BASF: Sales up 2% in the Third Quarter
Third-quarter sales of BASF SE, Ludwigshafen, Germany, increased by 2% compared with the second quarter but fell 19% compared with the same period of 2008. Income from operations (EBIT) before special items was 9% higher than in the second quarter and 20% lower than in the third quarter of 2008. All operating divisions contributed positive earnings. BASF’s strong cash flow increases the company’s financial strength and has enabled it to reduce debt.
The Ciba integration is making rapid progress, and is faster than planned in some areas. By the end of the year, the closure of 33 of Ciba’s nonproduction-relevant sites will have been completed out of a total of 56 planned closures. Three of the seven conditions for divestitures imposed by the merger control authorities have been fulfilled, and the goal is to complete the remaining divestitures by December 2009. The fact that the integration is faster also means that a larger proportion of the related costs will be incurred in 2009. For the full year, BASF therefore now expects the Ciba integration to result in a negative impact on earnings of more than EUR 800 million, of which approximately EUR 150 million will be cash costs. Approximately EUR 700 million of the EUR 800 million is likely to be recorded as special items. Overall, the integration will result in the reduction of 3,800 positions, the majority of which will be eliminated by the end of 2010.
Despite stabilization of the economic environment in the third quarter, the company anticipates a significant decline in sales and earnings for full year 2009. Fourth-quarter income from operations before special items is likely to be higher than in the weak fourth quarter of 2008, but lower than in the third quarter of this year.
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