BASF: Stabilization in the third quarter
Faster integration of Ciba negatively impacts 2009 earnings
BASF’s figures for the third quarter of 2009 demonstrate the company’s operational strength in the global economic crisis. Third-quarter sales increased by 2% compared with the second quarter but fell 19% compared with the same period of 2008. Income from operations (EBIT) before special items was 9% higher than in the second quarter and 20% lower than in the third quarter of 2008. All operating divisions contributed positive earnings. BASF’s strong cash flow increases the company’s financial strength and has enabled it to reduce debt.
“In this unprecedented downturn, we have demonstrated decisive action in the form of strict crisis management, tailoring production to demand, idling plants and introducing flexible working time arrangements,” said BASF Chairman Dr. Jürgen Hambrecht during his presentation of the company’s third-quarter results. “In the past three months our business has stabilized at a low level. Positive impulses are coming from Asia, especially from China, and from parts of South America. Europe and North America remain weak.”
BASF believes that destocking by its customers worldwide appears to be over for the time being. This has caused a slight upturn in demand. However, customers are still placing smaller orders at increasingly short notice, especially closer to the end of the year.
“Overall, there is much to suggest that the worst is behind us. After a steep plunge, we are now climbing gradually out of the trough. The recovery will be slow and uneven,” said Hambrecht.
Worldwide BASF is pursuing a “value over volume” pricing strategy just as rigorously as it is implementing measures to reduce costs and improve efficiency. While capital expenditures are being adjusted to reflect changing markets, at the same time the company is continuing to seize the opportunities offered by growth markets worldwide. Research and development expenditures are being maintained at the high level of the previous years.
The Ciba integration is making rapid progress, and is faster than planned in some areas. By the end of the year, the closure of 33 of Ciba’s nonproduction-relevant sites will have been completed out of a total of 56 planned closures. Three of the seven conditions for divestitures imposed by the merger control authorities have been fulfilled, and the goal is to complete the remaining divestitures by December 2009.
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