By Ludwig Burger
LUDWIGSHAFEN, Germany (Reuters) - German chemicals maker BASF said it was aiming for a gain of up to 10 percent in group operating profit this year, because an earnings rebound from specialty chemicals would offset declines at its basic petrochemicals unit.
At its basic chemicals unit, operating profit, or earnings before interest and tax (EBIT) adjusted for one-off items, would likely drop by 11 percent or more in 2018, after a surge of 67 percent in the fourth quarter, the group said on Tuesday.
Supply bottlenecks and strong demand across the petrochemicals industry have flung BASF's commodities business into a surprise upward cycle last year, with full-year operating earnings doubling, mirroring similar developments at rivals such as Covestro.
But BASF and its rivals are busy ramping up output capacity, most notably for chemicals that are used in building insulation or furniture, which will likely bring down margins.
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Meanwhile, the profitability of its more advanced and customised products, the group's designated growth drivers, were hurt by the higher raw materials prices but BASF expects fortunes to reverse this year.
The 2018 earnings gain would mainly be driven by two divisions that specialty products such as food nutrients, ingredients for household products, catalytic converters or engineering plastics, BASF said.
It added that the Wintershall oil and gas division, which BASF is seeking to merge with Russian billionaire Mikhail Fridman's DEA before the end of June, would also contribute to the increase in profit.
Crude oil gained almost 17 percent in the last three months of 2017 and traded at two-year highs in January.
(Editing by Maria Sheahan)
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