Market and product

BASF saw sales slump 20% in the third quarter, thanks in part to the impact of offloading its gas trading and storage business as part of an asset swap with Russian energy giant Gazprom last year.

While volumes had grown, lower prices and what the German chemicals giant called “significantly negative portfolio effects” also hit sales.

BASF said overall third quarter sales came in at €14bn (£12.5bn), down a fifth year-on-year, although earnings and volumes in its chemicals operation had risen, thanks to growth in its Performance Products and Functional Materials and Solutions businesses.

Earnings before interest and tax (Ebit) for the period fell 5% to €1.5bn (£1.3bn), and net income fell 35% to €888m (£794m).

The recent fire at BASF’s North Harbor operation in Ludwigshafen, in which three people died and several were seriously injured, would lead to what it called “logistics and supply bottlenecks” and knock earnings.

However the disaster would not change the group’s outlook for 2016, it said.

BASF said it expected that sales would decrease “significantly” in 2016, notably due to the Gazprom deal, while lower prices for oil and gas would also have a negative impact.

Ebit for the full year was also expected to be “slightly below” 2015’s figure of €6.7bn (£6bn).

“This remains an ambitious goal in the current volatile and challenging environment, and in light of the fire of October 17 and its consequences,” BASF’s finance chief, Dr Hans-Ulrich Engel said.

In an update on the Ludwigshafen fire, BASF said a fire had initially taken hold after a pipe had been cut by an angle grinder during maintenance and assembly work nearby.

The fire was in the process of being dealt with by emergency services when an explosion took place, which triggered further fires along the pipeline.

BASF said the fires were extinguished at 9.30pm on 17 October, the day the blaze occurred.

It would "continue to support the relevant authorities during the investigation into the cause of the accident" and safety was its "first priority". - prw.com