BASF sticks to 2019 forecast despite sales slide

Bosses plan to cut 6,000 of BASF’s roughly 120,000 jobs worldwide by the end of 2021, contributing to annual savings of €2 billion. — Reuters pic
Bosses plan to cut 6,000 of BASF’s roughly 120,000 jobs worldwide by the end of 2021, contributing to annual savings of €2 billion. — Reuters pic

FRANKFURT, Oct 24 — German chemical giant BASF today left forecasts unchanged for 2019 despite reporting falling sales and profits in the third quarter, blaming trade conflicts and uncertainty for the lingering gloom.

Net profits at the group slumped 24 per cent year-on-year between July and September, to €911 million (RM4.6 billion).

Meanwhile sales edged back 2.0 per cent, to €15.2 billion, for an operating, or underlying profit down 1.0 per cent at 1.4 billion.

“We can’t sound the all-clear about the economic environment,” chief executive Martin Brudermueller told reporters in a telephone conference, pointing to US-China trade conflicts and Brexit uncertainty.

“Things certainly aren’t going to get easier in the coming months... it’s clear that it’s not going to be a walk in the park,” he added.

Especially falling production in the global car industry — a vital customer for chemical makers — has weighed on the Ludwigshafen-based firm.

But there were some bright spots, like better sales of catalytic converters in China and India as new emissions limits are set to bite next year.

And sales of battery materials continued to climb steeply as pure electric and hybrid vehicles claim a small but growing share of the market.

“In recent years, we’ve seen double-digit (per centage) growth in revenue and volumes” in batteries “and it’s continuing that way in 2019,” chief financial officer Hans-Ulrich Engel said.

“Tesla published relatively positive numbers yesterday evening, of course that’s also a sign of what’s going on in the automobile field,” he added.

CEO Brudermueller added that the company was “radically and systematically reshaping our organisation” through the downturn and had already “made a lot of progress” in a restructuring programme announced earlier this year.

Bosses plan to cut 6,000 of BASF’s roughly 120,000 jobs worldwide by the end of 2021, contributing to annual savings of €2 billion.

By October, 1,800 posts were already shed, with more to come in the fourth quarter, Engel said.

Looking ahead to the full year, BASF confirmed its forecast of a fall of up to 30 per cent in operating profit before special items, on a “slight decline” in sales.

BASF shares gained 1.8 per cent to trade at €68.98 around 10.20am in Frankfurt (0820 GMT), against a DAX index of blue-chip stocks up 0.4 per cent. — AFP

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