BASF up by 'disappointing' 41%

BASF, the German chemicals group, confirmed the improved health of the European chemicals industry with a 41.5 per cent increase in first-half pre-tax profits to DM683m ( pounds 284.5m).

But analysts were disappointed by the scale of the profits recovery - some had forecast as much as DM900m - which was held back by an unexpectedly sharp rise in charges to cover restructuring in North America as well as lower earnings from interest and currency transactions.

Max Dietrich Kley, a BASF director, said yesterday that the group was in the middle of a turnaround that began at the end of 1993. Volume in the first half showed a rise of 9 per cent on a comparable basis.

But prices remained unsatisfactory, down 2 per cent on average, despite increases in the prices of some products. Higher raw material costs underlined the need for further price rises.

Sales rose by 6.5 per cent on a comparable basis to DM21.7bn led by chemicals, where revenues rose by 14.3 per cent.

All growth in revenues came from outside Germany, where sales continued to decline but at a slower rate - down 2.3 per cent in the second quarter after a 3.4 per cent fall in the first.

Higher sales in North America and South-east Asia and Australia were partly offset by a disappointing showing in Japan.

Restructuring will lead to the loss of 4,220 BASF jobs this year. This inlcudes employees taken on with ICI's polypropylene division, swapped for BASF's acrylics business ealier this year.