BASF SE's (BAS.XE) crop protection unit has a good chance of surpassing its 2009 adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, margin target, the head of BASF's crop protection division Markus Heldt told Dow Jones Newswires in an interview.

With the crop protection unit showing a positive development for 2009, the German chemicals company predicts it will exceed its goal of an adjusted Ebitda margin of 25% for the full year, he said. In 2008, the margin was 26.6% after 23.2% in 2007.

The unit, which develops and produces innovative active ingredients and formulations for the improvement of crop quality and yields, increased first-quarter sales in both fungicides as well as herbicides, he said.

"It is important that we transfer the positive start of the business [this year], particularly in the northern hemisphere, onto the field," Heldt said. Initially, the strong demand was mainly driven by dealers and now this needs to be continued through farmers buying the products and putting them into action, he noted.

"We now see the main applications being used on the field. We see a strong demand there, also driven by the first quarter, particularly for the innovative, new solutions." He said: "we expect a fundamentally positive development of sales and earnings for the full year," adding it is still too early for a detailed guidance.

In 2008, the unit's revenue was EUR3.41 billion and adjusted earnings before interest and taxes was EUR706 million. The unit thus contributed about 5% to the group's EUR62.3 billion sales in 2008. BASF is the world's number four in crop protection according to sales, behind Syngenta AG (SYT), Bayer AG (BAY.XE) and Monsanto Co (MON).

Heldt was confident on the price development of crop protection goods after the unit raised prices by 7% across the portfolio in the first quarter. The company plans to further increase prices to at least partially offset higher re-registration costs in Europe, he said.

The economic and financial crisis hurts crop protection significantly less than it hurts other chemical businesses, Heldt said. "We generally see that the agro and crop protection operations are more robust with regard to the cycles than our colleagues in the chemical area experience."

Heldt noted that particularly in central and eastern Europe, the agricultural and liquidity situation has deteriorated due to the financial crisis. It has also become more difficult in parts of Latin America, mainly in Argentina and Brazil. The affected regions make up about 20% to 25% of its crop protection sales.

"We try to do a better job [in these regions] by improving risk management and through more careful customer management. With regard to accounts receivables, we've seen a very good performance in the agro business at the end of April compared with other BASF units."

"In fungicides and herbicides, with the current portfolio and our innovations, we have a broad and very robust portfolio," Heldt said, adding that the strategic gap remains insecticides.

"We are on the look-out here," he said. Should an equally attractive opportunity arise like the Fipronil acquisition from Bayer in 2003, "we would certainly be interested." BASF paid about EUR1.2 billion for Bayer's Fipronil package in 2003.

Company Web site: www.basf.com

-By Heide Oberhauser-Aslan, Dow Jones Newswires; +49 69 29725 500; heide.oberhauser@dowjones.com