BASF SE has reported a fall in second quarter sales and earnings (EBITDA), due in part to global trade conflicts and a slowdown in industrial growth.
Group sales stood at 15.2 billion euros ($16.9 billion) during the three months to end of June, down 4 percent compared to the same period in 2018, the German chemicals giant announced July 25.
Earnings plunged 27 percent year-over-year to 2 billion euros ($2.23 billion), impacted by lower volumes and margins in the chemicals and materials segments.
“In total, the two segments accounted for 83 percent of the overall earnings decline in the second quarter of 2019,” said Dr. Hans-Ulrich Engel, chief financial officer of BASF SE.
Second quarter revenue for the materials segment fell 16 percent to 2.96 billion euros ($3.3 billion) during the period, while the chemicals unit registered a 22 percent drop in sales at 2.18 billion ($2.43 billion).
“There is currently high uncertainty, low visibility and poor predictability,” said Dr. Martin Brudermüller, chairman of the Board of executive directors of BASF SE, during a conference call.
BASF cited global trade conflicts, particularly between the U.S. and China, as a serious concern for the company.
“We followed the general assessment that a solution would be found by the middle of the year. But now it seems the situation will not ease for some time,” said Brudermüller.
BASF revised down its 2019 outlook in an July 8 ad-hoc release citing a slowdown in industrial and chemical growth globally.
The Ludwigshafen-based company now anticipates a slight decline in revenue and a 30 percent fall in EBIT for the year.
“The automotive industry – an important customer industry for BASF – will not recover this year. We now expect a global decline of minus 4.5 percent over the full year,” said Brudermüller.
According the BASF official, customers in all industries are currently “very cautious” with projections and ordering, therefore lowering visibility on demand development.
BASF announced plans to cut 6,000 jobs in early July, to save 300 million euros ($334 million) annually by 2021.
According to Brudermüller at BASF in Ludwigshafen, more than 1,100 employees accepted an offer and signed termination agreements in the first half of the year.