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BASF doubles 4Q profit
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March 15, 2000: 5:21 a.m. ET
Chemical maker's pretax rebounds from setback of price-fixing lawsuit
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LONDON (CNNfn) - Germany's BASF, Europe's biggest chemicals maker, on Wednesday reported a doubled pretax profit for the fourth quarter and issued a bullish forecast for 2000 as higher oil prices and a fledgling recovery in the chemical sector helped it bounce back from a massive U.S. price-fixing penalty.
However, full-year earnings declined, hit by the after-effects of the emerging markets financial crisis of 1998 and heavy costs associated with the lawsuit. BASF and six other vitamin makers agreed collectively to pay $1.05 billion in November to settle allegations, brought by the U.S. Justice Department, that the companies had colluded to keep vitamin prices artificially low. BASF paid $287 million of the total.
Pretax profit rose 143 percent surge in the fourth quarter to 1.384 billion euros, as sales jumped 26.6 percent to 8.218 billion euros, helped by favorable exchange rates.
For the whole of 1999, net income fell 27.1 percent to 1.237 billion euros, in line with market forecasts, after what the company called a "very difficult first half."
The company said it sees no further substantial impact on its bottom line in 2000 from the vitamin lawsuit. Charges from that suit were about 700 million euros in 1999, the company said.
Three of BASF's five main business units last year reported higher income from operations before special items. At the oil and gas segment, operating income almost tripled to 741 million euros. The plastics and fibers segment raised its operating earnings by 23 percent to 640 million euros, and there were more modest gains for the health products division and the unit for colorants and finishing products.
The chemicals segment showed a 224 million-euro decline in operating earnings, to 698 million euros, though it contributed the largest portion of the company's overall earnings.
BASF struggled in the first half of the year to overcome the fallout from the financial crisis of 1998 in the world's emerging markets. But a recent upswing in the cyclical chemicals industry, which tends to move in tandem with fluctuations in the world economy, prompted a recovery in the final quarter of the year.
A rise in crude oil prices also boosted the bottom line. Oil prices last year were, on average, about 35 percent higher than the sub-$10-a-barrel troughs plumbed at the end of 1998, boosted by output curbs by the Organization of Petroleum Exporting Countries. BASF's oil and gas business accounted for more than one-third of overall income from operations and about 10 percent of sales.
Shares of BASF (FBAS) were up 1 percent at 48.30 euros Wednesday in Frankfurt. 
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BASF
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