BASF says second half will be better after weak start to 2019

MANNHEIM: German chemicals giant BASF expects to eke out some profit growth in 2019 as it banks on business to perk up with car production in the latter half of the year and on benefits from ongoing cost cuts.

BASF, which held its annual shareholder meeting on Friday, reported a drop in first-quarter operating profit of 24 percent, hurt by weakness in the firm's basic chemicals business and a slump in prices for materials used in polyurethane foams.

The maker of petrochemicals, coatings, catalytic converters and foams, said it still aims to grow operating profit this year at the lower end of a 1-10 percent range from 6.35 billion euros in 2018, despite analyst predictions of a decline in full year earnings.

"What's important is the state of our customer industries," Chief Executive Martin Brudermueller told shareholders at the meeting. "Automotive saw a very weak start to the year. But there are still forecasts for a very slight growth rate over the full year... That has to mean more cars will be manufactured in the second half and that means more business for BASF."

First-quarter operating profit, or earnings before interest and tax (EBIT) adjusted for one-off items, fell to 1.73 billion euros ($1.93 billion) versus a company-provided analyst forecast of 1.75 billion.

The shares were little changed at 72.35 euros at 1128 GMT.

The company experienced lower volumes and prices for basic petrochemicals made from oil distillates and had to mark down prices of intermediate chemicals used in heat insulation slabs and upholstery foams.

Weak demand and global trade disputes, which began late last year, led to a decline in global auto production of 6 percent during the quarter and continued to weigh on BASF's automotive coatings and catalytic converters businesses.

Earnings at BASF's agricultural chemicals and seeds unit were bolstered by assets acquired from domestic rival Bayer as well as by higher prices.