19 November 2008 18:26 [Source: ICIS news]
TORONTO (ICIS news)--BASF’s move to temporarily shut down 80 plants and reduce capacity at 100 more in response to rapidly deteriorating demand and a lack of credit availability among customers is “unprecedented”, Citigroup said on Wednesday.
The cuts meant that approximately 25% of BASF's industrial capacity would be temporarily closed in the 2008 fourth quarter, Citigroup said in a research note.
“The depth of these cuts is unprecedented in recent memory,” the analysts said.
The move would have implications for US chemicals producers in auto paints, auto plastics and commodities as well as specialty chemicals and plastics, they said.
However, BASF’s large agrochemicals business should hold up much better, Citigroup said.
The analysts said that beyond the capacity cuts BASF was providing very little specific guidance apart from saying that 2008 earnings before interest and tax (EBIT) would not beat 2007 EBIT.
BASF’s 2007 EBIT was €7.3bn ($9.2bn), up 8.4% from 2006, according to information on the company’s website.
Citigroup said: "We are cautious to negative on the commodity chemical space. Today’s announcement reinforces that view.”
($1 = €0.79)
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