German chemical giant BASF sees profit drop in 3rd quarter

The German chemical giant BASF AG, the biggest chemical maker in the world, said on Thursday that its profit dropped 24.1 percent in the third quarter although its sales increased 28 percent.

In a report, Ludwigshafen-based BASF said that the profit loss was caused by costs from jobs cuts and closures of factories the German company acquired in North America.

It said that the company's net income fell to 613 million euros (some 782 million U.S. dollars), or 1.22 euros a share, from 808 million euros, or 1.55 euros, a year earlier.

However, the company's sales grew 28 percent to 13.3 billion euros and the newly acquired businesses Engelhard, Degussa Construction Chemicals and Johnson Polymer contributed 1.8 billion euros to "this dynamic growth."

Income from operations (EBIT) rose by 22 percent to 1.6 billion euros in the third quarter.

The cumulative sales in the first nine months of 2006 increased by 23 percent to more than 38 billion euros.

"We have achieved a new earnings level, and in doing so, three things are important," said Jrgen Hambrecht, chairman of the Board of Executive Directors of BASF. "First, our chemicals businesses were again very successful in the third quarter. Second, the newly acquired businesses have met our expectations. And third, we are continuously improving our sites and business processes."

BASF has already made six purchases so far this year, led by the 4.8 billion U.S. dollars takeover of Engelhard Corp.

In the fourth quarter, BASF expects demand for its products to remain strong. Despite an easing in the oil price, raw material costs remain high and margins are therefore still under pressure.

Source: Xinhua