BASF rejects bearish market expectation 2012

LUDWIGSHAFEN: BASF the world's largest chemical maker by sales, dismissed market expectations of a shrinking business this year, saying sales and earnings would rise as it banks on a rebound in the second half.

"We expect the global economy to pick up speed over the course of 2012 following a moderate start," Chief Executive Kurt Bock said in a statement on Friday, describing his 2012 targets as ambitious.

Uncertainties over government debt in Europe and the United States would pose a risk, while "positive impetus for the chemical industry will again mainly come from the emerging markets", he added.

The group also predicted growth next year and in a sign of further optimism said it would lift its annual dividend to 2.50 euros per share, up from 2.20 euros last year and more than the 2.39 euros expected by analysts.

Analysts had expected a decline in sales of almost 5 percent this year and operating earnings to drop 8 percent , based on 2011 figures of 73 .5 billion euros ($97.9 billion) and 8.4 billion euros, respectively.

"The positive outlook for the global economy and BASF is surprising, " said DZ Bank analyst Peter Spengler

Fourth quarter earnings before interest and tax (EBIT), adjusted for special items, fell 14 percent to 1.51 billion euros, matching the average analyst estimate in a Reuters poll.

BASF added it would earn a high premium on its cost of capital in 2012, based on earnings before interest and tax (EBIT).

EBIT would be below last year's figures in the first half but would rise above the year-earlier comparison in the second half, the company said.

Copyright Reuters, 2012