Trade wars hit BASF as coronavirus looms

FRANKFURT AM MAIN (AFP) – German chemical giant BASF yesterday said global trade tensions hit 2019 sales, with the auto sector especially affected, and pointed to a “signficant impact” ahead from the new coronavirus.

“2019 was a challenging year with strong economic headwinds, including both trade wars and other sources of uncertainty such as Brexit,” Chief Executive Martin Brudermueller said in a statement.

BASF sales fell 1.5 per cent to EUR59.3 billion (USD65.3 billion), while operating, or underlying profit slumped sharply.

But the group’s net profit jumped almost 80 per cent, to EUR8.4 billion, thanks to a one-off effect related to the merger of its oil and gas business Wintershall with DEA.

Looking ahead to 2020, Brudermueller warned that “the coronavirus has added a new factor that is considerably hampering growth… especially in China,” reducing demand and interrupting production.

“We do not expect the corona effects to be fully offset in any rebound later in the year,” he added.

While most customer industries should grow, “for the automotive industry… we anticipate a continued decline in production,” Brudermueller said.

Looking to BASF’s different segments, profits at its basic chemicals division fell by half, while the slide was even steeper at the materials unit, which makes inputs for client industries slammed by the United States (US)-China trade conflict such as carmakers and electronics producers.

More specialised “downstream” areas were able to boost operating income, including its catalysts and coatings business, industrial chemicals, nutrition and pharma and agriculture.