FRANKFURT (Reuters) - German chemicals giant BASF (BASFn.DE) on Monday warned profit would fall well below forecasts for the second quarter and full year, blaming a global economic slowdown and trade war between the United States and China.
The maker of petrochemicals, coatings, catalytic converters and foams warned full-year earnings before interest and taxes (EBIT) excluding special items would fall up to 30% below 2018 levels, instead of showing modest growth.
Sales are now expected to fall in 2019 rather than rise, the company said.
In a statement, the company cited a hit from a sharp slowdown in the autos sector, while poor weather conditions in North America hurt sales in the agricultural sector.
The trade war has weighed on the agricultural sector and also led to a slowdown in global auto production and sales, which has weighed on BASF’s coatings and catalytic converters business.
“To date, the conflicts between the United States and its trading partners, particularly China, have not eased contrary to what was assumed in the BASF Report 2018. In fact, the G20 summit at the end of June has shown that a rapid détente is not to be expected in the second half of 2019,” BASF said.
BASF last month said it was still aiming for growth in 2019 operating profit at the lower end of a 1-10% range, even as analysts predicted a decline in full-year earnings.
Second-quarter sales were down 4% to 15.2 billion euros ($17.04 billion), and earnings before interest and taxes before special items are expected to fall 47% to 1 billion euros. The company is due to report second quarter results on July 25.
Group second-quarter EBIT is expected to tumble 71% to 500 million euros, in part because of an impairment on a natural gas investment on the U.S. Gulf coast, BASF said, without elaborating.
Last month, the company said it is planning to cut 6,000 positions by 2021 as part of a cost reduction plan.
Reporting by Edward Taylor, editing by Deepa Babington