UK: BASF confirms outlook for 2008 and presents longterm financial goal

At an analyst conference held today in London, BASF has confirmed its outlook for 2008 despite signs of weakening growth in the chemical industry. For the current year, the company has revised its expectations for growth in global chemical production from 2.8 percent to 2.4 percent. For 2008, BASF is now assuming an average oil price (Brent) of $120 per barrel and an average exchange rate of $1.55 per euro.

“I am confident that BASF will achieve its goals for 2008 despite the rise in oil prices and the associated significant increase in raw material prices,” said Dr. Jürgen Hambrecht, chairman of BASF. “Assuming that there are no changes to BASF’s portfolio, we aim to increase sales and to improve EBIT before special items slightly in 2008.”

At the same time, BASF presented a long-term financial goal: For the next five years, the BASF Group aims to achieve an EBITDA margin of 18 percent. The EBITDA margin is a measure of the profitability of a company. It is calculated as income from operations before depreciation and amortization as a percentage of sales. This goal is based on the following long-term assumptions: an unchanged portfolio, an oil price (Brent) of $100 per barrel and an exchange rate of $1.40 to $1.50 per euro. In the same period, BASF aims to post average volume growth two percentage points above the chemical market.

Against the background of an increasingly difficult global economic environment, Hambrecht pointed out the advantages of having a portfolio that has been focused on profitable growth markets over the past years. For example, specialty products, which are faster growing than commodities, now account for 63 percent of sales (excluding Oil & Gas and precious metals trading) compared with 54 percent in 2003. As a result, BASF is now in a better position to deal with economic fluctuations than in the past. BASF’s acquisitions of Engelhard, Degussa Construction Chemicals and Johnson Polymer in 2006 have contributed substantially to this development.

New products and the use of innovative processes are expected to contribute significantly to growth in the coming years. In terms of patents, BASF is a global leader with a portfolio of almost 130,000 patents and patent applications.

About BASF

BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from oil and gas to chemicals, plastics, performance products, agricultural products and fine chemicals. As a reliable partner BASF helps its customers in virtually all industries to be more successful. With its high-value products and intelligent solutions, BASF plays an important role in finding answers to global challenges such as climate protection, energy efficiency, nutrition and mobility. BASF has more than 95,000 employees and posted sales of almost €58 billion in 2007. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (AN).

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Added: July 8, 2008 Source: Agencies
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