Flags with the logo of German chemicals company BASF flutter in front of the headquarters in Ludwigshafen, Germany.
Frankfurt: German chemicals giant BASF yesterday said it expected higher oil prices to push up earnings this year after a challenging 2016, when its main Ludwigshafen plant was hit by a deadly explosion.
“We are cautiously optimistic for 2017. We want to grow further, with all segments contributing to this growth,” chief executive Kurt Bock said after a weak performance by its oil and gas unit weighed on the group.
The world’s largest chemicals maker said it made a net profit of €4.06bn ($4.3bn) in 2016, up two percent on the year before. Underlying or operating profit was flat at €6.3bn, while group sales saw an 18-percent drop to €57.6bn, slightly beating analyst forecasts.
As expected, revenues were badly hit by the firm’s divestiture of its gas trading and storage business as part of an asset swap agreed with Russia’s Gazprom in 2015.
“This business had contributed €10bn to sales in 2015,” BASF said, adding that strong sales in Asia, particularly in the chemicals division, offset some of those losses.
A long stretch of low oil and gas prices also dented the firm’s earnings, although that looks set to change in 2017 with the group saying it expects Brent crude oil prices to climb from $44 to $55 per barrel on average.
The turnaround already appeared visible in the final quarter of 2016, when net profit more than doubled to €689m even after the explosion at its Ludwigshafen headquarters led to a slowdown in production.
Four people were killed in the blast and subsequent fire on October 17, which happened during work on a raw materials pipeline.
Several production facilities had to be temporarily shut down after the accident, but BASF stressed at the time the setback would not impact its 2016 outlook.
For the second year in a row, the group said it planned to raise dividend payouts by 0.10 euros to three euros per share for 2016.
Looking ahead, BASF said it expected “considerable sales growth” in 2017 and “slightly higher” underlying profits.
Shares in the group fell by more than three percent to 87.21 euros in early trading in Frankfurt, underperforming the DAX index of leading German shares which was down 0.27 percent.
