BASF Beats Estimates as Farming Helps Offset Trade-War Pain

(Bloomberg) -- BASF SE reported third-quarter profit that slightly beat estimates after its 8 billion-euro ($8.9 billion) purchase of agrochemical and seed assets from Bayer AG helped offset an economic slowdown stoked by the U.S.-China trade war.

• Adjusted earnings before interest and taxes fell 24% to 1.1 billion euros, the Ludwigshafen, Germany-based chemical maker said. Analysts had predicted 1.06 billion euros, according to a Bloomberg survey.

Key Insights

• Agriculture was the highlight, as that business reported sales growth of 26% on the back of higher volumes in South America, Africa and the Middle East. The acquisition of the Bayer operations helped as well.
• BASF is battling an array of economic challenges. The company said Thursday that the global industrial economy continued to cool in the third quarter, with the trade war and Brexit uncertainty in particular affecting the U.S. and Europe’s export-focused countries. After earlier cuts, Chief Executive Officer Martin Brudermueller stuck with current full-year targets.
• BASF’s diverse portfolio of chemicals -- spanning petrochemicals and pesticides to cosmetic ingredients and plastics -- means the company is particularly exposed to the global industrial economy, which is also suffering from a slowdown in China and the decline of the auto industry.
• The CEO is shaking up the chemical maker by trimming management and jobs, selling peripheral businesses and reallocating about 20,000 workers to customer-facing roles to keep pace with volatile market trends.

Market Reaction

• BASF shares rose 1.9% to 69.06 euros as of 9:36 a.m. in Frankfurt, extending gains for the year to 14%.

Get More

• Click here for more information on BASF’s earnings.
• BASF expects its efficiency drive to deliver a 500 million-euro earnings boost this year. It predicted the program will deliver a 1 billion euro to 1.3 billion euro uplift in 2020.

To contact the reporter on this story: Andrew Noël in London at anoel@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker

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