FRANKFURT, March 1 (Reuters) - German chemicals trade group VCI cut its outlook for sector sales by half this year after revenue growth slowed to 1.8 percent in the fourth quarter, when Europe’s biggest economy contracted.
“The slowing effect of the debt crisis in the European Union became more and more apparent in 2011. Our industry felt that as well,” VCI head Utz Tillmann said.
“But we appear to have reached the trough, the situation in the chemicals industry is improving,” he added.
The trade group said on Thursday that industry revenues should grow by 1 percent this year, compared with a previous outlook for 2 percent growth.
VCI, which represents Germany’s third-largest industry after carmakers and engineering companies, also said the sector’s output volume should stagnate this year, while it previously anticipated a 1 percent increase.
Earnings at German chemicals companies have been a mixed bag, with Bayer posting a 9 percent drop in fourth-quarter profit due to soaring raw materials costs at its plastics division, and BASF surprising with a bullish outlook.
VCI said German industry output slipped by 4.3 percent year-on-year in the fourth quarter as customers ordered fewer chemical products amid an uncertain economic outlook, and manufacturers responded by cutting capacity.
The chemical sector’s dependence on highly cyclical machinery makers, carmakers and builders makes it especially vulnerable to a downturn. (Reporting by Maria Sheahan)