Frankfurt, Germany, Mar. 19—BASF’s fourth quarter net profit was 199 million euros ($211 million) in contrast to a loss of 469 million euros in the same period a year ago.
Sales grew to 8 billion euros ($8.6 billion) in the fourth quarter from 7.7 billion euros a year earlier.
For the year, BASF's profit fell 74% compared with 2001 results that were inflated by a gain on the sale of its pharmaceuticals business.
Net profit dropped to 1.5 billion euros ($1.6 billion) from 5.9 billion the year before. Sales fell 0.9% to 32.2 billion euros ($34.4 billion).
But its operating profit grew, beating analysts' expectations. Operating income, which excludes items such as interest and taxes as well as one time items such as 6 billion euros reaped from the pharmaceuticals sale, grew 25% to 2.8 billion euros ($3.0 billion) from 2.3 billion euros a year earlier. Analysts had expected operating income of around 2.7 billion euros ($2.9 billion).
On the strength of that performance, BASF management recommended increasing the dividend by 10 euro cents (11 cents) to 1.40 euros ($1.54) per share.
The company’s cost-cutting program helped earnings in a difficult environment marked by sluggish economic growth and currency fluctuations that reduced income.
“Throughout 2002 there was severe pressure on margins for BASF products,” the firm said in a statement. “The effects of rising raw materials prices could only be partially compensated through price increases.”
The fall in the U.S. dollar against the euro also hurt income, it said, but the company's restructuring program, initiated in 2001, made a positive impact.
“We have drastically reduced our costs,” the company said.
Chief executive Juergen Strube was cautious about the 2003 outlook, saying that BASF expected sales and operating profit to rise in the first quarter, but flat sales in the second quarter.
“Further development is burdened by the uncertainty surrounding the further development of the Iraq conflict,” he said.
