German chemical giant BASF SE is hoping to complete its €1.6bn acquisition of Solvay SA’s nylon business in 2018.
Germany-based company said in its 2017 annual report published 27 Feb, the Ludwigshafen, the previously-announced acquisition would expand its range of engineering plastics for the transportation, construction and consumer goods industries and strengthen its access to raw materials.
BASF chairman Kurt Bock, commenting on the results, said the company “achieved significant growth” and was able to increase profitability. Compared to the previous year BASF reported “substantial” volume growth in all segments for the full year 2017. Sales in the chemicals segment rose by €3.4bn in 2017 to reach €16.3 billion. The jump was attributed primarily to higher prices, especially in the Monomers division. BASF also increased volumes in all chemicals divisions.
Full year sales were up slightly at €16.2bn, €560m higher than the year before, in the performance of products segment. Improving the turnover, this was mainly attributable to volume growth in all divisions, with higher sales prices in the care chemicals and dispersions & pigments divisions. Portfolio measures and negative currency effects in all divisions, however, reduced sales slightly. Earnings (EBIT before special items) declined by €361mn year-on-year to €1.4bn, largely because of the lower margins which were the result of higher raw materials prices. Sales were up 10% for the full year at €20.7bn, in the functional materials & solutions segment.
BASF attributed the growth to higher prices and volumes as well as the Chemetall business, which was acquired from Albemarle in December 2016. The volumes growth was largely attributable to higher demand for BASF products for the automotive and construction industries. At €1.6bn, earnings were, however, down €329m compared to the 2016 figure, primarily due to lower margins and higher fixed costs.
BASF expects the global economy and chemical production for 2018 to grow at roughly the same pace as in 2017. It also expects growth in all regions and with the continuation of the recovery already underway in Brazil and Russia. However, in addition to the US dollar having a negative impact on its sales and earnings BASF pointed out that it also sees “increased market volatility”.