German Results Up

Spirits were buoyant at the recent annual financial press conferences where BASF, Bayer, and Degussa reported results for 2005.

At BASF, Chairman Jürgen Hambrecht crowed that his company "posted the best results in its history in 2005." For the full year, the company reported sales of $53.2 billion, up 13.9% from 2004. The bulk of the increase, the company noted, came from higher selling prices, particularly in plastics businesses. Net earnings were $3.74 billion, up 50% from the previous year.

Increased selling prices also contributed heavily to Bayer's improved results, said Chairman Werner Wenning. For the full year, the company reported sales of $34.1 billion, up 17.6% from 2004, and net profit of $1.99 billion, up 133.1%.

Security analysts were concerned that Bayer's fourth-quarter net profit dropped by 32.4%. Wenning, however, was sanguine about the decline, virtually all of which occurred in the firm's CropScience unit. Sales of insecticides and fungicides were held back, he said, "by the unusually long droughts in Brazil, Southern Europe, and Australia."

Meanwhile, Degussa's optimistic chairman, Utz-Hellmuth Felcht, pointed out that his company's budgeted capital spending for the next three years of a combined $2.61 billion will outpace depreciation. The company also plans to significantly increase its R&D spending as a proportion of sales over the next several years; R&D spending last year rose 10% to $436 million, or 3% of sales.

Degussa's sales for the year were $14.7 billion, up 9% from 2004. The company posted a $611 million net loss for the year, compared with a net profit of $371 million in 2004. The loss primarily reflected $1 billion in impairment charges in Degussa's fine chemicals business, Felcht said. Operationally, the year was very successful, he insisted.