarter of 2018
Sales in the chemicals business area was 4.3 billion euros, slightly higher than the same period of last year (Q1 2017: 4.1 billion euros). This was mainly due to higher selling prices of monomer and intermediate products and sales of petrochemicals business. However, sales were negatively affected by the exchange rate factor, mainly related to the U.S. dollar. Thanks to higher profits and sales, BASF’s pre-tax income excluding special items increased significantly by more than EUR 1.1 billion, compared to Q1 2017. An increase of 18% over the previous year.
Sales in the feature product business area fell sharply from the same period last year to about 4 billion euros (Q1 2017: approximately 4.3 billion euros). This is mainly due to the fact that all businesses in this sector were dominated by U.S. dollars. The negative impact of the exchange rate factor. The Division of Nutrition and Health and the Care Chemicals slowed sales growth due to the decline in sales volumes and changes in the product mix. BASF was able to increase its selling price and make adjustments based on exchange rate effects, resulting in an average profit margin Some increase. Ex-benefit before special items was mainly affected by the negative impact of exchange rate factors, which was a slight decrease of 45 million euros to 470 million euros.
Sales in the functional materials and solutions business area was 5.1 billion euros, a slight drop from the same period of the previous year (Q1 2017: 5.2 billion euros). Rising prices and small sales volumes did not completely offset the negative impact of exchange rate factors. As a result of falling profits and rising fixed costs, EBIT without special items dropped sharply to EUR 333 million (Q1 2017: EUR 513.1 million).
Sales volume in the agricultural solutions business area was 1.7 billion euros, a year-on-year decrease of 7%. This was mainly due to the negative impact of exchange rate factors in all regions. In particular, sales in North America also declined slightly due to the decline in sales prices. On the contrary, the sales volume has improved. The performance of the northern hemisphere has been frustrated by the long and cold winter. The EBIT without special items was 423 million Euros, much lower than the same period of last year (Q1 2017: 533 million Euros). This is mainly due to the negative impact of exchange rate factors, as well as the increase in fixed costs in areas such as production and research.
Sales in the oil and natural gas business area increased significantly year-on-year. Sales increased by 14% compared to the previous year to 945 million Euros. This was mainly attributable to the increase in prices, the increase in Norwegian production and the increase in trading volume. The average price of Lent crude oil is US$67/bbl (Q1 2017: US$54). Natural gas prices in the European spot market have also increased significantly year-on-year. Some of these were offset by dollar-based exchange rate factors. EBITDA without special items The previous earnings also improved significantly, which was a year-on-year increase of 195 million euros to 365 million euros.
Sales in other business sectors decreased by 9% year-on-year, mainly due to other factors such as the decline in sales of technical materials, workshops and engineering services. The significant increase in pre-tax income excluding special items was mainly attributable to the valuation of long-term incentive plans. effect.