BASF Cuts Full-Year Outlook
October 27 2015 - 4:40AM
Dow Jones News
FRANKFURT—German chemicals giant BASF SE on Tuesday cut its
outlook for 2015, citing weak global economic growth, low oil
prices and a recent asset swap with Russia's OAO Gazprom.
The world's largest chemicals company now expects a "slight
decrease" in sales and earnings before interest and taxes before
special items this year. BASF had initially been targeting a
"slight increase" in sales and EBIT before special items to stay
flat year-over-year.
BASF issued its revised full-year outlook as it reported a 19%
jump in third-quarter net profit to €1.2 billion ($1.33 billion),
compared with €1.01 billion for the same period last year, largely
driven by gains from the asset swap with Gazprom that was completed
at the end of September. The swap led to a reduced tax rate
compared with the same period last year, the company explained.
The profit figure beat analysts' forecasts of a €1.01 billion,
according to a recent poll conducted by The Wall Street
Journal.
Sales dropped 5% to €17.42 billion, hurt by weaker sales at its
basic chemicals division, which produces petrochemicals and
monomers, as lower raw material costs contributed to pricing
pressure.
However, the basic chemicals unit reported a slight increase in
EBIT before special items, to €17 million, as a result of high
margins in the petrochemicals unit.
BASF's overall EBIT before special items declined by 10%, to
€1.6 billion, held back by weak earnings in the paper chemicals,
agricultural chemicals and oil and gas divisions.
EBIT before special items at the Performance Products unit,
which manufactures paper chemicals, plastic additives and leather
chemicals, fell 15% to €319 million because of higher fixed costs
from the startup of new plants and unfavorable currency
effects.
The Agricultural Solutions business posted an 84% plunge in EBIT
before special items plunge to €7 million, hurt by a depreciation
of the Brazilian real and higher costs connected with capacity
increases and inventory reduction.
EBIT before special items at the oil and gas
division—wholly-owned subsidiary Wintershall AG—fell by 15% to €371
million because of a smaller contribution from the natural gas
trading business following the swap with Gazprom.
BASF last month announced it would move forward with a
previously canceled deal with Gazprom, whereby Wintershall sold its
gas trading and storage operations in exchange for access to
natural gas fields in Siberia. The two companies had called off the
deal at the end of 2014 amid rising political tensions between
Russia and Europe over the former's incursion in Ukraine.
Write to Christopher Alessi at christopher.alessi@wsj.com
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(END) Dow Jones Newswires
October 27, 2015 04:25 ET (08:25 GMT)
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