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August 9, 2000 

FRANKFURT (AP) - High raw material prices and a sagging U.S. market for health and nutrition products kept half-year net income below expectations at chemical and pharmaceutical giant BASF AG, the company reported Tuesday.

Net income more than doubled to 912 million euros (dlrs 830 million) for the first half of 2000.

But the figures fell below the expectation of analysts, who said the increase looks artificially big because a special charge to settle lawsuits for price-fixing vitamins socked earnings last year.

Operating profit rose 18 percent to 882 million euros (dlrs 801 million) for the period, driven mainly by BASF's oil and gas, and plastics and fibers businesses. But that too disappointed analysts, who were expecting earnings in the range of 940 million euros (dlrs 855 million) to 1.1 billion euros (dlrs 1 billion).

BASF's first-half bottom line was further bruised by a slowdown - especially in the United States - at its health and nutrition division, which makes everything from diet pills and vitamins.

BASF shares dropped sharply in early morning trading, down 3.3 percent to 43.70 euros (dlrs 39.77).

With 105,000 employees, BASF, produces a wide range of products including chemicals, paints, pesticides and pharmaceuticals.

Revenues at the Ludwigshafen-based company rose 24.5 percent to 17.4 billion euros (dlrs 15.83 billion) for the half-year, and the company stood by its forecast to raise operating profit by more than 10 percent for the year.

"For 2000 as a whole, the company expects higher sales and a much higher comparable income from operations," BASF said in a statement.

The company also said it will log a 400 million euro (dlrs 364 million) one-time charge in the second half to help pay for this summer's takeover of New Jersey-based American Home Products Corp.'s Cyanamid agrochemicals business. BASF paid dlrs 3.8 billion for the pesticides company.

BASF said it would look to slim down for the rest of the year by selling off various assets not related to its core chemicals and pharmaceutical business. But it said the additional sales brought by Cyanamid should compensate for sales lost through such divestments.