BASF SE share price down, Q4 profit tops projections

The worlds biggest chemical manufacturer – BASF SE – reported on Friday that fourth-quarter profit beat analysts projections, driven by strong performance in the chemicals division and lower oil prices.

According to the companys statement, earnings before interest, tax and one-time items rose by 2.8% to €1.46 billion ($1.64 million), topping analysts forecasts of €1.38 billion.

On an adjusted basis, net profit came in at €1.41 billion ($1.59 billion), 26% above last years €1.13 billion and easily topping analysts forecasts of €922 million. This brought full-year earnings to €5.15 billion, compared to €4.79 billion in 2013.

“We have our costs firmly under control,” BASF shared in the statement, adding that it expects sales to slightly increase over the current fiscal year, while EBIT before special items should match last years level.

Fourth quarter revenue fell by 0.6% to €18.05 billion in the three months through December due to lower sales prices linked to cheaper oil, but still topped analysts projections of €17.7 billion. Full-year sales marked a 0.5% jump to €74.3 billion. The chemical manufacturer also intends to propose a dividend amounting to €2.80 per share, up by €0.10 compared to last year.

The fourth quarters upbeat results came amid a strong showing in the companys chemicals and agricultural divisions, but the recent oil price rout caused a 31% decline in the oil and gas units adjusted profits.

“A year ago, no one could have foreseen that the price of oil would plummet from $110 per barrel to a price as low as $50 per barrel for Brent crude,” said BASF CEO Kurt Bock.

The company sounded a cautious note on its outlook for the current year, with the German chemical association earlier this week reversing a forecast for sales growth in 2015 amid weaker demand from Europe and rising competition.

“Oil and raw material prices are volatile, as are currencies,” Mr. Bock said. “The emerging markets are growing more slowly and the global economy is being damped by geopolitical conflict.”

BASF SE fell by 1.57% on Friday to close at €85.65 per share in Frankfurt, marking a one-year change of +4.45%. The company is valued at €78.67 billion. According to the Financial Times, the 30 analysts offering 12-month price targets for BASF SE have a median target of €82.00, with a high estimate of €105.00 and a low estimate of €60.00. The median estimate represents a -4.26 % decrease from the last price of €85.65.