Chemical giant BASF reports 1st quarter slump in earnings

Chemical giant BASF reports 1st quarter slump in earningsMannheim, Germany - Shares in German chemical giant BASF surged Thursday - despite the company reporting a steep drop in 2009 first quarter sales and profits, as the economic slowdown began to bite.

At 12.2 billion euros (16.1 billion dollars), sales were 23 per cent lower than in the first quarter of 2008, primarily due to persistently weak demand, the company said in a statement.

Earnings before interest and taxes (EBIT), not taking into account special items, fell by 58 per cent to 985 million euros as a result of a substantial decrease in volumes in many divisions, it said.

Net income decreased by 68 per cent to 375 million euros, while earnings per share were 41 cents in the first quarter compared with 1.24 euros in the same period of 2008.

However, the figures were better than analysts expected and BASF shares climbed 8.2 per cent to 28.80 euros on the Frankfurt Stock Exchange.

The company said it was "rigorously and rapidly" implementing cost reduction and efficiency programmes in response to the global economic crisis as well as tailoring production to reflect the decline in demand.

"Our goal is to emerge from this crisis even stronger and to increase our leading position," said BASF chairman Juergen Hambrecht in his presentation of the figures at the company's annual meeting.

But he warned that BASF faced "enormous" challenges in 2009. The demand for chemical products has declined further since the beginning of the year, which has had a substantial negative effect on business worldwide in the first quarter, he said.

"There is currently no sign of a reversal of this trend and we do not consider temporary topping up of inventories in some regions and industries to be signs of a sustainable upturn," said Hambrecht.

The company confirmed that it expected a decline in turnover for 2009 and warned it would slash at least 2,000 jobs worldwide by the end of the year.

BASF, the world's biggest producer of chemicals, posted sales of more than 62 billion in 2008 and had 97,000 employees as of the end of the year.

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