29 October 2009 12:38 [Source: ICIS news]
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LONDON (ICIS news)--BASF expects a slow and uneven climb out of recession and for it to be 2012 before 2008 rates of growth are restored, CEO Jurgen Hambrecht said on Thursday.
“We really are at a nadir,” he said in a conference call. “There will be a very slow recovery and an uneven recovery at that,” he added.
BASF said on Thursday that it had seen de-stocking come to an end and growth in ?xml:namespace>
Hambrecht cautioned, however, that the company continued to operate at an unprecedented low level and would not earn its cost of capital this year. It predicted “significant declines in sales and earnings for the full year”, he added.
The company said it expected some employees to continue on short-time working into next year.
Third-quarter net profits for the Germany-based chemicals giant dropped 69% year on year to €237m ($349m) due to the global economic crisis.
Sales for the three-month period ended 30 September were €12.8bn, down 19% from the same period last year, while earnings before interest and tax (EBIT) before special items fell 20% to €1.2bn, BASF said in a statement.
However, earnings in petrochemicals and intermediates increased compared with the third quarter of 2008, it added.
BASF benefited from supply reductions caused by unscheduled plant shutdowns by competitors in the third quarter, especially
Destocking by customers worldwide appeared to be over for the time being, which had caused a slight upturn in demand, but customers were still placing smaller orders at increasingly short notice, BASF said.
“In the past three months our business has stabilised at a low level. Positive impulses are coming from Asia, especially from
“Overall, there is much to suggest that the worst is behind us. After a steep plunge, we are now climbing gradually out of the trough,” he added.
BASF said it believed its fourth-quarter income from operations before special items was likely to be higher than that of the weak fourth quarter of 2008 but down from the third quarter of this year.
The effects of stimulus packages were starting to peter out, Hambrecht said, and many companies were dealing with financing problems. "The number of bankruptcies is increasing, little attention is being paid to address structural overcapacities, and unemployment is rising," he added.
The integration of specialty chemical company Ciba had been faster than planned in some areas and therefore a larger proportion of the integration costs would be incurred in 2009, BASF said.
“Higher costs for the Ciba integration will additionally negatively impact earnings. BASF is therefore unlikely to reach its goal of earning its cost of capital this year,” said Hambrecht.
BASF's share price was down 1.28% at €36.53 at 12:41 local time on Thursday. Germany's DAX index was up 0.11%.
($1 = €0.68)
Nigel Davis contributed to this article
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