Ciba 3Q profit down 8 pct, BASF deal advancing

BASEL, Switzerland - Specialty chemicals maker Ciba Holding reported Wednesday an 8 percent drop in third-quarter net profit on lower demand for its products in Europe, and cut its full-year outlook amid an expected slowdown in the U.S. and Asia.

The Swiss company, which is being acquired by German giant BASF SE, said it expects a more challenging environment in the coming months and that previous guidance for the year was no longer applicable. It had previously predicted a 15 percent decline in operating profit from 552 million Swiss francs last year.

Net income for the three months ended September was 46 million Swiss francs ($39.3 million), down from 50 million francs in the same period last year, Ciba said in a statement. Sales fell 6 percent in Swiss currency to 1.55 billion francs ($1.32 billion).

Figures for the first nine months remained deep in the red on mid-year losses related to high energy and raw materials costs, and a 595 million franc ($543 million) one-time accounting charge. Ciba has lost 523 million francs ($446.4 million) so far this year, compared with gains of 153 francs through the first three quarters last year.

"The third quarter improved considerably over what had been a disappointing second quarter," said Chief Executive Brendan Cummins, attributing the improvement to sales price increases, the high profitability of Ciba's coating business and a boost in the company's water and paper treatment results.

But, Cummins added, the economic slowdown in recent months led to a "sudden deterioration in demand" in a number of industries, particularly in Europe. Results were better in the Americas, and sales growth was particularly strong in Asia — at least for now.

"Growth in Asia will start to slow over the coming months as the economies in the region begin to be affected by the global downturn," he said.

Ciba shares rose 0.7 percent to close at 49.30 francs ($42.54) in Zurich.

In September, BASF, one of the world's biggest makers of chemicals, announced it would acquire Ciba for 50 francs ($42.68) a share — a total of 6.1 billion francs. BASF said it hoped to finish the purchase in the first quarter of 2009.

Ciba said Wednesday the transaction was progressing as planned, and that BASF has now secured the required two-thirds majority of shares in the offer. The deal is still subject to regulatory approvals, it added.

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