German chemicals giant BASF on Tuesday reported a massive leap in profits in 2017, as the worldwide economic upturn fuelled demand and stoked prices for its products. Net profit increased 50 percent year-on-year to 6.1 billion euros ($7.5 billion), BASF said in a statement, in line with a forecast it offered in January.
Operating, or underlying profits increased almost 36 percent to 8.5 billion euros, while revenues were up 12 percent at 64.5 billion euros - beating forecasts from analysts surveyed by Factset. A synchronised economic upturn around the globe enabled BASF to sell greater volumes in all its divisions - chemicals, high-performance and specialist products, agrochemicals and oil and gas - and also boost prices and margins.
"Last year, we achieved significant growth and were able to further increase our profitability," said chief executive Kurt Bock, set to pass the mantle he has held since 2011 to successor Martin Brudermueller after the group's annual general meeting in May. BASF still plans to buy a clutch of agrochemical activities from rival Bayer for around 6.0 billion euros this year, which Bayer is selling off in order to obtain regulatory approval for its planned merger with US seeds and pesticides giant Monsanto.
BASF will also buy Belgian firm Solvay's polyamide division, opening up new plastics markets in transportation, construction and consumer goods. Furthermore, BASF has agreed with Luxembourg-based LetterOne to combine their respective energy businesses to create one of Europe's largest oil and gas exploration and production companies, which will then be floated on the stock exchange.
Looking ahead to 2018, BASF expects favourable conditions to continue worldwide, with 3.4-percent growth in global chemical production. "We want to continue to grow profitably and achieve a slight increase in sales" and operating profit, Bock said.
But lower margins will bite in the chemicals division, sapping operating profit at the unit, the group added. For 2017, BASF plans to pay shareholders a dividend of 3.10 euros, 10 euro cents higher than the previous year.
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