BASF to achieve higher sales for 2013

Speciality chemicals firm is targeting to increase its sales volume as well as earn a high premium on cost of capital once again this year and to exceed the 2012 restated levels in sales, which it said the expected increase in demand, together with measures to improve operational excellence and raise efficiency, will contribute to this.

BASF has also published restated figures for fiscal year 2012 due to the application of new International Financial Reporting Standards (IFRS) 10 and 11 and of International Accounting Standard (IAS) 19 (revised). The company has applied these standards since January 1 this year.. It is publishing restated figures for 2012 in order to provide a basis for comparison for its first-quarter interim report 2013 which will be published on April 26. The restated figures also reflect the changes in the company’s segment structure, which also took effect January. BASF thus has 14 instead of 15 operational divisions, which are aggregated into five instead of six segments.

The application of IFRS 10 and 11 leads to a change in the scope of consolidation at BASF. From January 1, four companies, which were previously fully consolidated and several , which were proportionally consolidated will now be accounted for in the BASF Group Financial Statements using the equity method. Overall, the application of IFRS 10 and 11 does not impact net income, but leads to lower reported sales and income from operations (EBIT), especially in the Oil & Gas segment. Net income will be slightly reduced by the application of IAS 19 (revised), which concerns the accounting for employee benefits.

Moreover, the company’s financial targets for 2015 and 2020 have been adjusted accordingly. Based on the changes of IFRS 10 and 11, BASF is adjusting the absolute values of its targets in 2015, such that sales target of EUR85 billion had been adjusted to EUR80 million; EBIDTA from EUR15 billion had been changed to EUR14 billion, whilst the EPS remains at EUR7.50. For 2020, orevious sales target of EUR15 billion had ben adjusted to EUR110 billion and EBIDTA, previously pegged at EUR23 billion had been changed tp EUR22 billion.

These adjustments do not take into account the planned asset swap with Gazprom, which is expected to close by the end of 2013. This transaction includes the divestiture of BASF’s natural gas trading and storage business as well as a share in exploration and production activities in the North Sea. Together these activities contributed about EUR10 billion to sales and roughly EUR500 million to EBITDA of BASF Group in 2012.


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