* Considers spending more than 1 bln eur on U.S. plant
* Q1 adj EBIT down 3 pct at 2.1 bln eur, in line with poll
* Sticks to outlook for slight increase in 2014 adj EBIT
(Adds CFO comment on investment plans, shares)
By Ludwig Burger
FRANKFURT, May 2 BASF, the world's
No.1 chemicals company by sales, said it could spend more than 1
billion euros ($1.4 billion) to build a petrochemical plant in
the United States, joining global peers attracted by cheap shale
Natural gas is about three times cheaper in the United
States than in Europe, encouraging BASF to redirect investment
away from its home region, which still accounts for more than
half of group sales.
The planned plant on the U.S. Gulf Coast - which would be
BASF's largest investment in a single facility - would convert
natural gas into propylene, a key building block for advanced
materials such as insulation foams, lubricants and
superabsorbants for diapers.
BASF is seeking to curb its reliance on suppliers of
propylene, and more in-house production will give it flexibility
to make more advanced products that need propylene as input,
finance chief Hans-Ulrich Engel said.
The German firm announced the possible U.S. investment along
with first-quarter results. Operating profit fell 3 percent as a
decline in foreign currencies against the euro - which lowered
the value of revenue from overseas markets - offset higher sales
volumes of farming pesticides and precursor chemicals.
BASF said it was still in the early planning stages for the
American plant, and gave no timeframe, but it has a track record
of following through with big investments after going public
"We are currently in a net buyer position for propylene.
That's the key driver for considering an investment," Engel told
analysts in a conference call.
Propylene has mainly been made from the oil distillate
naphtha, but cheap shale gas from hydraulic fracturing, or
fracking, is gaining importance as a feedstock.
The company is not alone in looking to the United States.
Lobby group the American Chemistry Council said in February that
the value of planned chemical industry investment projects
linked to shale gas had topped $100 billion, more than half of
which is from firms based outside the United States.
Shares in BASF were up 0.2 percent at 1045 GMT, hovering
near a record high, outperforming the STOXX Europe 600 Chemicals
index which was down 0.4 percent.
First-quarter earnings before interest and tax (EBIT),
adjusted for one-off items, slipped 3 percent to 2.1 billion
euros ($2.9 billion), broadly in line with the 2.12 billion euro
average estimate in a Reuters poll of analysts.
BASF's business in North America was the only regional
division that achieved a rise in first-quarter operating
earnings, up 8 percent on strong demand for basic petrochemicals
as well as herbicides and fungicides.
That compared with a 1 percent decline in Europe due to an
unusually mild winter which led to lower demand for heating gas,
and a 29 percent drop in Asia where there was weaker demand for
Group profit was hit by a depreciation of the dollar against
the euro, as well as a decline of emerging market currencies
such as the Brazilian real and the Malaysian ringgit
BASF said that despite unfavourable currency shifts, it
continued to target a slight increase in adjusted EBIT this
($1 = 0.7212 euros)
(Additional reporting by Frank Siebelt in Mannheim; Editing by
David Goodman and Pravin Char)