BASF posts slight increase in 2018 sales

MOSCOW (MRC) -- BASF generated sales of EUR62.7 billion last year, said the company.

This represents an increase of 2% compared with the previous year. Income from operations (EBIT) before special items declined to EUR6.4 billion, compared with EUR7.6 billion in the previous year. This was mainly attributable to the Chemicals segment, which accounted for around two-thirds of the total decline in earnings. Isocyanate margins fell sharply in the second half of the year. Furthermore, cracker margins were lower than expected in all regions in 2018.

Overall, 2018 was a year characterized by difficult global economic and geopolitical developments and trade conflicts. In the second half of the year, BASF felt an economic slowdown in key markets, especially in the automotive industry, BASF’s largest customer sector. In particular, demand from Chinese customers declined significantly. The trade conflict between the United States and China contributed to this. Around the world, uncertainties grew. Many market participants therefore acted very cautiously.

"We are tackling these challenges. With our new corporate strategy, we will use 2019 as a transitional year to emerge even stronger. This year, we are adapting our structures and processes, and focusing our organization clearly on the needs of our customers," said BASF’s Chairman of the Board of Executive Directors, Dr. Martin Brudermuller, who presented the 2018 financial figures together with Chief Financial Officer Dr. Hans-Ulrich Engel.

BASF implemented price increases in all segments and divisions in 2018. Volumes rose slightly compared with the previous year: Higher volumes in the Functional Materials & Solutions and Agricultural Solutions segments were partially offset by lower volumes in the Performance Products and Chemicals segments. The main reason for the lower volumes in the Performance Products segment was the outage at the citral plant in Ludwigshafen, which started production again in the second quarter. Sales volumes in the Chemicals segment were negatively influenced by the low water levels on the Rhine River. Currency effects were minus 4% overall, while portfolio effects were plus 1%.

Lower earnings in the Functional Materials & Solutions, Agricultural Solutions and Performance Products segments also contributed to the decline in EBIT before special items. In the Agricultural Solutions segment, negative currency effects in all regions dampened earnings. In addition, there was a strongly negative contribution from the businesses acquired from Bayer, which BASF only took over in August. This timing was a disadvantage because of the seasonality of the seeds business, which primarily generates income in the first half of the year. Moreover, there were costs for integrating the acquired activities.

As well, the unusually long period of low water levels on the Rhine River posed a challenge for BASF. At the Ludwigshafen site, for much of the third and fourth quarter, it was nearly impossible to receive deliveries of raw materials via ship. Consequently, BASF was forced to reduce plant capacity utilization rates in Ludwigshafen. This lowered 2018 earnings by around EUR250 million.

Special items amounted to minus EUR320 million, primarily due to acquisitions. This compares with minus EUR58 million in the previous year. EBIT declined by 20% to EUR6 billion. At EUR9.5 billion, EBITDA before special items was 12% below the prior-year level. EBITDA amounted to EUR9.2 billion, compared with EUR10.8 billion in 2017.

Earnings per share fell from EUR6.62 to EUR5.12 in 2018. Adjusted for special items and amortization of intangible assets, earnings per share amounted to EUR5.87, down by EUR0.57 from the previous year.

BASF Group’s sales rose by 2% in the fourth quarter of 2018 to EUR15.6 billion. Supported by the segments Performance Products, Functional Materials & Solutions and Agricultural Solutions, prices could be raised by 2%. Volumes declined by 3%. This was primarily attributable to the prolonged low water levels on the Rhine River, which severely limited shipments of key raw materials to the Ludwigshafen site and thus forced us to reduce capacity utilization. Portfolio effects amounted to plus 3% due to the acquisition of Bayer businesses in the Agricultural Solutions segment.

EBIT before special items in the fourth quarter was EUR630 million, down 59% on the prior-year figure. This decline was due to significantly lower earnings in the Chemicals and Agricultural Solutions segments. In the Chemicals segment, the main reason for this was lower margins in the isocyanate and cracker business. Fourth-quarter earnings development in the Agricultural Solutions segment was hampered by acquisition-related expenses. BASF was able to improve earnings in the Performance Products and Functional Materials & Solutions segments. The supply bottlenecks resulting from the low water levels on the Rhine River had a negative impact of around EUR200 million on earnings in the fourth quarter.

Cash ?ows from operating activities declined from EUR8.8 billion to EUR7.9 billion. This was mainly due to the decrease in net income. In 2018, the change in net working capital reduced cash flows by EUR530 million; this compared with minus EUR1.2 billion in 2017. Cash used in investing activities increased from EUR4 billion to EUR11.8 billion. In 2018, net payments for acquisitions and divestitures amounted to EUR7.3 billion, mainly relating to the acquisition of businesses and assets from Bayer. Payments made for property, plant and equipment and intangible assets declined by EUR102 million to EUR3.9 billion. At EUR4 billion, free cash flow was once again strong, but EUR744 million lower than the 2017 level due to the decrease in cash flows from operating activities.
MRC

MOSCOW (MRC) - India’s Bharat Petroleum Corp Ltd has bought a gasoline cargo for first-half March arrival, two trade sources said, said Hydrocarbonprocessing.

BPCL bought late last week 35,000 tons of 91.5-octane gasoline at a low single-digit premium to Singapore quotes on a cost-and-freight (C&F) basis, said the sources.

Both sources said strong demand and low gasoline prices amid a glut of the fuel likely prompted the refiner to import.
BPCL does not typically comment on its tender purchases or sales.

Based on Reuters data, BPCL last imported a gasoline cargo for arrival in May last year at Kochi and Haldia.
MRC

MOSCOW (MRC) -- Borouge, a leading petrochemicals company that provides innovative, value creating plastics solutions, has awarded TechnipFMC, Maire Tecnimont and WorleyParsons three major contracts for the fourth phase of the Ruwais petrochemicals complex which will include the world’s largest mixed feed cracker, said Hydrocarbonprocessing.

In a ceremony held in Abu Dhabi, Borouge signed the FEED (Front-End Engineering and Design) contract, PMC (Project Management Contract) and License contract associated with the mixed feed cracker complex. The contracts were signed by Ahmed Omar Abdulla, CEO of Abu Dhabi Polymers Company (Borouge); Marco Villa, President EMIA, TechnipFMC and Pierroberto Folgiero, Maire Tecnimont Group Chief Executive Officer, in the presence of Abdulaziz Alhajri, Executive Director, Downstream Directorate, ADNOC; Alfred Stern, Borealis Chief Executive, and other leadership members from ADNOC, Borealis and Borouge.

The mixed feed cracker will be the 4th cracker in the Borouge complex and will be the world’s largest with 1.8 million tonnes Ethylene output. It will have overall capacity to produce 3.3 million tonnes of olefins and aromatics using a variety of feedstocks such as Ethane, Butane and Naphtha coming from ADNOC’s refinery and gas processing facilities. Both ADNOC and Borealis intend to finalise the downstream configuration within three months, following the FEED award.

"The mixed feed cracker is unique as it enables many new petrochemical building blocks to be available in Ruwais for the first time, thereby transforming Ruwais into an even more advanced integrated refining and petrochemicals complex," said Alhajri. "The new project will significantly contribute to achieving ADNOC’s growth ambitions as well as those of Borouge."

The introduction of new and additional feedstocks and products to be produced by the plant supports the Abu Dhabi, Borouge and ADNOC 2030 strategies, by creating a platform for future industrial development and diversification of the economy and contributing to ensuring a more profitable downstream business, he added.

Stern hailed the strong partnership and long successful history that Borealis has with ADNOC at Borouge. He underlined Borealis’ continuous support to Borouge in setting up the huge downstream polyolefin’s production plants that will be based on the Borstar® technology. "The mixed feed cracker is not only a new milestone in Borouge’s history, but it is also a new step forward in Borealis’ growth strategy in the Middle East. The project, which reflects the strength of our strong partnership with ADNOC, ideally embodies Borealis’ commitment and willingness to continue contributing to the development of the UAE through Borouge."
MRC

MOSCOW (MRC) - Energy trader Gunvor Group is considering selling non-core assets in Russia and finding a strategic partner for its German refinery as it tries to recover from the first-ever annual loss it suffered in 2018, trading and banking sources said, as per Hydrocarbonprocessing.

Four sources familiar with the development said the plan had been discussed in recent meetings between Gunvor’s majority owner Torbjorn Tornqvist and Gunvor’s main lending banks.

The sources asked that neither they nor their banks be identified because they were not allowed to speak to the media. The plan and losses had not previously been reported.

Gunvor, formed at the start of the century by Tornqvist and his former Russian partner Gennady Timchenko, first specialized in Russian crude and product sales. It became at one point the biggest seller of Russian oil thanks to what it described as excellent Russian connections.

Its role in Russian oil shrank earlier this decade and the trading house diversified into other areas and products. Last year was widely considered to have been difficult for merchants as traders lost money on sharp, unexpected price swings in oil benchmarks such as Dated Brent and U.S. West Texas Intermediate.

Sources said Gunvor’s underlying trading business remained profitable and strong in 2018. However, the trader suffered losses due to one-off factors that will not be repeated this year, the sources said.

Those included a write-down of several tens of millions of dollars because of an abandoned upgrade of its Rotterdam refinery, a write-down relating to the Lagansky Caspian Sea oil block in which it no longer holds an interest, and provisions for legal cases that remain open.

Gunvor told its bankers that 2018 losses would be non-recurring, the sources said. Final 2018 results will not be published before April. Preliminary nine-month results for 2018 showed a loss in excess of USD100 million due to the one-offs, two of the four sources said.

Gunvor declined to discuss the plan and financial performance. “Gunvor has proactively addressed challenges it faced in 2018 by making decisive, strategic adjustments, including restructuring, trimming costs, and investing in its trading platform,” a company spokesman said.
MRC

MOSCOW (MRC) - Saudi Aramco has agreed to deliver more than 500,000 barrels of crude oil every month to Egyptian refineries starting in January, Egyptian Petroleum Minister Tarek El Molla said, as per Hydrocarbonprocessing.

The minister told Reuters that the agreement would be effective for a period of six months.

As MRC informed earlier, Saudi Aramco signed an agreement to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC