Falling first quarter profit fails to dent BASF’S confidence

FRANKFURT AM MAIN: German chemicals giant BASF said it remains confident of meeting its forecasts for the full year, even as it reported falling revenues and profits in the first quarter.

Net profit at the group slipped 2.0 per cent year-on-year, to just under 1.7 billion euros ($2.0 billion) between January and March, in line with analysts’ expectations.

But BASF increased operating, or underlying profit 3.0 per cent, to 2.5 billion euros, while revenues fell 1.0 per cent to 16.6 billion.

“The first quarter passed in line with expectations, very satisfactorily,” chief executive Kurt Bock told shareholders at the group’s annual general meeting.

Nevertheless, “the weak US dollar threw a spanner in the works,” he lamented, saying that if exchange rates had remained at levels seen during most of last year BASF could have seen net profits some 300 million euros higher.

The chemicals and oil and gas divisions both defied the currency headwinds to book sales growth, while the group’s more specialised units — performance products, functional materials and agrichemicals — all fell back.

“There’s some consolidation of demand at a high level, we’re continuing to see good growth, but the pace of growth is easing off,” Bock said.

“The momentum we experienced at the end of 2016 and during 2017 is no longer there.”

Looking ahead to the full year, the group confirmed its forecast that it would “slightly increase” revenue and operating profit adjusted for special items, but predicted a “slight decline” in operating profit. “We are optimistic for the future” in spite of looming economic threats like Britain’s departure from the EU — “so far, there is no solution” — to trade wars between Washington, Beijing and Brussels, Bock said.

The 60-year-old CEO will depart after Friday’s shareholder gathering, passing the reins to successor Martin Brudermueller who until now has served as his deputy.

Brudermueller takes charge with several major projects underway that will change the face of BASF. The Ludwigshafen-based firm will take over some 7.6 billion euros worth of seeds and pesticides activities that competition authorities have demanded rival Bayer give up to allow a mega-merger with Us-based Monsanto to go ahead.

It marks the first time that BASF will produce its own seeds designed to resist its pesticides, which allows farmers to treat crops more aggressively with the chemicals.