MOSCOW (MRC) -- Chemicals company BASF expects the Ukraine crisis to de-escalate, easing its bottom line, said Dw.de.
The German firm has turned a healthy profit thanks to big business in Russia, but worries about sanctions. While the European Union weighs how to exert political pressure on Moscow while shielding its own economic interests, a discussion on expanding sanctions against Russia has unsettled parts of Germany's business community.
BASF recorded a double-digit rise in earnings in recent months, but the chemicals giant is weary of the effect sanctions against Russia may have on its profitability and the economy as a whole. A third of jobs in Germany are dependent on the country's strong exports and curtailing German-Russian trade could force some companies that have invested heavily in Russia to make cutbacks.
"Put yourself into our position. We have customers in those countries. Customers we have dealt with for many, many years, sometimes decades, and we have a very trustful relationship with these customers. We want to continue to serve these customers and they also rely on BASF as a supplier. So that has to be our foremost concern," he said.
Talks of further sanctions against Russia have already unsettled some multinational firms. Bock noted that BASF was already feeling the effect of previous sanctions against Russia and was wary to what extent further ones may affect the company's profitability and the economy as a whole.
"We do business in Russia and Ukraine. It's about 2% of our sales and we have seen quite a decline, mostly currency-related in Russia, but heavy decline in Ukraine, which is very important for our crop protection business. This will most probably continue over the course of the year," he said.
"We have said, however, several times, that we have certain concerns about the effectiveness of sanctions. But that is something politicians have to decide right now. If sanctions will be hardened we will comply certainly."
BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year. Second-quarter earnings before interest and tax (EBIT), adjusted for one-off items, rose 12.1% to 2.05 billion euros (USD2.76 billion).
MRC