The world's largest producer of chemicals, Germany's BASF, has announced a considerable drop in net profit for the first quarter of this year. It has blamed the slump on rising prices for raw materials.
German chemicals giant BASF on Friday reported a 28.5-percent fall in net profit year-on-year for the first three months of 2012. It said earnings in the first quarter dipped to 1.724 billion euros ($2.3 billion), down from 2.41 billion euros in the respective period of last year.
The Ludwigshafen-based company pointed out that the steep drop in profit came despite a 6.3-percent gain in sales worth 20.59 billion euros in the January through March period.
"Higher raw material costs could only be partly passed on to customers, which put pressure on our margins," Chief Executive Kurt Bock said in an address to an annual shareholders' meeting on Friday.
BASF reported that earnings before interest and tax (EBIT) also fell during the first quarter of this year, declining 7.3 percent to 2.532 billion euros. The company's stocks were the second biggest loser in early trading of Germany's DAX-listed blue chips.
Better months to come
But the company said it expected business to pick up as the year unfolded. "Our forecast will be especially supported by the resumption of our crude oil production in Libya and by growing volumes in the chemicals segment," CEO Kurt Beck argued.
The company reactivated its oil business in Libya in October of last year following the regime change in that country, after stopping production completely during the civil war there.
BASF said fresh business momentum would be generated particularly in emerging economies in Asia and South America, with demand for chemicals rising steadily in those areas.
The German chemicals producer is planning to pay shareholders 2.50 euros per stock for 2011, up from 2.20 euros in the previous year.
hg/sgb (dpa, Reuters)