BASF sees profits decline in first quarter
Its earnings dropped to €1.41bn (US$1.58bn) from €1.68bn in the prior year quarter.
Sales, though, were slightly higher at €16.2bn.
“This [sales hike] was mainly driven by portfolio effects in the agricultural solutions’ segment as a result of the acquisition of significant businesses and assets from Bayer in August 2018. Currency effects also had a positive impact on sales in all segments.”
However, sales in some divisions were negatively impacted by lower prices, its animal nutrition business in particular.
The company had already advised that 2019 would be challenged by the rolling out of its new divisional structure as well as the integration of the various agricultural businesses it acquired from Bayer.
Risk from low water levels
BASF also said it does not expect a repeat of the financial losses it, and other companies, suffered from low water levels of the River Rhine last year as it said it has taken preventative action.
BASF saw a negative earnings impact of €250m due to that event in Q4 2018. The record low water levels prevented barges from delivering enough raw material.
Measures undertaken by the chemical giant include reducing its dependency on the intake of cooling water from the River Rhine, and engaging more barges that are tailored to low river water levels. BASF’s largest chemical complex in Ludwigshafen, Germany, receives about 40% of its raw materials by river cargo, according to Reuters.
“We obviously are not expecting this to repeat in the year 2019,” said BASF CFO, Hans-Ulrich Engel, on a conference call with analysts.
Sticking to guidance
The company said it expectations for the global economic environment in 2019 remain unchanged.
It maintains its 2019 guidance for slight sales growth and slightly higher earnings before interest and taxes (EBIT) before special items.
