By Christopher Alessi
LUDWIGSHAFEN, Germany--Germany's BASF SE (BAS.XE) said Friday it is counting on higher oil and gas prices to help boost growth this year after two years of stagnation, while reporting net profit more than doubled in the fourth quarter of 2016.
Net profit for the quarter ended Dec. 31 was 689 million euros ($728.84 million), compared with EUR339 million during the same period a year earlier. It beat analysts' forecasts of EUR624 million, according to a poll by The Wall Street Journal.
Profitability was up year-on-year due to impairment charges of roughly EUR600 million at the oil-and-gas unit that weighed on net profit during the fourth quarter of 2015, as well as stronger growth at the chemicals businesses.
For 2017, the world's largest chemicals company said it expects "considerable" sales growth of at least 6%, compared with EUR57.55 billion last year. It also forecasts a "slight" increase of between 1% and 10% in earnings before interest, taxes and before special items, up from EUR6.31 billion in 2016.
Chief Executive Kurt Bock said the company's earnings outlook was predicated on "considerably higher contributions" from the oil-and-gas unit. That business, fully-owned subsidiary Wintershall AG, has been squeezed in recent quarters by substantially lower global oil prices.
BASF said earnings growth at the division should be driven by higher prices for oil and gas in the current year and a bigger contribution from its 35% stake in Siberian natural gas field Yuzhno Russkoye.
The company estimates the average price of the global benchmark Brent crude oil will be $55 a barrel for this year, compared with an average of $44 a barrel the year before.
BASF's closely watched EBIT before special items for the fourth quarter rose by 15% to EUR1.2 billion. The increase was driven by two of its chemicals divisions--one that produces petrochemicals and monomers and another that manufactures construction chemicals and coating--and the oil-and-gas business.
Quarterly sales rose by 7%, to EUR14.85 billion, a result of a higher volumes at the chemical businesses.
BASF said it would propose a dividend of EUR3.00 a share for 2016, up from EUR2.9 a share the year before.
-Write to Christopher Alessi at [email protected]