BASF posts Q2 gains, but share price falls on lacklustre guidance

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BASF posts Q2 results and says economic uncertainties mean industrial customers are still cautious about placing orders.

Despite a 14 per cent hike in sales for the second quarter to €18.4bn ($26.6bn), the German chemicals was still short of Bloomberg​ analysts’ operating income estimates.

BASF’s chemicals and performance products divisions, which supply the pharmaceutical sector, saw little change in operating income for the period despite revenue growth.

Earlier​ this year BASF raised its prices for active pharmaceutical ingredient and excipients by 10 per cent citing higher raw material costs and energy prices, which is something the firm reiterated in its quarterly statement.

We continue to be concerned about the development of the euro as well as the debt situation in some European countries and the United States.

“Added to this is the persistently high oil price, which is having a negative impact on margins across our value chains and is leading to some customers being more cautious in their orders​.”

BASF also issued guidance for the rest of 2011, predicting that: “In the second half of the year we expect the pace of growth to be slower and that demand from our customer industries will stabilize at a high level​.”

BASF held its earning call earlier today and was unavailable for comment ahead of publication. The firm’s share price fell 5.9 per cent to €61.95.

Mixed response

BASF’s results were met with a lukewarm response by some observers, with the firm’s share price falling by as much as 5.9 per cent to €61.95.

Warburg analyst Oliver Schwarz told Bloomberg ​that “The outlook isn’t very pleasing. When they say that demand will be stable they mean that there is no demand growth. We didn’t expect it to collapse to zero​.”

Others, like analysts at Berstein Research, were more positive telling the Wall Street Journal​ that BASF had "good year-on-year growth, just not as much as expected," and the deviations from consensus expectations were small and the full-year targets have been confirmed, "which speaks against large stock price drops."

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