BASF dividend back on track

City A.M. Reporter
GERMANY’S BASF returned to form with an improved dividend payout for 2010, although fourth-quarter earnings at the world’s biggest chemicals company by sales fell short of forecasts.

BASF cut its 2009 dividend for the first time in 16 years after the global economic crisis forced it to leave many plants idle.

It has since been helped by a buoyant auto sector and a fledgling recovery in demand from builders for its insulation foams, allowing it to pass on higher material costs to customers.

BASF said yesterday that sales and operating earnings in 2011 are set to clearly exceed last year’s levels, and gains should also continue next year.

The maker of coatings and catalytic converters proposed an annual dividend of €2.20 (£1.19) per share, up from €1.70 last year and ahead of an average analyst estimate of €2.14.

After incurring roughly €1bn in integration costs for Ciba, the plastics and paper chemicals maker it acquired in 2009, BASF is now reaping the full benefits from cost cuts that followed the tie-up.

Fourth-quarter sales came in at €16.42bn, above the €15.69bn expected by analysts, as higher raw materials costs were largely passed on to customers.