FRANKFURT (Reuters) - Operating income at Germany’s BASF (BASFn.DE) dropped 24% during July-September as uncertainty over trade disputes weighed on prices for its basic petrochemicals and foam ingredients.
BASF, the world’s largest chemicals company by sales, said on Thursday that earnings before interest and tax (EBIT), adjusted for one-off items, dropped to 1.1 billion euros ($1.2 billion), in line with market expectations.
“The trade conflict between the United States and China is weighing on our business. Moreover, there are uncertainties related to Brexit,” said Chief Executive Martin Brudermueller.
“These events are acting as a drag on the economy,” he added.
BASF, whose products include vitamins, foams for car seats, engineering plastics and superabsorbers for diapers, reaffirmed earlier projections that adjusted full-year EBIT would be as much as 30% below the year-ago numbers.
Higher earnings in company’s seeds and pesticides as well as specialty chemicals, such as catalytic converters and battery chemicals, cushioned the blow.
CEO Brudermueller is trying to cut costs at the group’s large integrated chemical complexes around the globe, while divesting businesses that are not closely connected with that production network, such as oil and gas as well as BASF’s pigments and construction chemicals businesses.
Under an ongoing scheme to ramp up cost cuts to an annual rate of 2 billion euros by 2021, BASF said cost cuts would be at around 500 million euros in 2019.
($1 = 0.8981 euros)
Additional reporting by Patricia Weiss, Editing by Tassilo Hummel and Sherry Jacob-Phillips