FRANKFURT (Reuters) -German chemicals giant BASF on Wednesday cut its full-year earnings guidance, the latest in a string of chemical companies caught out by weak demand from industrial clients and higher interest rates.
In an unscheduled statement, BASF said earnings before interest and tax (EBIT) and adjusted for special items would be 4.0 billion euros to 4.4 billion euros ($4.90 billion) in 2023
It had previously projected adjusted EBIT of 4.8 billion euros to 5.4 billion euros for the year, down from 6.9 billion in 2022.
"Global chemical production declined perceptibly in the first half of 2023," BASF said in a statement, putting this down to slowing growth in industrial output.
Chemical industry peers such as Croda, Lanxess , Victrex , Clariant and Evonik have recently cut their guidance, prompting several analysts to predict that BASF would be next.
As early as October last year, BASF flagged structurally weak demand in Europe, laying out plans to slash costs and following up this year with a programme to cut 2,600 jobs in the region.
The company said it assumed only "a tentative recovery" in the second half as global demand for consumer goods would be lower than previously assumed.
For BASF, as for the entire industry, a lot depends on China, which accounts for more than 40% of global chemical demand and which has seen only a slow recovery from lockdown measures during the COVID-19 outbreaks.
Second-quarter adjusted EBIT dropped 57% to 1.01 billion euros, down from 2.34 billion a year ago. That was in line with a 1.02 billion euro average analyst forecast posted on the company's website.
The head of German chemical industry association VCI said in a newspaper interview this month that the lobby group's 2023 forecast of a 5% decline in industrial production would soon have to be revised lower.
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(Reporting by Ludwig Burger and Sarah Marsh. Editing by Jane Merriman and Sharon Singleton)