BASF still sees FY profit up, boosted by oil unit

FRANKFURT Thu Jul 26, 2012 2:00am EDT

Flags of the German chemical company BASF are pictured in Monheim April 20, 2012. REUTERS/Ina Fassbender

Flags of the German chemical company BASF are pictured in Monheim April 20, 2012.

Credit: Reuters/Ina Fassbender

FRANKFURT (Reuters) - BASF (BASFn.DE), the world's largest chemicals maker by sales, stuck to its outlook of higher operating earnings this year, shored up by its oil and gas division, which would more than offset a decline at its core chemicals businesses.

"Our forecast is especially supported by the resumption of our crude oil production in Libya. It is unlikely that the earnings from our chemicals business will match the level of the previous year," Chief Executive Kurt Bock said.

Before the armed conflict in Libya, BASF's oil and gas unit was the second-largest foreign oil company in the North African country after Italy's ENI (ENI.MI).

After some setbacks in ramping up production there in the first quarter, BASF managed to continuously produce crude oil in Libya throughout the second quarter, it said.

The group, whose products range from catalytic converters and car coatings to insulation foams, also said it still expected group sales to rise this year even as sales volumes in most of its chemicals and plastics businesses declined in the second quarter.

"The Chinese growth engine has started to stall leading to a decrease in BASF's sales in local-currency terms in Asia," he added.

Asia, which accounted for almost 20 percent of BASF sales last year and is its main growth market, has proved a headache for other global players.

Brazil's Vale (VALE5.SA), the world's largest producer of iron ore, on Wednesday cited China's economic slowdown as second-quarter profit tumbled. Engineering conglomerate Siemens (SIEGn.DE) on Thursday said major orders from China were becoming rare.

BASF's U.S. peer DuPont (DD.N) said this week it expected 2012 earnings to come in at the bottom of its prior forecast range, due in part to economic uncertainty around the globe.

BASF's second-quarter earnings before interest and tax (EBIT), adjusted for one-off items, rose by more than 11 percent to 2.5 billion euros ($3.03 billion), surpassing the 2.3 billion euro average estimate in a Reuters poll of analysts.

($1 = 0.8248 euros)

(Reporting by Ludwig Burger)