Bottom Line: No breakdown from BASF

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BASF would love to have a listing in the US. As is well known, US institutional investors are extremely snooty about German standards of financial reporting.

The company's cause will not have been helped by episodes on the lines of yesterday's half-year results announcement. Pre-tax profits, although 41.5 per cent higher at DM683m ( pounds 285m), came in well below best expectations.

This shortfall was largely attributable to an unexpected near doubling in 'other expenses' from the equivalent of 6.6 per cent of sales.

The figure is not broken down but is attributed to special charges, mainly in North America, and reduced earnings from interest and currency.

Setting aside concern about BASF's uninformative accounting, the message from the group's operations continues the encouraging volume story that ICI and other European chemical companies have been telling.

Pricing, however, is clearly still a cause for concern, particularly in plastics, which is over-supplied in Europe.

BASF has taken more than DM1bn out of fixed costs in the group since 1990, more than half of that last year, so the upturn in volume is having a sharp effect on profitability.

It has also shed non-core activities, cut back in oil and gas and finally got its information systems business back into the black for the first time since 1991.

At this stage of the cycle, with recovery in annual profits to a target DM3.5bn against DM1bn in 1993, an earnings discount of 25 per cent and a yield premium of 50 per cent to the German stock market seems mean by US/UK standards.