BASF Earnings Sag On Weak Chemicals Segment

- Mar 05, 2019-

BASF SE has reported a 17 percent decline in profit on a 2 percent jump in sales for fiscal 2018.


While revenues rose to 1 billion euros an ounce last year, revenues (before special items) fell to $7.3 billion from $8.6 billion in 2017.


The company attributed the decline mainly to the performance of its chemicals division, which accounted for about 2/3 of total revenue declines.


The company's profit margins fell sharply in the second half of this year. Margins in 2018 were also lower than expected.


In short, 2018 has been a difficult year for global economic and geopolitical development, as well as a year of trade conflict. BASF said, especially in the automotive industry, Arths is the largest BASF customer industry.


More importantly, BASF noted that the "significant decline" in demand from Chinese customers was triggered by trade disputes between the United States and China.


"We accept these challenges. Using our new corporate strategy, we will use 2019 as a year of transition to strengthen," said BASF CEO Martin Broudmiller.


The volume is reduced in the performance products section. Last year, because of the low water level of the Rhine, the chemical "volume" also declined.


"very long low water levels also affect the depth of the water. For much of the third and fourth quarters, shipping supplies of raw materials almost stopped. " The company noticed.


Therefore, its capacity utilization must be reduced. This brings the 2018 results closer to $284 million.


The company is continuing the restructuring bid that began earlier this year to streamline the process.


"By the end of the third quarter, the whole process will be completed. and then about 20,000 co-workers will be closer to our customers,", he said.


The changes in the organization have affected areas such as research and development, engineering, supply chain, procurement, human resources, information services, and the environment, health and safety.


In commenting on the recent investment plan in China, he said China is a "key market" of Asia and the world, and for the entire chemical industry.


"That is why we must be involved in the growth of the world's largest chemical market,". He added.


In January, CNOOC signed a framework agreement with the Ministry of Chemical Industry to build a $10 billion chemical plant in China.


The company is also expanding in India. The company recently signed a memorandum of understanding with ADB to study a US $2.3 billion Acrylic first Port joint venture in the Acrylic value chain. The state of India.


The project marks BASF's largest investment so far in India and will be the company's first CO2 neutral production facility.