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Germany's BASF warned that earnings could fall further this year after the fallout from the coronavirus outbreak began to hit demand, further slowing growth in its biggest customer segment, the automotive industry
.
The world's largest chemical company by sales said on Feb.
28 that the novel coronavirus had heightened uncertainty in the global economy in January and February and that it did not expect further easing in the trade conflict between the United States and its trading partners
.
CEO Martin Brudermueller said: "Coronavirus added a new factor at the beginning of the year, especially for China
.
"The drop in demand and production disruptions in many industries is a consequence of measures taken to prevent further spread of the virus
.
The company said its one-off adjusted EBIT could come in between 4.
2 billion euros ($4.
6 billion) and 4.
8 billion euros this year, below analysts' expectations of more than 5 billion euros
.
Last year, the company's EBIT was 4.
54 billion euros, down 28 percent from 2018
.
BASF, whose products include coatings, catalysts and foam chemicals, hoped the impact of the coronavirus would not have a major impact in the second half of the year, but said the economy could recover slowly
.
Martin Brudermueller said: "We do not expect the impact of the epidemic to be offset soon for some time during the year
.
BASF expects a slight increase in revenue for the full year
.
Continued declines in production in the automotive industry, which account for about a fifth of BASF's business, are suppressing modest growth in most other customer industries, he added
.
Adjusted earnings before interest and taxes rose 23 percent to 765 million euros in the fourth quarter ended December, beating analysts' expectations, thanks to better-than-expected agricultural business
.
BASF said it is accelerating a layoff plan that began last year and will cut 6,000 jobs
.
The group now plans to cut costs by 1.
3 billion to 1.
5 billion euros this year, exceeding the original target of 1.
0-1.
3 billion euros
.
Martin Brudermueller added that spending on plant and equipment will become "rigorous" this year, with the investment budget increasing to 3.
4 billion euros from last year's 3.
3 billion euros
.
The company has established factories in China's Guangdong province and Mundra, India, and is looking to ramp up production of battery materials
.
