Bock: "We do not anticipate an upturn in the global economy for the fourth quarter of 2013. The environment is likely to remain challenging: We anticipate uneven development marked by economic uncertainty. Currency effects will continue to negatively impact sales and earnings in the fourth quarter. Nevertheless, we still aim to exceed the 2012 levels in sales and EBIT before special items."
In addition to innovation-driven acquisitions and investments in its production Verbund, BASF is continuing the restructuring of its portfolio. One focus is on the Performance Products segment where the growth and profitability of some standard products do not yet meet requirements. As announced, a number of measures in the pigments business are being implemented to strengthen competitiveness and sharpen its customer focus. At the same time, as the market leader in pigments, BASF will continue to invest in its production network as well as in research and development.
High operating cash flow
Cash provided by operating activities amounted to around EUR 6.0 billion in the first three quarters of 2013, up by EUR 957 million compared with the same period of 2012. Free cash flow was EUR 2.9 billion compared with EUR 2.3 billion in the first nine months of the previous year.
Business development in the segments in the third quarter
At EUR 4.2 billion, sales in the Chemicals segment were 8 percent below the level of the third quarter of 2012. Reduced prices dampened sales, especially in the Monomers division. In addition to negative currency effects, lower volumes in all divisions contributed to this sales decrease. EBIT before special items in the segment declined to EUR 527 million compared with EUR 569 million in the previous year's quarter, largely as a result of lower margins for isocyanates in Asia and ammonia.
Sales volumes increased in the Performance Products segment. Sales of EUR 3.9 billion were just under the level of the previous year's quarter, mostly due to currency effects. Margins were largely stable. At EUR 376 million, EBIT before special items nevertheless exceeded the level of the third quarter of 2012 by 9 percent. This was mainly the result of our fixed-cost management.
In the Functional Materials & Solutions segment, sales rose by 3 percent to EUR 4.4 billion compared with the prior third quarter. While the Catalysts and Performance Materials divisions were able to increase sales through higher volumes, sales declined in the Construction Chemicals and Coatings divisions. This was mostly attributable to negative currency effects. Earnings significantly increased in all divisions except Coatings. EBIT before special items for the segment was EUR 300 million compared with EUR 231 million in the third quarter of 2012.
Sales grew in the Agricultural Solutions segment despite negative currency effects. As in the third quarter of 2012, sales were again more than EUR 1 billion. Volumes and sales prices were higher in all indications. The acquisition of Becker Underwood, which was completed in November 2012, also contributed to sales growth. Due to increased investments in research and development, production, and distribution, EBIT before special items of EUR 172 million matched the level of the previous third quarter.
In the Oil & Gas segment, sales were up 25 percent to EUR 3.1 billion thanks primarily to increased volumes in the Natural Gas Trading business sector. Sales rose in the Exploration & Production business sector predominantly as a result of the activities in Norway acquired from Statoil on July 31, 2013. EBIT before special items decreased by 15 percent to EUR 422 million on account of a volumes-related earnings decline in Libya, higher field abandonment costs as well as a lower contribution from the Natural Gas Trading business sector.
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