FRANKFURT, July 9 — Shares in German chemical giant BASF tumbled at the start of trading today, after the group slashed its earnings forecast for the full year, blaming the impact of trade conflicts on the industry.
After plunging more than five per cent at the open, the stock was showing a loss of nearly six per cent at €58.87 (RM273) just before 10am (0800 GMT), making it the second-worst performer on the DAX index of blue-chip companies.
In a statement late today, BASF had warned that it expects to report a 71-per cent year-on-year slump in operating profit for the second quarter, to €500 million.
Over the full year, operating profit before special items could be as much as 30 per cent lower than the €7.6 billion booked in 2018.
The forecast cuts were “a consequence of the considerably weaker-than-expected business development in the second quarter of 2019 and the slowdown in global economic growth and industrial production, mainly due to the trade conflicts” between the US, China and Europe, BASF said.
A long-awaited breakthrough in Washington’s face-off with Beijing has so far failed to materialise, despite a meeting between presidents Donald Trump and Xi Jinping at the G20 gathering in Japan.
“The G20 summit... has shown that a rapid detente is not to be expected in the second half of 2019,” BASF said, but “uncertainty remains high”.
As well as the impact on manufacturing, particularly car production, adverse weather in North America has weighed on agriculture — lowering demand for the chemical maker’s pesticides.
The headwinds strike BASF as it is tackling a far-reaching restructuring, including 6,000 job cuts by the end of 2021. — AFP