BASF cuts full-year goals in face of slowing global economy
BASF, the world's biggest chemicals maker, cut Tuesday its full-year sales and earnings targets in face of slowing growth in China and the weaker-than-expected global economy.
"In the first three quarters of 2015, growth in the global economy remained considerably below (our) expectations," BASF said in a statement.
"The economic environment clouded over in important emerging markets, especially in China. BASF has further reduced its expectations for the global economy in 2015," the statement said.
Falling oil prices would also hurt BASF's business, said chief executive Kurt Bock.
"Besides weaker economic development, the oil price fell further than expected," he said.
"In addition, the divestitures concluded in the third quarter of 2015 will put a strain on sales and earnings development. We are therefore adjusting our outlook for 2015."
BASF said it was "unlikely" that it would achieve the slight sales growth forecast for 2015.
"BASF now expects sales to decline slightly. This assumption is based on the divestiture of the natural gas trading and storage business concluded in the third quarter of 2015 as well as on the lower price of oil," it said.
Also contrary to expectations, underlying profits "will probably not match the previous year's level but will instead see a slight decrease," the statement continued.
In 2014, the company booked sales of 74.326 billion euros ($82 billion) and underlying profit of 7.357 billion euros.
In September, BASF announced it had agreed with Russian gas behemoth Gazprom to go ahead with an asset swap the two had put on ice due to tensions between Russia and the West.
Under the deal, BASF's subsidiary Wintershall will obtain shares in a western Siberian gas field.
In exchange it will hand over its stake in their joint venture gas storage and trading business, plus a stake in an oil and gas exploration unit in the North Sea.
BASF said its third-quarter business had felt the pinch from the economic slowdown in China and other emerging markets.
"In a weaker-than-expected market environment," third quarter sales fell by 5.0 percent to 17.4 billion euros and underlying profit, as measured by earnings before interest, tax and special items, declined by 171 million euros to 1.6 billion euros.
"We experienced a pronounced summer lull and no volume momentum in September. Major markets like Brazil are in a recession or face lower growth rates, such as China," said Bock.
© 2015 AFP