BASF posts 68.7 percent drop in profit

FRANKFURT: The German chemical giant BASF said Thursday that its third quarter net profit plunged by 68.7 percent from the same period a year earlier to 237 million euros owing to costs stemming from the integration of the Swiss company Ciba.

Sales fell by 18.9 percent to 12.8 billion euros, while core earnings before interest and tax (EBIT) were down by 35.7 percent at 971 million euros (1.430 billion dollars), a statement said.

Sales nonetheless gained two percent from the second quarter of 2009 and EBIT was up by nine percent, the company added.

"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," BASF chairman Juergen Hambrecht was quoted as saying.

"The recovery will be slow and uneven," he added.

The statement said that customers appeared to be replenishing their stocks but that they were "still placing smaller orders at increasingly short notice, especially closer to the end of the year."

Meanwhile, BASF continued with the integration of Ciba, a specialty chemicals group that the German group bought last year, saying that it "is making rapid progress, and is faster than planned in some areas".

That also meant however "that a larger proportion of the related costs will be incurred in 2009," and BASF expected them to amount to more than 800 million euros this year.

Around 3,800 jobs would also be eliminated, for the most part by the end of 2010, the statement said.

Looking ahead, BASF said it "anticipates a significant decline in sales and earnings for the full year 2009".

The higher costs of integrating Ciba meant that "BASF is therefore unlikely to reach its goal of earning its cost of capital this year", Hambrecht said.