BASF Issues Profit Warning on U.S.-China Trade Concerns, Slowing Auto Market
July 08 2019 - 6:12PM
Dow Jones News
By Sara Germano
BERLIN -- BASF SE slashed its profit forecasts on Monday, citing
the continuing trade dispute between the U.S. and China as well as
sluggish demand in the auto market, furthering the struggles at the
German chemicals giant.
The Ludwigshafen, Germany-based firm said that due to slower
economic growth and trade conflicts, it now expects income and
sales to decline for the full year, compared with earlier forecasts
for growth in both segments.
"To date, the conflicts between the United States and its
trading partners, particularly China, have not eased -- contrary to
what was assumed," the company said in a statement. "In fact, the
G-20 summit at the end of June has shown that a rapid detente is
not to be expected in the second half of 2019. Overall, uncertainty
remains high."
Additionally, BASF said it is challenged by continued slowing
demand in the auto market, particularly in China, where production
fell 13% in the first half of the year.
In a release of preliminary figures for its fiscal second
quarter, the chemical maker said that sales fell 4% to EUR15.2
billion ($17.07 billion) while earnings before interest, taxes, and
special items are expected to fall 47% to EUR1 billion. For the
full year, the company now forecasts a slight decline in sales and
a drop of up to 30% in EBIT before special items.
The company previously predicted sales growth of 1% to 5% for
the year and an increase of 1% to 10% in EBIT before special
items.
Shares of BASF fell more than 4% to EUR59.49 in after-hours
trading on Monday.
The guidance comes just two weeks after the company said it
would cut 6,000 jobs, or roughly 5% of its workforce, in an effort
to boost profits.
In November, BASF launched restructuring efforts aimed at
simplifying the company's central functions and cutting costs in
areas from production to research and development.
The company is scheduled to report its full fiscal
second-quarter report on July 25.
(END) Dow Jones Newswires
July 08, 2019 17:57 ET (21:57 GMT)
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