* Q2 adj EBIT 2.05 bln eur vs 2.12 bln poll avg
* BASF still sees slightly higher adj EBIT in 2014
* Says economic environment more challenging
(Adds details and background on forex effect, CEO comment)
By Ludwig Burger
FRANKFURT, July 24 BASF, the world's
largest chemicals maker by sales, became the latest euro zone
company to suffer from the strength of the euro, posting
lower-than-expected earnings growth even as sales volumes rose.
Second-quarter earnings before interest and tax (EBIT),
adjusted for one-off items, rose 12.1 percent to 2.05 billion
euros ($2.76 billion), just short of the 2.12 billion euro
average estimate in a Reuters poll of analysts.
"The devaluation of almost all major currencies against the
euro negatively impacted earnings by roughly 200 million euros
compared to the previous second quarter," Chief Executive Kurt
Bock said on Wednesday.
"We expect something similar going forward so it's a real
drag on our performance," he told Reuters Insider TV an in
Sales and net income also narrowly missed consensus
estimates, hurt also by an outage due to an accident at a Dutch
plastics raw materials plant, run jointly with Shell,
and by sluggish raw materials trading.
BASF shares were down 1.5 percent at 1100 GMT, compared with
a 0.5 percent rise in Germany's blue-chip index.
The strong euro, up more than 5 percent against the
U.S. dollar on average over the quarter, has proved a burden for
a range of European companies.
German aircraft engine maker MTU Aero Engines
blamed currency effects when it cut its sales target last week,
while Frankfurt airport's operator has said the strong
euro was putting deep-pocketed overseas travellers off shopping.
BASF said it was hurt by the weakness of the U.S. dollar
, Japanese yen and Brazilian real in
Earnings at the German group's core chemicals and plastics
businesses as well as at its oil and gas unit rose faster than
analysts had expected, helped by higher sales of petrochemicals
in North America and increased offshore oil production in Libya.
DZ Bank analyst Peter Spengler said the negative currency
effects masked an otherwise good operating performance.
"The quality of the results is good, since chemical
businesses were strong," he said, keeping a "buy" rating on BASF
The German group said that despite unfavourable currency
developments, it continued to target a slight increase in
adjusted EBIT in 2014 but warned the economic environment had
become more challenging.
BASF reiterated it aimed to increase sales volumes excluding
the effects of acquisitions and asset sales but that revenues
would decline slightly due to the divestment of its gas trading
and storage business.
($1 = 0.7431 Euros)
(Additional reporting by Angeline Ong in London and Frank
Siebelt in Frankfurt; Editing by Maria Sheahan and Mark Potter)