BASF right.jpgBASF’s reported results for 2008 show that its profits are increasingly coming from the oil and gas sector. Geographically, it is becoming similarly dependent on its German operations.
Agricultural and performance products put in a strong performance during the year, with their combined EBIT rising €300m to €1.5bn. But the chemicals, plastics and functional businesses, which accounted for 47% of total sales, saw EBIT fall €1.5bn to €2.1bn
A year ago, the blog noted that the oil and gas “sector accounted for only 18% of 2007 sales, but contributed 41% of total profit (EBIT). In 2008, it accounted for 23% of total sales, whilst profit reached an astonishing 59% of total EBIT. Of course, higher taxes on the sector meant that its net income was ‘only’ €951m, up 20% on 2007. But even so, this meant that oil & gas accounted for 33% of total BASF net income of €2.9bn, versus 19% in 2007.
Similarly, BASF became even more dependent on its German operations in 2008. These accounted for a similar proportion of sales (44%) as in 2007. But their share of BASF’s total €6.5bn EBIT rose to 73% from 58% in 2007. If the downturn continues for the next few years, as the blog expects, BASF may become increasingly dependent on the resilience of the oil and gas sector, and its core German manufacturing sites.