February 28, 2020 / 8:22 AM / a month ago

BASF flags risk of lower earnings on virus hit

FILE PHOTO: The chemical company BASF building in Levallois-Perret, near Paris, France, is seen at sunset, November 29, 2018. REUTERS/Christian Hartmann/File Photo

LUDWIGSHAFEN, Germany (Reuters) - Germany’s BASF warned that earnings could drop further this year after the fallout from the coronavirus outbreak has started to weigh on demand from its industrial customers.

The world’s largest chemicals company by sales said on Friday that the virus heightened uncertainty in the global economy in January and February, and it does not expect trade conflicts between the United States and its trading partners to ease further.

“The coronavirus has added a new factor that is considerably hampering growth at the beginning of the year, especially in China,” said Martin Brudermueller, chief executive officer of BASF.

“Lower demand and production outages in many industries are already visible consequences of the measures taken to prevent the further spread of the virus.”

The company said earnings before interest and tax (EBIT), adjusted for one-offs, would likely be in a range of 4.2 billion euros ($4.6 billion) to 4.8 billion euros.

That represents a decline of 7.5% and a gain of 6.7% from last year’s EBIT of 4.54 billion euros, which was already 28% lower than 2018.

Adjusted EBIT increased by 23% to 765 million euros in the fourth quarter ended December, beating analysts’ projections thanks to a stronger-than-expected agriculture business.

($1 = 0.9201 euros)

Reporting by Ludwig Burger; editing by Thomas Seythal and Amy Caren Daniel

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