BASF 3Q profit down, but sales rise

FRANKFURT, Germany - Chemical maker BASF SE said Thursday that its net profit for the third quarter fell 38 percent in part due to currency effects and hurricanes, and warned that the global financial crisis raised uncertainty over its full-year forecasts.

BASF said net earnings for the July through September period fell to 758 million euros ($1 billion) from 1.2 billion euros a year earlier.

The company, which makes everything from fertilizers and paints to glues and ingredients for cosmetics, said third-quarter sales increased 13 percent to 16 billion euros ($21.1 billion) from 14 billion euros.

Still, "the effect of the global financial crisis on our sales markets and supply markets were greatly intensified toward the end of the quarter," the Ludwigshafen-based company said in a statement.

"Declining demand in key markets, the reduction of inventories by our customers and the fast and drastic decline in the oil price indicate a recessive development that is likely to be intensified even further in 2009. Any forecast therefore involves a great deal of uncertainty."

BASF said it "will make every effort to match last year's excellent earnings," and will "focus on efficiency and sustainability."

In the third quarter, BASF said earnings were affected by currency effects and by the busy hurricane season on the U.S. Gulf Coast — which forced it to shut a number of plants temporarily.

It said restrictions imposed on production during the Beijing Olympics also had a negative impact.

BASF said the worsening global economic situation meant that it now expects growth in chemical production, excluding pharmaceuticals, this year of less than 2 percent, down from its previous forecast of 2.4 percent.

BASF also lowered its forecast for the average price of Brent crude oil to fall to $105 a barrel from the previous $120.

In the third quarter, BASF said sales in its oil and gas segment increased 46 percent to 3.2 billion euros ($4.2 billion) from 2.2 billion euros a year earlier because of higher oil prices and a rise in volumes in natural gas trading.

The company's chemical segment saw a 19 percent increase in sales, which rose to 2.8 billion euros ($3.7 billion) from 2.3 billion euros.

BASF's agricultural solutions business saw an 11 percent increase in sales to 636 million euros ($840 million) from 574 million euros.

"The high price level for agricultural products resulted in a strong demand for our innovative crop protection agents," BASF said. "Although the third quarter is usually rather weak, sales reached a record high."

Plastics sales rose 4 percent to 2.6 billion euros ($3.4 billion) from 2.5 billion euros.

The news sent shares of BASF 4.3 percent lower to 23.55 euros ($31.09) in Frankfurt trading.

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