The Urethane Blog

BASF Urethane Comments from Investors’ Call

Hans-Ulrich Engel

In Monomers, sales increased considerably. Significantly higher prices, especially for MDI and TDI, drove this growth. Volumes in Monomers declined slightly, due in part to turnarounds and the force majeure at our Chongqing plant caused by a natural-gas supply-shortage at our syngas supplier.

Considerably higher sales in intermediates were driven by higher prices in all businesses and slightly higher volumes. In a continued favorable market environment, we were able to increase margins, especially for isocyanates, acids and polyalcohols, cracker products in Europe and acrylic monomers. This resulted in an EBIT before special items of almost 1.1 billion euros, which is more than 400 million euros above the prior-year quarter. All divisions contributed to this significant increase.

Andrew Stott

Yeah good morning, Stefanie and good morning Hans. Thanks for the questions. So just a couple. First of all, on the start to 2018, you said your circle is more complex this year, I guess it’s also complex because we got the outages, not just citral but also enchanting with MDI. And I think one or two other smaller ones. At this stage, can you give an idea of perhaps an EBIT impact? And also, how are you thinking about insurance proceeds. And indeed, were there any in Q4 in performance products that sit –. Thank you.

The second one is just coming back to guidance on ag for the year. Do I take it that you’re sort of assuming now rather than booking 9 months, you’re probably going to book closer to 6 months, or is it really the integration costs are going to be fairly material? I wasn’t quite sure as to the assumption within that. Thank you.

Kurt Bock

Yeah, hi Andrew, thanks for the questions. I will take the first one and Hans will second one on integration cost. 2018 yes, it’s a little bit more complex also due to the outages and I mentioned this in my speech, we have external effects and we cannot control one obviously. And clearly magnitudes were unexpected it’s a shortage of natural gas was enchanting which is not operating as we speak, and we certainly have some double-digit EBIT impact. Quite clearly, we hopefully back in late February early March needs to be seen.

Then we had freezing temperatures earlier this year in Q4 and on the U.S. Gulf Coast, also some of our supplier side at issues that has impaired production volumes. And this is again a double-digit impact.

Volume growth overall in January has been good as planned. It’s too early to talk about February still a couple of days to go. As you know that in some of our businesses, volumes come in rather late final days of the months, the sales are booked. So, it’s a bit of uncertainty. However, we look at the underlying economic drivers, underlying growth in all regions, most businesses of our customers are still positive about the outlook. And that I think justifies our intention to slightly improve last year’s earnings.