LUDWIGSHAFEN, Germany (Reuters) – German chemicals group BASF reported a nearly 60 percent drop in fourth-quarter operating profit on Tuesday, due to a sharp decline in earnings at its basic petrochemical-making unit.
Fourth-quarter group earnings before interest and tax plunged 59 percent to 630 million euros ($715.37 million), above the average analyst estimate of 598 million euros in a Reuters poll.
Chief Executive Martin Brudermueller is under pressure from analysts and investors to show that a decline at the basic chemicals unit, which makes materials that go into products such as heat insulation foams or coatings, can be offset by gains from more advanced products such as pesticides, catalysts or engineering plastics.
But a weakening global economy, with the U.S.-Chinese trade conflict weighing on key customers in the Chinese automotive industry, are a drag on BASF’s bottom line.
“We will use 2019 as a transitional year to emerge even stronger. This year, we are adapting our structures and processes, and focusing our organization clearly on the needs of our customers,” Brudermueller said in a statement.
In addition, low water levels in the Rhine River hampered shipments of key raw materials by barge to the group’s largest chemical complex in Ludwigshafen, while the acquisition of seeds and crop chemical businesses from Bayer led to additional expenses.
BASF said it was targeting a slight increase in adjusted EBIT for 2019.
(Reporting by Patricia Weiss; Writing by Ludwig Burger; Editing by Thomas Seythal and Rashmi Aich)