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High Raw Material Costs Hurt BASF

Rising raw materials prices and weaker demand in a slowing economy held back profits at German-based chemical, plastics and oil company BASF.

FRANKFURT, Germany (AP) -- Rising raw materials prices and weaker demand in a slowing economy held back profits at German-based chemical, plastics and oil company BASF SE.

But the company predicted things would pick up in the second half of this year, with sales and earnings improving.

Net profit rose 3 percent in the fourth quarter to euro1.13 billion ($1.5 billion). The figure compared to euro1.10 billion in the same quarter a year earlier.

Revenues rose 10 percent to euro18.07 billion, with sales up across most of the company's divisions as the company raised prices to offset the higher raw materials costs. But less robust demand restrained profits.

The chemicals division saw earnings, measured before interest and taxes, slip 29 percent to euro381 million while earnings for the plastics division fell 60 percent to euro110 million, despite higher sales.

For 2011, net income rose strongly helped by a strong first half and was up 35.8 percent to euro6.19 billion on sales that increased 15 percent to euro73.50. The dividend has also been raised to euro2.50 per share from euro2.20 per share.

BASF set 2012 targets of increased sales and earnings and said it foresaw an economic rebound in the second half of the year despite ongoing worries over the impact of too much government debt in Europe and the United States. It said earnings at its oil and gas unit would be helped as production in Libya, interrupted by the country's civil conflict, continued to pick up. Onshore production began in mid-October with 20,000 barrels per day and reached 60,000 barrels per day by the end of the year.

"We expect the global economy to pick up speed over the course of 2012 following a moderate start," CEO Kurt Bock said in a statement. "Uncertainties due to the sovereign debt crises, in particular in Europe and the United States, will dampen growth prospects."

BASF SE, based in Ludwigshafen, produces chemicals and plastics as well oil and gas and agricultural herbicides and fertilizers.

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