26 February 2009 09:12 [Source: ICIS news]
(Recasts lead, adds quarterly net loss, more detail throughout and share price)
SINGAPORE (ICIS news)--German chemical giant BASF expects its earnings to weaken this year as business conditions have not improved, making cuts of at least 1,500 jobs worldwide necessary, the company said on Thursday.
Its full-year operating profits before special items fell 10% year-on-year to about €6.9 billion ($8.7bn) due to a sharp slump in demand for chemicals, but higher prices helped sales to rise 8% to €62.3bn. In the fourth quarter, the company incurred a net loss of €313m.
“2009 will be a year of unprecedented challenges,” BASF chairman Jurgen Hambrecht said, deeming the goals of maintaining a stable dividend payout to investors and earning the company's cost of capital as "ambitious."
BASF said it sees an "even greater decline in income from operations" in 2009 and lower sales despite the acquisitions of Ciba and Revus Energy.
The company has proposed a dividend of €1.95 per share for 2008, the same amount it paid in 2007 before the 1:2 stock split in February last year.
“In order to maintain the company’s long-term competitiveness, BASF is accelerating its ongoing efficiency and restructuring programs, and will close less profitable plants and also sites throughout the BASF Group,” the company said in a statement.
It said the restructuring program would apply to coatings sites in the ?xml:namespace>
“Normally, such plants would be replaced by new capital expenditures. Now, BASF is closing them faster than originally planned,” the company said.
Hambrecht said demand for chemical products has not picked up since the start of 2009 after a dramatic drop in BASF’s global business in the fourth quarter of 2008.
“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.
The company’s shares rose nearly 7% from Wednesday’s close at €22.50 (11:45 GMT).
($1 = €0.79)
With additional reporting by Pearl Bantillo
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