BASF Group's third quarter EBIT of EUR 1.1 billion was 24% lower

BASF Group's sales in the third quarter of 2019 were EUR 15.2 billion, down slightly from the same period last year. This is mainly due to lower prices in the two business areas of materials and chemicals. Market uncertainties and customers' cautious buying behavior also partly contributed to the decline. Demand in key customer areas has not recovered. However, BASF strongly maintained sales at the same period last year, thanks to increased sales in the agricultural solutions and surface treatment business. EBIT excluding special items was EUR 1.1 billion, down 24% from the same period last year, mainly due to a significant decrease in earnings in the materials and chemicals business. As expected, the price of isocyanate fell sharply; in addition, the profit of cracking products decreased due to the planned maintenance of steam cracking unit. All of the above factors have a significant negative impact on the earnings of the two major business areas of materials and chemicals.

Dr. Martin Bruder m ü ller, chairman of BASF Europe's executive board, said at the financial performance conference in the third quarter of 2019: "the company's downstream business unit has successfully achieved a performance significantly higher than that of the same period last year in a difficult market environment." In the industrial solutions business area, EBIT excluding special projects increased significantly due to the decrease of fixed costs. In the field of surface treatment technology business, the earnings before interest and tax of the three major business departments excluding special projects have increased significantly. In the field of nutrition and nursing business, the profit of nursing chemicals business department increased significantly, which led to a significant increase in EBIT of the business area excluding special items. In the agricultural solutions business, sales increased and EBIT excluding special projects also increased significantly, partly due to the seasonality of South America. Earnings before interest, tax, depreciation and amortization increased to 2.3 billion euros compared with 2.2 billion euros in the same period last year. EBITDA excluding special items decreased by 8% to 2.1 billion euros. The EBIT excluding special items is EUR 1.4 billion, basically the same as the same period in 2018. The total amount of special items in EBIT in the third quarter was EUR 257 million, compared with negative EUR 75 million in the same period in 2018. This is mainly due to BASF's considerable income from the sale of shares in klybeck base in Basel, Switzerland, which offsets the special expenses incurred by the restructuring of the company, the integration of Bayer's acquisition business and the divestiture of assets.

Net income amounted to 911 million euros, compared with 1.2 billion euros in the third quarter of 2018. Earnings per share fell to 1 euro from 1.31 euro in the same period last year. Adjusted earnings per share were 0.86 euros, compared with 1.51 euros for the same period last year. Cash flow from operating activities was EUR 2 billion, compared with EUR 2.9 billion in the third quarter of 2018. Free cash flow decreased to EUR 1.1 billion mainly due to the decrease in cash flow from operating activities. The global geopolitical environment will continue to pose a challenge to BASF. "In particular, trade frictions between China and the United States will have an impact on our business," he added. In addition, uncertainty comes from the brexit process. These factors will slow economic growth, not only for export-oriented European countries, but also for the United States. The Chinese market is still growing, though at a slower pace. The output of the global automobile industry continues to decline compared with the first half of the year, which is already at a low level. " "Although the adverse environment is beyond our control," said Bo mule. But we know what to do inside BASF. We are firmly and rapidly promoting relevant progress. BASF is systematically and rapidly adjusting its organizational structure, with the goal of building a streamlined structure with customers as the core.

2019 is a turning year for BASF. "We have taken advantage of this year to implement our corporate strategy step by step with full vitality and enthusiasm," Bo said. We are streamlining our administrative structure, centralizing service functions and regional responsibilities, and streamlining our processes. We have made good progress in restructuring our organization. BASF is rapidly advancing the corporate strategy announced a year ago. Most of the functional services are embedded in business operations. As of October 1, about 20000 BASF employees have completed the work transformation. Dr Hans Ulrich Engel, vice chairman of executive board and chief financial officer of BASF Europe, said: "we have accelerated the progress of the" excellence "project to achieve the goal of contributing 2 billion euros per year of EBITDA to BASF by the end of 2021, and the progress is very smooth at present. This year's excellence project will bring about EUR 500 million in EBITDA to the company. " However, BASF expects that the project will generate a one-time investment of corresponding magnitude. BASF expects the project to contribute between 1 billion and 1.3 billion euros to the company's EBITDA in 2020. One time investment is expected to be between 200 million and 300 million euros. The biggest contribution of "excellence" project will come from production, logistics and planning. "In addition, we are streamlining our organizational structure," said Dr Engel. As of September 2019, BASF has reduced 1800 jobs globally. "