UpdateBASF Q1 net profit plunges 68%, to cut 2,000 jobs by year-end

30 April 2009 06:51  [Source: ICIS news]

(adds job cut plans, further details)

BASF CEO Jurgen HambrechtSINGAPORE (ICIS news)--BASF has reported a 68% year on year plunge in its first quarter net profit to €375m ($498.8m) due to “persistently weak demand”, the German chemical giant said on Thursday.

Citing “enormous challenges” the company would face this year, BASF said it was looking at cutting its workforce by at least 2,000 by end-2009 and could consider more plant closures to cope with the difficult business environment.

BASF expected full-year sales and profit from operations to contract from 2008.

“Our goal of earning our cost of capital is thus becoming increasingly difficult to achieve,” said BASF chairman Jurgen Hambrecht.

The company’s sales for the first three months of the year declined 23% year on year to €12.2bn while its earnings before interest, tax and special items tumbled 58% to €985m.

“There is currently no sign of a reversal of this trend and we do not consider temporary topping up of inventories in some regions and industries to be signs of a sustainable upturn,” he said.

“BASF will maintain strict cost and spending discipline and will continue to reduce current assets rigorously,” said Hambrecht.

Further restructuring may include closure or sale of plants and sites that could not ensure long-term competitiveness, he added.

BASF said it planned to develop an extensive integration plan with its newly-acquired chemicals firm Ciba Holding by the middle of the year.

“Substantial restructuring measures are urgently needed to ensure the profitable growth of the combined businesses,” the company added.

It said its 2009 financial results would also be negatively impacted by integration costs with the acquisition of Ciba and Revus Energy.

($1 = €0.75)

Bohan Loh contributed to this story
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