30 October 2008 07:56 [Source: ICIS news]
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SINGAPORE (ICIS news)--The world's largest chemicals company BASF has posted a 37.5% plunge in its third-quarter net profits to €758m ($591.24bn) due to high raw material costs and hurricane-related losses, the company said on Thursday.
“The impact of the global financial crisis on the real economy is speeding up and hitting harder,” said Jurgen Hambrecht, chairman of the board of executive directors of BASF.
Sales rose 13% for the company’s third quarter ended 30 September to €15.78bn on substantial price and volume increases, while operating income tumbled 10.7% to €1.51bn, from €1.69bn year on year, it said.
BASF said hurricanes Gustav and Ike, which ravaged US Gulf coast chemicals facilities, had shaved more than $100m (€78m) off its earnings for the period.
It had also incurred significant expenses from hedging naphtha purchases against increasing prices that came to nothing as oil prices plunged towards the end of the quarter.
Net profits for the nine months to 30 September, however, only dipped marginally to €3.23bn, from €3.27bn year on year, while company sales for the same period rose 11% to almost €48bn, from €43.25bn.
The company reported an across-the-board rise in sale volumes for all its divisions, with the oil and gas segment leading the increase with a 46% rise, while the chemicals and plastics segments recorded relatively modest rises of 19% and 4% respectively.
Looking forward, Hambrecht predicted an extremely challenging business environment for the company.
“The decline in demand in important markets, stockpiling by our customers and the fall in oil prices are all signs of a recessionary trend that is likely to sharpen in 2009,” he said.
The company now expected global economic growth of below 2.7%, chemical production growth of below 2%, average Brent crude of $105/bbl in 2008 and an average $1.45 per euro exchange rate, in addition to volatile raw material costs and risks in a further economic downswing.
Under the revised expectations, BASF had also shifted its outlook for the full year and expected to increase sales in 2008, while making every effort to “match” the previous years’ excellent earning before interest and tax before special items, it said.
($1 = €0.78)
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