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BASF SE

Difficult third quarter - BASF proceeds with its restructuring measures

Ludwigshafen, Germany (ots)

Difficult third quarter - BASF proceeds with its restructuring 
   Measures
- Sales increase slightly despite negative currency effects
   - EBIT before special items below the previous year's good level
   - Significant improvement in Agricultural Products & Nutrition
   - Oil & Gas makes largest contribution to income
   - Outlook for full-year 2003: EBIT before special items below
     previous year's level
In a business environment characterized by high raw material
prices, margin pressure and a weak U.S. dollar, BASF
Aktiengesellschaft increased its sales in the third quarter of 2003
by 2.1 percent to EUR 7.7 billion compared with the same period in
2002. Excluding negative currency translation effects, sales
increased by 7.6 percent. Price increases contributed 2.1 percent to
sales, but prices still remain at an unsatisfactory level. Sales
volumes were up 4.5 percent.
"The latest figures for our ongoing business give grounds for hope
that we have now reached the bottom of the downturn. However, there 
has still not yet been a real breakthrough. 2003 remains a difficult 
year, as demonstrated by the weak third quarter," said Dr. Jürgen 
Hambrecht, Chairman of the Board of Executive Directors of BASF 
Aktiengesellschaft, at a press conference to present BASF's third-
quarter results.
Third-quarter income from operations (EBIT) before special items
fell 31.8 percent to EUR 403 million compared with 2002. This
unsatisfactory operating result is due mainly to continuing pressure
on margins in the Chemicals, Plastics and Performance Products
segments. High oil prices kept purchasing prices for naphtha and
natural gas high. BASF's chemicals operations remain burdened by
overcapacities, especially in the United States and in Europe. Prices
could therefore not be increased to the extent necessary.
EBIT after special items declined 20 percent to EUR 374 million. 
Special charges related mainly to restructuring measures in the 
NAFTA region and integration costs for the crop protection business 
acquired by BASF.
Net income in the third quarter fell 51 percent to EUR 120
million. In the third quarter of 2002, the financial result contained
tax-free gains from the sale of marketable securities. The absence of
these tax-free gains in 2003 led to a significant increase in the tax
rate compared with the previous year.
Third-quarter earnings per share were EUR 0.21 compared with EUR  
   0.43 in 2002.
In the first nine months of 2003, BASF posted cumulative sales of
EUR 24.8 billion - slightly more than in the same period in 2002.
Excluding currency effects, sales would have amounted to EUR 26.7
billion, 10.2 percent more than in 2002. At EUR 2.2 billion, EBIT
before special items in the first nine months was 2.3 percent lower
than in 2002.
Cash provided by operating activities is a good indicator of
BASF's financial strength: At just over EUR 3.5 billion, the figure
for the first three quarters was already significantly higher than
the full- year value for 2002 of EUR 2.3 billion.
Outlook: Full-year EBIT before special items lower than in 2002
"In the summer, it was already clear that major efforts would be 
needed to match the previous year's earnings level. But our own 
efforts are not enough if there is not a sustainable improvement in 
the economic climate. We saw no signs of such an improvement in the 
third quarter," said Hambrecht. "Although there are currently 
initial signs of an economic recovery, high raw material costs, 
unsatisfactory margins in some areas of our chemicals businesses and 
the weak U.S. dollar will continue to put pressure on our business 
in the fourth quarter," he continued. Based on a slight increase in 
sales, BASF expects EBIT before special items to be lower than in 
the previous year in both the fourth quarter and for the full year.
Hambrecht also remains realistic when it comes to assessing future
economic developments: "Even though more and more indicators are 
positive and pointing upward, we have to rely on facts rather than 
moods." He therefore stated that it is too soon to be able to 
predict when an economic recovery will set in, how strong it will be 
and how long it will last.
BASF is therefore focusing on its extensive Group-wide programs
and initiatives to optimize its portfolio, reduce costs and
restructure its organization. "The success of such measures lies
primarily in our own hands," said Hambrecht.
Share buy-back program to be implemented as planned in 2003
In the first nine months of 2003, BASF shares have outperformed the 
EURO STOXX 50 index and have been included in the Dow Jones 
Sustainability Index for the third year in succession. BASF aims to 
implement its share buy-back program as planned in 2003, buying buy 
back shares for a total of EUR 500 million. The company intends to 
continue its share buy-back program in 2004.
Performance of the segments in the third quarter of 2003
Agricultural Products & Nutrition and Oil & Gas posted significant
increases in sales compared with the strong third quarter of 2002. 
Chemicals and Plastics maintained sales at the level of the previous 
year despite the weak dollar. Sales were slightly down in Perfor-
mance Products.
The situation is different with regard to EBIT before special
items. All segments with the exception of Agricultural Products &
Nutrition reported lower income compared with the good third quarter
of 2002. This segment improved by more than 36 percent thanks to
higher sales volumes as well as extensive cost-reduction measures. As
is typical in this sector, third-quarter income was negative due to
the seasonal nature of the business.
At EUR 271 million, the largest contribution to income came from
the Oil & Gas segment. Sales increased 14.6 percent mainly due to
higher volumes in the natural gas trading business. Significantly
higher volumes of oil and gas were produced in the exploration and
production activities. A higher oil price compared with the same
period in 2002 led to an increase in sales, which, however, was
partially offset by the weaker U.S. dollar.
Income in the Chemicals segment was negatively impacted by 
persistently high raw material costs coupled with competitive 
pressure. Startup costs following conversion of part of the chlorine 
production facilities at the Ludwigshafen site to a modern membrane 
process reduced earnings, as did scheduled maintenance of key 
production plants.
A fall in the price of polymers in Europe and the NAFTA region
reduced income in the Plastics segment. In addition, fiber
intermediates posted a loss. In September, however, the company was
able to implement initial price increases for important polymers. The
integration of the business acquired from Honeywell is proceeding as
planned and initial cost synergies have been realized.
Third-quarter income in the Performance Products segment also
failed to achieve the strong previous year's level. The weak dollar
reduced income in the Performance Chemicals and Coatings divisions.
The Functional Polymers division improved margins and income despite
a difficult market situation.
BASF is the world's leading chemical company, offering its
customers a range of high-performance products, including chemicals,
plastics, performance products, agricultural products, fine chemicals
as well as crude oil and natural gas. Its distinctive approach to
integration, known in German as "Verbund," is its strength. It
enables BASF to achieve cost leadership and gives the company a
competitive advantage. BASF conducts its business in accordance with
the principles of sustainable development. In 2002, BASF had sales of
about ¤32 billion (circa $34 billion) and over 89,000 employees
worldwide. BASF shares are traded on the stock exchanges in Frank-
furt (BAS), London (BFA), New York (BF), Paris (BA) and Zurich (BAS).
Further information on BASF is available on the Internet at
www.basf.com.
Forward-looking statements
This release contains forward-looking statements under the U.S. 
Private Securities Litigation Reform Act of 1995. These statements 
are based on current expectations, estimates and projections of BASF 
management and currently available information. They are not 
guarantees of future performance, involve certain risks and 
uncertainties that are difficult to predict and are based upon 
assumptions as to future events that may not prove to be accurate. 
Many factors could cause the actual results, performance or 
achievements of BASF to be materially different from those that may 
be expressed or implied by such statements. Such factors include 
those discussed in BASF's Form 20-F filed with the Securities and 
Exchange Commission. We do not assume any obligation to update the 
forward-looking statements contained in this release.
You can also obtain further information from the Internet at the 
   following address:
www.basf.de/pcon  (English)
www.basf.de/pk  (German)
07:30 a.m. CET Third Quarter 2003 Interim Report
                  Press Release
                  Photos
11:00 a.m. CET Speeches by Dr. Jürgen Hambrecht and 
                  Dr. Andreas Kreimeyer (live transmission)
11:00 a.m. CET Speeches by Dr. Jürgen Hambrecht and 
                  Dr. Andreas Kreimeyer (printed versions)
ots Original Text Service: BASF 
Internet: http://www.presseportal.de

Contact:

Michael Grabicki
Tel. +49 621 60-99938
Fax +49 621 60-92693
michael.grabicki@basf-ag.de

Original-Content von: BASF SE, übermittelt durch news aktuell

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