February 26, 2019 / 7:39 AM / 8 months ago

Germany's BASF sees higher 2019 revenues and earnings, lifting shares

LUDWIGSHAFEN, Germany (Reuters) - BASF expects revenues and earnings to rise this year as recent acquisitions help it cope with a slowing global economy and trade tensions, the German company said on Tuesday, sending its shares five percent higher.

FILE PHOTO: A logo is seen on the facade of the BASF plant and former Ciba production site in Schweizerhalle near Basel July 7, 2009. REUTERS/Christian Hartmann/File Photo

Fourth-quarter operating profit plunged almost 60 percent to 630 million euros (£543 million) as the firm’s basic chemicals business was hit by a slump in prices for isocyanate - used in making polyurethane polymers and foams - and supply disruptions.

But that was still better than analysts’ expectations following a December profit warning and CEO Martin Brudermueller played down the risks for 2019.

“Talking to our customers, besides the automotive industry, the outlook is not really super pessimistic. It slows, yes, but it’s not falling off the cliff,” he told analysts.

Brudermueller is under pressure from investors to show a decline in the company’s basic chemicals business, which makes materials for products such as heat insulation foams and coatings, can be offset by growth in more advanced products such as pesticides, catalysts and engineering plastics.

The company said it expected revenues to rise slightly in 2019, helped by acquisitions such as herbicide and vegetable seeds businesses from Bayer.

It also forecast earnings before interest, tax and one-off items would rise at the lower end of a 1-10 percent range, assuming tensions between the United States and its trading partners ease and that Brexit does not cause big disruptions.

“BASF’s 2019 outlook was more upbeat than we expected, albeit mostly due to operating leverage re-acceleration in the second half of 2019,” Jefferies analysts said in a note.

At 1535 GMT, BASF shares were up 4.7 percent at 67.81 euros.

The company said it would pay a dividend of 3.20 euros a share for 2018, up from 3.10 euros for 2017.

It also said it would continue to streamline its portfolio, including putting its pigments business up for sale. People close to the matter said that business could be valued at about 1 billion euros.

BASF is expected to shop the asset to private equity groups such as Advent, CVC, Cinven and Blackstone, some of which may look to combine it with a similar business that peer Clariant is selling.

BASF is also looking to sell its construction chemicals unit, aiming to wrap up both deals by the end of the year.

It added that it expected an initial public offering of Wintershall DEA, a planned oil and gas joint venture between BASF and LetterOne, in second half of 2020 at the earliest.

Additional reporting by Arno Schuetze; Editing by Rashmi Aich and Mark Potter

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