Chemicals giant BASF warns of dire 2009

AFP - [email protected]
Chemicals giant BASF warns of dire 2009
Photo: DPA

The world's biggest chemicals company, BASF, saw business slide in the last quarter of 2008 due to the global economic slump and warned Thursday 2009 could be be equally grim.


BASF posted a net loss of €313 million ($398 million) in the final three months of last year, compared with a profit of €793 million in the same period of 2007. The company said in a statement that the "significant decline in the global economy impaired fourth-quarter earnings." For all of 2008, net profit fell by 28.4 percent to €2.9 billion.

The results came in below analysts forecasts, which had foreseen a quarterly loss of €5.4 million and an annual profit of €3.2 billion, according to a poll by Dow Jones Newswires.

In 2009, BASF expected sales to fall further and warned of "an even greater decline in income from operations," owing in part to costs connnected with the integration of the Swiss chemical company Ciba. The German group said it would propose an unchanged dividend of €1.95 per share for 2008.

Despite the grim news, the price of those shares jumped by 6.31 percent to €22.40 in morning trading on the Frankfurt stock exchange, while the DAX index of German blue chips was 1.85 percent higher overall.

To deal with the downturn, BASF has already closed several plants, and the statement said that more would shut down this year in Asia, Europe and the United States, with the loss "of at least 1,500 jobs."

One of the group's main activities, supplying the automobile sector, has been hit hard by a sharp decline of markets worldwide. That trend is expected to continue this year, while the fall in oil prices also weighed on BASF's revenues.

Chairman Jürgen Hambrecht painted a bleak picture for the current year, saying it would present "unprecedented challenges."

"Following the dramatic drop in our global business in the fourth quarter of 2008, demand for chemical products has not picked up since the start of 2009," the BASF boss acknowledged.

"A reversal of the trend is not yet in sight. On the contrary: The situation in our sales markets is worsening, and inventory levels in the value chains are still too high. As a result, the chemical industry is continuing to shrink," he said.

Like many other companies, BASF declined to give a detailed outlook for 2009 earnings.

It nonetheless expected to maintain its share dividend constant and to pursue spending on research and development "at the same level as in previous years in order to ensure our long-term success," Hambrecht said. He termed those goals "extremely ambitious in the current economic climate."

BASF employs 95,000 workers and is present in the full range of chemical activities, including plastics and agricultural products, as well as in the exploration and sale of oil and gas.



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