BASF, the world’s leading chemicals group, posted steep drops in first-quarter earnings yesterday and warned of huge challenges ahead as key clients like the auto sector struggled amid a global recession.
BASF reported a 68 percent drop in first quarter net profit to 375 million euros (US$499 million) because of “persistently weak demand.”
A gloomy but direct BASF statement said core earnings shed 58 percent to 985 million euros, on sales that lost 23 percent to 12.2 billion euros owing to the economic slump.
Responding to what it called “an extremely difficult environment,” BASF said it would eliminate at least 2,000 posts by the end of the year.
BASF employed around 97,000 workers at the end of last year and is active in the chemical sector, including plastics and agricultural products, as well as in the exploration and sale of oil and gas.
It had already warned of at least 1,500 job cuts this year, but said yesterday it “will restructure and, where necessary, close or sell plants and sites that cannot ensure the company’s long-term competitiveness.”
“BASF is facing enormous challenges in 2009,” the statement said, adding that demand for chemical products, used widely in the distressed auto sector for example, had shown a “drastic decline” since the start of the year.
It quoted chairman Juergen Hambrecht as saying: “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.”
Looking ahead, the chemicals giant said that despite the acquisition of two companies, Ciba Holding and Revus Energy, it forecast “a decline in sales compared with 2008 and an even greater decline in income from operations, which will be negatively impacted by integration costs.”
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