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Q2 Earnings of German chemical giant BASF drop as global markets weaken
BERLIN, July 25, 2019 (Xinhua via COMTEX) -- Copyright 2019 XINHUA NEWS AGENCY

BASF's earnings before interest, taxes, depreciation and amortization (EBITDA) declined to 1.6 billion euros in the second quarter (Q2) of 2019, compared with 2.6 billion euros during the previous year, the company announced on Thursday.

BASF's Q2 sales declined by four percent to 15.2 billion euros (16.9 billion U.S. dollars) compared with the second quarter of the previous year while EBIT fell by almost half to 1.05 billion euros.

Chemical production for the European market had declined by 0.5 percent in the European market in the first half of 2019. The downturn in chemical production in Germany was particularly pronounced at minus 3.5 percent, BASF noted.

In addition, the German chemical company is fearing that the automobile industry, BASF's most important customer group, would not recover this year and is expecting global industrial and chemical production to grow by only about 1.5 percent.

"Customers in all industries are currently very cautious with forecasts and orders," noted Martin Brudermueller, Chairman of the Board of Executive Directors (CEO) of BASF but cautioned that "our own view of the development of demand is also very limited".

Global trade conflicts, particularly between the United States and China, were a "serious concern for the company", according to BASF. "These conflicts will not be resolved in the near future and will cause a noticeable slowdown in overall economic growth worldwide," warned BASF CFO Hans-Ulrich Engel.

BASF's net income after taxes and minority interests, had however, increased to 6.5 billion euros in 2019 from 1.5 billion euros the previous year.

The high profit in Q2 had been mainly caused by a "book gain" resulting from the merger of the oil and gas business of BASF's subsidiary Wintershall with its rival Dea.

In order to make the company more profitable in the future, BASF's management had launched a new savings program in November. BASF is expecting the program to contribute 2 billion euros annually to operating profit (EBITDA) from the end of 2021.

At the end of June, the German chemical company announced that it would cut 6,000 jobs worldwide by the end of 2021, half of them at its corporate headquarters in Ludwigshafen.

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