BASF Sees Role of Oil and Gas Unit Declining Further
MANNHEIM, Germany, May 12 (Reuters) - BASF, the world's largest chemicals maker, said its focus would be on boosting profitability at its chemicals and crop protection businesses as the contribution to earnings from oil and gas, hurt by low crude oil prices, diminishes further.
The company, whose products include catalytic converters, vitamins, foam chemicals and engineering plastics, would continue to buy businesses and sell non-core activities to boost growth and earnings stability, Chief Executive Kurt Bock told shareholders at the group's annual general meeting on Friday.
"Traditionally, the Oil & Gas segment has accounted for around 25 percent of EBIT before depreciation and amortisation, but in 2016 this figure was just 15 percent," Bock said.
"It is therefore even more important to improve the profitability of our chemicals and crop protection businesses year after year. In recent years, we have managed to do this by an average of around 5 percent annually," he added.
Bock said the Wintershall oil and gas unit, a subsidiary since 1969, remained a core activity, however.
"We cannot see at all at the moment that oil and gas would not be a good part of the portfolio," Bock said.
Much of last year's decline in group sales by about 13 billion euros to 58 billion euros ($63 billion) was due to a transfer of BASF's gas trading and storage business to Gazprom .
That was part of an asset swap under which BASF took a bigger stake in some of Gazprom's Siberian gas fields that will not start production until next year.
Bock said he will still look at takeover targets for BASF's crop protection unit, even though asset prices had increased "dramatically" over the past few years.
Rival Bayer said this week it would sell its Liberty herbicide and Liberty Link-branded seeds businesses to win antitrust approval for its acquisition of Monsanto, the biggest chunk of expected asset sales worth about $2.5 billion.
BASF is seen as a suitor, after missing out on antitrust-related selloffs by prospective merger partners DuPont and Dow chemical.
($1 = 0.9197 euros) (Additional reporting by Patricia Weiss; Editing by Maria Sheahan and Elaine Hardcastle)
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