BASF North America Delivers Strong 2004 Performance

FLORHAM PARK, N.J. – BASF’s financial results for 2004 in the North American region were strong. Income from operations in the region increased more twentyfold over 2003, and fourth-quarter earnings showed continued impressive improvement compared to the same period a year ago.

Note: BASF Group reports financial results in Euros. References to U.S. dollars are made using the exchange rate effective on Dec. 31, 2004, of euro 1 = $1.36. This conversion is provided solely for the convenience of the reader.

2004 North American sales for the Ludwigshafen, Germany-based company with U.S. headquarters in Florham Park, N.J., were euro 8.16 million (about $11.1 million), up 13.2 percent over euro 7.21 million in fiscal 2003. Income from operations in 2004 was euro 246 million (about $335 million) up more than twentyfold from euro 10 million in 2003. Income from operations before special items for the year increased to euro 404 million (about $549 million), an increase of 393 percent from euro 82 million in 2003. The performance marks the third consecutive year BASF's North American results have improved.

Fourth-quarter sales in North America were euro 2 million (about $2.721 million), up 23.6 percent over the fourth quarter of 2003. Income from operations in the fourth quarter 2004 was euro 42 million (about $57 million) up 367 percent from euro 9 million in the fourth quarter 2003. Income from operations before special items increased to euro 42 million (about $57 million) an increase of 82.6 percent from euro 23 million compared with the same period a year ago.

BASF is continuing to successfully implement its North American restructuring program and has made great progress toward its goal of reducing costs by at least $250 million by 2006. As of year-end, the company has achieved annual cost savings of $175 million. The program includes optimizing administrative functions, manufacturing site operations and business processes.

"These financial results illustrate that our restructuring initiative is proving to be successful in positioning us to fully benefit from the current upswing in the U.S. economy and the chemical industry," said Klaus Peter Loebbe, chairman and chief executive officer of BASF Corp., BASF's North American affiliate. "Our goal is to strengthen BASF's North American presence to be able to sustain the downturns, and prosper in the upturns."

Loebbe said that the company's strong financial performance was driven by aggressive cost reduction coupled with a diligent approach to passing along increases in energy and feedstock prices. "We must continue to rebuild margins if we are to reach re-investment levels for our businesses," he said.

Loebbe added that BASF is committed to the North American market, which is the largest chemicals market in the world. "The North American chemical sector continues to be strong, vibrant and growing,” he said. “It is a critical market to BASF's global presence, and our strategies are designed to support long-term profitability despite changing market conditions. I am optimistic that the North American chemical industry will stay competitive through innovation, customer and industry focus, and smart portfolio management."

BASF's strategy going into 2005 will continue a keen focus on programs to enhance competitiveness by reducing fixed costs, enhancing margins, strategically improving the company's business portfolio, and in delivering greater customer value through innovation.