MOSCOW (MRC) -- BASF Group sales in the third quarter of 2019 declined slightly year on year and amounted to EUR15.2 billion on lower prices in the Materials and Chemicals segments, said the company.
The uncertainties in the market and cautious ordering by customers also played a role. Demand from key customer sectors did not recover. Nevertheless, BASF was able to keep its sales volumes at the level of the prior-year quarter thanks mainly to higher volumes in the Agricultural Solutions and Surface Technologies segments.
Income from operations (EBIT) before special items was EUR1.1 billion, down by 24% compared with the level of the third quarter of 2018. This was primarily due to significantly lower contributions from the Materials and Chemicals segments. As expected, isocyanate prices declined considerably. In addition, there were scheduled turnarounds at the steam crackers and falling margins for cracker products. These factors had a significant negative impact on earnings in the two segments. “In our downstream divisions, we were successful despite the difficult market environment and posted a considerable improvement compared with the prior-year quarter,” said Dr. Martin Brudermuller, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the financial results for the third quarter of 2019. In the Industrial Solutions segment, EBIT before special items increased considerably primarily due to lower fixed costs. In the Surface Technologies segment, EBIT before special items also rose considerably in all three divisions. In the Nutrition & Care segment, EBIT before special items grew considerably as a result of significantly higher earnings in the Care Chemicals division. In the Agricultural Solutions segment, EBIT before special items increased considerably, driven mainly by higher sales. One reason for this was the good start to the season in South America.
EBITDA increased to EUR2.3 billion, compared with EUR2.2 billion in the third quarter of 2018. EBITDA before special items was down by 8% to EUR2.1 billion.
EBIT amounted to EUR1.4 billion, nearly matching the prior-year level. Special items in EBIT totaled EUR257 million, compared with minus EUR75 million in the prior-year period. A considerable disposal gain from the sale of BASF’s share of the Klybeck site in Basel, Switzerland, more than offset special charges for restructuring measures, for the integration of the businesses acquired from Bayer and for divestitures.
Net income amounted to EUR911 million, compared with EUR1.2 billion in the third quarter of 2018. Earnings per share in the third quarter of 2019 fell to EUR1.00 from EUR1.31 in the prior-year quarter. Adjusted earnings per share were EUR0.86, compared to EUR1.51 in the prior-year quarter.
Cash flows from operating activities amounted to EUR2.0 billion, compared with EUR2.9 billion in the third quarter of 2018. Free cash ?ow declined to EUR1.1 billion as a result of lower cash flows from operating activities.
As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASF’s production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.
Ethylene is a feedstock for producing polyethylene (PE).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased.
BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
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