BASF's Q1 net income dips 68%; Chemicals, Plastics sales plummet

30-Apr-09

BASF posted a 23% year-on-year decline in sales for Q1 2009 to EUR 12.2 bln driven by extremely weak demand across all segments except for 'Agricultural Solutions' and 'Oil and Gas' segment. The company recorded a steep decline of 68% in Q1 net income to EUR 375 mln compared to same period last year. In the three month period, sales dropped in all divisions of the 'Chemicals' segment on lower volumes and weak prices. Earnings fell sharply as a result of the continued low level of product demand but were positive in all divisions. Production was tailored to reflect this fall in demand and inventories have been reduced. The 'Plastics' segment witnessed drop in sales due to lower volumes and the earnings turned slightly negative due to low margins and high costs of mothballed capacity in the Performance Polymers division. The company does not expect an upstick in demand for all the regions. BASF will restructure and, where necessary, close or sell plants and sites that cannot ensure the company's long-term competitiveness. The company will cut at least 2,000 positions by the end of 2009. In 2009, despite the acquisitions of Ciba Holding AG and Revus Energy ASA, BASF expects a decline in sales compared with 2008 and an even greater decline in income from operations, which will be negatively impacted by integration costs.