Ludwigshafen, Germany - BASF SE has reported strong sales growth in its third quarter 2008 (Q3) results but has seen profits slip as the German chemical company prepares for what it calls a "tough business environment."
Sales in BASF's plastics segment, where about 50 percent of turnover comes from the polyurethanes business, increased by 4 percent. Due to theslowdown in the automotive and construction industries, BASF said, higher rawmaterial costs could not be passed on to the market sufficiently. Earnings were also "negatively affected by plant shutdowns due tothe hurricanes on the US Gulf Coast," the group added.
The company's Performance Products segment -- which has some polyurethanes in its adhesives, sealants, coatings and leather chemicals units, posted a 5 percent increase in sales whilst income from operations (EBIT) "rose significantly thanks to the strong performance of Care Chemicals and reduced fixed costs in all divisions," BASF said.
Group sales grew by 13 percent to Euro 15 800 million ($20 295 million) or by 18 percent disregarding currency effects, due to substantial price increases and volume growth, the company said. Earnings improved by 7 percent despite the effects of higher raw materials costs and hurricane impacts, whilst income from operations declined by 8 percent for BASF Group. "Significant expenses from hedging naphtha purchases against increasing prices were incurred as a result of the fall in oil prices towards the end of the quarter," the company said.
"The impact of the global financial crisis on the real economy is speeding up and hitting harder. The economic skid marks can no longer be ignored. The decline in demand in important markets, stockpiling by our customers and the fall in oil prices are all signs of a recessionary trend that is likely to sharpen in 2009," said Jürgen Hambrecht, chairman of BASF (pictured.)