BASF expects moderate growth in 2004

BASF's figures for 2003 showed the company has strengthened its position as the world's leading chemical company.

In a difficult market environment, sales increased by 3.6% to Euro 33.4bn. Excluding currency effects, the growth would have been substantially higher and sales would have reached Euro 35.7bn.

The forecast made last November for income from operations (EBIT) before special items was exceeded: It increased in 2003 by about 4% to almost Euro 3bn. Cash provided by operating activities reached a record level of Euro 4.9bn.

EBIT in 2003 contained special charges of Euro 335m. These special charges were primarily related to restructuring measures taken to increase efficiency as part of the Ludwigshafen Site project.

'Even in very challenging times, BASF is and will remain a company that investors can count on for its financial strength, a strong potential for innovation and its reliability', said Dr Juergen Hambrecht, chairman of the board of executive directors of BASF Aktiengesellschaft at the company's Annual Press Conference in Ludwigshafen.

Dr Dr. Kurt Bock, BASF's chief financial officer said that fourth quarter results were substantially better than expected, with business picking up since October 2003, and sales in the fourth quarter increased 6.55 to Euro 8.54 billion. 'Thanks to our cost-savings program and improved capacity utilisation, EBIT before special items increased by more than 25% to Euro 814m.

According to Hambrecht, the medium-term prospects for the global economy are now somewhat more favorable: 'Throughout the world, the economy seems to have bottomed out. Upward movement is increasing; the growth markets in Asia and the United States are fueling the global recovery process.'

The company's forecast for 2004 is based on an improved investment climate and a gradually improving consumer climate, an average oil price of $28/barrel in 2004, and a U.S. dollar that continues to be volatile and weak.

In parallel with the growing demand among industrial customers, BASF expects that global economic activity in the chemicals industry will pick up. Once again, the main impulses will come from Asia and to some extent from the US. In general, Hambrecht said that he expected moderate growth in 2004.

However, there are uncertainties in the future. For example, the strong euro is acting as a noticeable brake on European exports. Oil and raw material prices will remain at unexpectedly high levels and will therefore also retard growth.

Hambrecht stated: "Nevertheless, instead of only seeing the downside, we want to look ahead to the remainder of 2004 with greater confidence. We will devote our energies to those areas that lie within our control. We will continue with our measures to reduce costs and increase efficiency, as well as our efforts to reduce operational assets. In 2004, as announced, we will reduce capital expenditures to the level of depreciation.'