Stocks in the chemical sector are trading sharply higher on optimism that the worst is bottoming out as evidenced by surprisingly strong third quarter preliminary financial results of chemical manufacturer, BASF SE (PinkSheets: BASFY) on Wednesday. The figures for the period, although they slid lower than the ones reported in the same quarter of a year ago, outperformed consensus analysts’ forecasts as well as results of the previous quarter. According to the company, the improvement is attributable to sequential improvement of demand in China and cost cuts.
“We have the right strategy”, said Dr.
Jurgen Hambrecht, Chairman of BASF’s Board of Executive Directors at a conference call. “We are seeing the effects of the extensive measures we implemented in good time to adjust capacity utilization rates and to reduce costs”. The company, however, added that the consolidation of the Switzerland-based rival acquired for $3.34 billion, Ciba Holding AG, is going forward faster than anticipated and, thus, higher corresponding charges will be included in its full third quarter results scheduled for release on October 29.The Germany-based chemicals company announced that earnings before interest and taxes (EBIT), minus one-off items were 1.25 billion euros. This is reflective of a 9.5 percent increase from the second quarter, and a 20 percent decrease on a year-over-year basis. In contrast, analysts had predicted EBIT excluding special items of 1.04 billion euros, less nine percent from the previous period.
Sales during the third quarter also surprised the market with a 2.4 percent upsurge from the prior quarter at 12.8 billion euros, although also showing a 19 percent decline from the tallying period a year earlier. Analysts were looking to lower sales of 12.4 billion euros.
BASFY shares which closed down at $56 after a regular session on Tuesday, had climbed up more than 7 percent at the time of writing, breaking away into a record territory of $60.30. The company declined to estimate results for the fourth quarter on ongoing concerns of the inflation.
Reference:
http://www.basf.com/group/corporate/en/
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