BASF’s outlook for 2009 is weak after a difficult fourth quarter

By Katie Bird

- Last updated on GMT

Related tags: Revenue

BASF expects a drop in sales and an even greater drop in operating income in the coming year.

The chemicals giant released fourth quarter and annual results that show the strains of a global recession, and say it will be confronting major challenges in 2009.

Sales for the fourth quarter dropped 2.7 per cent but operating income suffered a much more drastic fall, deceasing 61.9 per cent from 2007’s fourth quarter figures.

Increasing raw material costs and high restructuring costs were cited as reasons for the decline.

Net income also suffered in the quarter and the company reported a loss of €313m, compared to a gain of €793m in the same quarter last year.

Care chemicals stable

Performance products, which includes care chemicals, was one of the company’s healthiest segments, beaten in the quarter only by oil and gas.

Within this segment, care chemicals was a strong performer particularly aroma chemicals and products for the cosmetics and pharmaceutical industries, according to the company.

Over the full year, sales in the care chemicals division increased by €36m to reach €3.065bn, mainly due to price increases.

Sales and earnings for the segment are expected to ‘decline only slightly thanks to a cyclically resilient portfolio’

2009 looks glum

The outlook for the other divisions in 2009 was more cautious and only agricultural chemicals can expect an increase in sales and income, according to the company.

Overall the company remained downbeat about the coming year and said despite the recent acquisitions, sales will drop and the significant integration costs will take their toll on income.

“Our global business declined sharply in the fourth quarter of 2008. Since the beginning of 2009 there has been no recovery in the demand for chemical products, and there is currently no sign of a reversal of this trend,” ​said the company in a statement.

However, BASF did reassure customers and investors that it did not foresee any specific threats to its continued exsitence in the coming year or the forseeable future.

Related topics: Business & Financial, Financial focus

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