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Name | Symbol | Market | Type |
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PJSC Gazprom (PK) | USOTC:OGZPY | OTCMarkets | Depository Receipt |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 1.10 | 0.00 | 01:00:00 |
By Christopher Alessi
LUDWIGSHAFEN, Germany--Strong growth in BASF SE's core chemicals business allowed the German company to post a 25% rise in net profit for the fourth quarter, even as the global plunge in oil prices sharply cut into earnings at its oil and gas division.
The world's largest chemicals company said net profit for the three-month period ended Dec. 31 was EUR1.42 billion ($1.59 billion), compared with EUR1.13 billion a year earlier. Analysts had predicted a net profit of EUR922 million, according to a recent poll by The Wall Street Journal.
Sales declined 0.6% to EUR18.05 billion, damped by falling sales prices due to low oil prices. The company's closely watched earnings before interest and taxes before special items rose 2.8% to EUR1.46 billion, bolstered by the basic chemical and agrochemical divisions.
EBIT before special items for basic chemicals, which includes petrochemicals and monomers, rose 13.7% to EUR580 million, driven by high margins for steam cracker products in North America. Agrochemical EBIT before special items jumped 83.6% to EUR123 million, helped by higher prices in North America and a stronger U.S. dollar.
But fourth quarter EBIT before special items at the oil and gas business plummeted 40% to EUR347 million, a direct result of the global slide in oil since last year.
BASF's wholly owned oil and gas division, Wintershall AG, generates roughly 30% of the group's cash flow. That division faces an approximate earnings loss of EUR20 million for every $1 decrease in the average annual price of Brent crude oil, up from a EUR15 million estimate earlier this year, BASF said.
The company said it anticipates a "considerably reduced" EBIT before special items for Wintershall in 2015. Its forecasts are based on an expected average oil price between EUR60 and EUR70 a barrel, compared with an initial estimate of EUR110 a barrel for last year.
Brent crude, the global oil benchmark, was trading up at $61.20 on Friday, after having fallen close to 50% over the past seven months.
However, negative oil price effects could be partially offset by an expansion of BASF's exploration and production activities in Norway and Russia, along with plans to restart onshore production in Libya, the company added. BASF purchased oil and gas assets in the North Sea valued at $1.25 billion late last year from Norway's Statoil ASA.
Wintershall, Germany's largest crude oil and natural gas producer, has also been a casualty of heightened geopolitical tensions between Europe and Russia over the latter's incursion into Ukraine. In December, BASF called off an asset swap deal with Russian state gas group OAO Gazprom, which would have given Wintershall access to natural gas fields in Siberia. The dissolution of the deal held back 2014 earnings by around EUR200 million, BASF said.
Shortly after the asset swap collapsed, Wintershall sold back its 15% share in Gazprom's South Stream pipeline project--designed to supply natural gas from Russia to Europa via Bulgaria--after Russian President Vladimir Putin shut it down amid growing opposition by European leaders.
BASF said it expects a slight increase in group sales for 2015 and for EBIT before special items to match the level it achieved in 2014, at EUR7.36 billion.
Write to Christopher Alessi at christopher.alessi@wsj.com
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