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GERMANY-EARNINGS-CHEMICALS-BASF
Trade conflicts and auto slowdown hit BASF in Q2
BERLIN, July 25, 2019 (BSS/AFP) – German chemical giant BASF on Wednesday
reported ebbing second-quarter revenues and a plunge in underlying profit, as
trade conflicts hit key client industries like cars and farming.
Operating, or underlying profit at the group excluding special items fell
47 percent year-on-year to one billion euros ($1.1 billion), BASF said in a
statement.
Sales fell four percent to 15.2 billion euros, in line with expectations
from analysts surveyed by Factset.
Regarding trade tensions, especially between the US and China, “we
followed the general assessment that a solution would be found by the middle
of the year. But now it seems the situation will not ease for some time,”
chief executive Martin Brudermueller said.
That meant that “growth in BASF’s customer industries in the first half of
the year was significantly below expectations,” the group said, pointing
especially to the car industry.
Automakers saw a six percent worldwide slump in production in the first
six months, BASF found, and 13 percent in vital market China.
“The automotive industry — an important customer industry for BASF —
will not recover this year,” Brudermueller said.
Meanwhile bad weather hitting North American farms squeezed demand for the
company’s agricultural products.
But the group was able to report a massive boost in net profit, from 1.5
billion in April-June 2018 to 6.5 billion this year, as it netted a windfall
from the merger of its Wintershall hydrocarbons division with DEA.
Earlier this month, BASF shares plunged as the Ludwigshafen-based firm
slashed its full-year earnings forecast.
It now expects “a slight decline” in revenue, while operating profit
before special items could fall up to 30 percent compared with the 7.6
billion euros booked in 2018.
BASF finds itself battling the business headwinds soon after launching a
far-reaching restructuring, which will see it slash 6,000 jobs worldwide by
2021.
“More than 1,100” employees had already signed termination agreements by
the end of June, the company said.
BSS/AFP/HR/1245