German chemical company BASF SE said Thursday net income fell 69 percent in the third quarter as the global downturn hurt demand and prices for the company's products.
BASF, based in Ludwigshafen, said net income fell to euro237 million ($348 million) from euro758 million in the July-September period of 2008.
Revenue fell 19 percent to euro12.8 billion from euro15.7 billion in the third quarter of 2008.
"Following the global economic downturn at the end of 2008, our business has stabilized at a low level during the course of the year," BASF said in its report.
BASF, the world's biggest chemical company by sales, said fourth quarter revenue should be around third quarter levels, while operating income before special items would probably be higher than a year ago, but lower than in the third quarter 2009.
In the third quarter, BASF reported operating income before special items of euro1.2 billion from euro1.6 billion in the third quarter of 2008, a 20 percent decrease.
"Overall, the development in the coming months is difficult to predict. Major risks still exist. The recovery will be slow and uneven," BASF said.
BASF released some preliminary results earlier this month, in line with Thursday's report, but the results were somewhat below analyst expectations. Six analysts polled by Thomson Reuters expected BASF to report net income during the period of euro333 million. Eleven analysts had expected revenue at euro13 billion.
BASF shares were down 1.4 percent to euro36.50 in Frankfurt afternoon trading.
Still, BASF continues to bet on a turnaround. Last month, it said it planned to invest euro2 billion in Asia through 2013, targeting faster demand growth in the region. BASF said its regional strategy for the next decade entails adding at least 5,000 people from around 15,000 currently.
UniCredit analysts said that is a shrewd move because China was the first region to experience the downturn and is now recovering first and fastest. While BASF does business in Korea and Japan as well, those markets are more saturated, UniCredit said.
"Korea and Japan are mature markets with low growth and India is only one sixth the size of the Chinese chemical market.
"The focus of growth will be China, which already accounts for 45 percent of Asian sales," UniCredit said.
In terms of divisions, BASF said the chemicals division saw third quarter revenue fall 34 percent to euro2 billion as a result of lower volumes and prices. The company said demand from the textiles, coatings and plastics industries, for example, were weaker than a year ago. Operating income for the chemicals division fell 9 percent to euro364 million.
The plastics division saw revenue fall 20 percent to euro1.96 billion from euro2.45 billion. Operating income for the division, however, rose 11 percent to euro216 million as the company was able to cut costs.
The agricultural products business saw revenue fall just 2 percent to euro623 million. Operating income however fell 32 percent because of higher marketing, research and development and sales expenses.
BASF also drills for and refines oil and natural gas. It said the energy business' revenue fell 25 percent to euro2.3 billion, while operating income fell 37 percent to euro550 million.
BASF said the results were affected by the significant fall in the price of crude oil.
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