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BASF books quarterly profit fall on flagging chemicals

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(Globalpost/GlobalPost)

The world's largest chemicals company, Germany's BASF, announced on Thursday a fall in net profit in the second quarter but held to its targets.

It warned that in a volatile global environment the rest of the year would be more difficult than expected, but maintained its forecast of annual results.

BASF makes a wide variety of chemicals for plastics, paints, textiles and drugs as well as the auto, construction and agricultural sectors.

Between April and June, the group booked net income of 1.16 billion euros ($1.53 billion), down four percent year on year, it said in a statement.

Analysts polled by Dow Jones Newswires had expected a rise of almost eight percent to 1.3 billion euros.

At the Frankfurt Stock Exchange, BASF shares fell more than four percent in mid-morning to 66.78 euros, reflecting investor disappointment.

Revenues however rose by almost three percent to about 18.3 billion euros, confirming analysts' estimates, driven by agriculture and energy products.

These more than offset a decline in traditional chemicals, affected by lower prices and margins.

Through the first half, BASF sales revenue was up four percent to 38.1 billion euros although net group profit declined by over 10 percent to 2.6 billion euros.

"In light of the challenging conditions, our business performed well in the first half of 2013," Kurt Bock, chairman of the executive board, said in a press release.

"Our business with crop protection products contributed substantially to sales and earnings growth."

He added that "the economic environment is and remains unstable".

The group does not expect the chemical sector to see a demand recovery in the second half but maintained its annual forecast of higher sales and earnings.

Achieving these goals would be "significantly more challenging today" than expected at the start of the year, said Bock.

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http://www.globalpost.com/dispatch/news/afp/130725/basf-books-quarterly-profit-fall-flagging-chemicals