BASF profit hit by automotive customers’ woes

October 26, 2018 11:25 CET

FRANKFURT — BASF’s quarterly operating profit fell 14 percent as stricter emission rules and trade barriers dented its business with automakers.

“Growth in industrial production fell short of expectations in the third quarter of 2018, primarily due to developments in the automotive industry in September in particular. The introduction of new emission standards had an impact in Europe,” the German group, which is the world’s largest maker of chemicals and plastics for the car industry, said in a statement on Friday.

“The effects of the trade conflict between the United States and China are also showing,” said BASF, whose products include automotive coatings, catalytic converters as well as materials for air inlet manifolds and car seats.

Third-quarter earnings before interest and tax (EBIT), adjusted for one-offs, fell to 1.47 billion euros ($1.67 billion), the company said on Friday, below average market estimates of 1.56 billion euros.

The decline was compounded by lower prices and margins in basic petrochemicals that go into foams for insulation and cushions, boosted last year by supply shortages.

Moreover, low water levels on the Rhine river in Germany, a vital freight route, disrupted production and inflated shipping costs because vessels could not be fully loaded.

The company reiterated its guidance for a decline in EBIT before special items of up to 10 percent from the 2017 figure of 7.6 billion euros.

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