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BASF warns of headwinds ahead

Friday, October 24, 2014 - 02:05

BASF, the world's largest chemicals company, slashes forecasts for 2015 on a reduced emerging markets outlook and the faltering European recovery. As Hayley Platt reports, it joins an ever-longer queue of mega-companies warning on growth.

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BASF is the latest firm to warn of headwinds on the horizon. The world's largest chemicals company follows ABB, Rolls Royce and Unilever. Its third quarter earnings rose to 1.84 billion euros, slightly ahead of expectations. But sales in its home market of Europe, which accounts for half the group's sales, are slowing. Kurt Bock is the company's chief exec. SOUNDBITE: BASF, CEO Kurt Bock, saying (English): "We've seen a very slow Q3 in terms of demand in Europe. Just to give you an idea, a four percent drop in chemical demand for our business in Europe and that is unprecedented for many many years. And we don't really feel a positive momentum going into Q4 and going into 2015." The company which makes car coatings, foam chemicals and catalytic converters, has slashed its outlook for 2015. It now sees chemical production growth at 4.0 percent down from 4.9 previously. EBIT-DA is seen at 10-12 billion euros in 2015, down from the 14 billion euros previously forecast. While Europe is the group's bread and butter, BASF relies on Asia for growth. And business there isn't what it used to be. That together with the current geopolitical tensions are proving to be testing times for BASF and others. SOUNDBITE: BASF, CEO Kurt Bock, saying (English): "We will look at our investment budget going forward very soon and will have to find out what can be really done over the next couple of years. Certainly at this point in time we have a higher degree of uncertainty than let's say 12 or 24 months ago." One bright spot: the U.S. where its petrochemicals business got a boost from cheap gas supplies. That added 8.9 percent to its quarterly operating earnings. The group says it's ahead with its efficiency programme. Which should produce 300 million euros in extra earnings by the end of 2015. Looking further ahead, BASF says the restructuring of its paper chemicals, plastics and pigments business will contribute about 500 million euros to its earnings from 2017.

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BASF warns of headwinds ahead

Friday, October 24, 2014 - 02:05