“BASF had a powerful start to 2011,” the world’s largest chemical company by sales said on Friday in its first-quarter report.
“Capacity utilization rates in our plants were good. In particular, demand in our chemicals business increased compared with the same quarter of the previous year.”
Key rivals such as Dow Chemical and DuPont, the largest US chemical makers, as well as Sabic, posted forecast-beating quarterly earnings in April.
Silvia Quandt Research analyst Harald Gruber said he expects BASF to raise prices for chemicals and plastics, which are in strong demand from automakers and industrial customers in booming Asia.
“This helps to generate low fixed costs per unit produced in facilities and enables producers like BASF to not only pass on higher raw material costs but to achieve a premium on top.”
Earnings before interest and tax (EBIT), adjusted for special items, jumped 40 pct to 2.7 billion euros ($3.77 billion), above the 2.4 billion euro average analyst estimate in a Reuters poll.
BASF said adjusted EBIT, excluding the effect of oil taxes that cannot be offset against German corporate taxes, would rise significantly this year.
BASF also expects to earn a high premium on its cost of capital this year, a measure it uses for setting its annual dividend payments.
That would put it on track to raise its annual payout to shareholders again next year.
At the group’s annual general meeting on Friday, investors are set to rubberstamp a dividend of 2.20 euros per share, up from 1.70 euros last year, when BASF cut its dividend for the first time in 16 years after the global economic crisis forced it to leave many plants idle.
However some investors are disappointed that BASF has not offered to restart a share buyback program this year. It stopped a series of share buybacks last year after the economic crisis struck.
In December, BASF completed the purchase of Germany’s Cognis, a maker of additives for household products, having bought Swiss rival Ciba in 2009. That made BASF the largest maker of additives for plastics and one of the biggest suppliers of paper chemicals.
Friday also marks the handover of Chief Executive Juergen Hambrecht to Finance Chief Kurt Bock, who has said BASF will continue looking for growth in Asia, although finding takeover targets there is a particular challenge.
