BASF: A drastic decline in sales in the Plastics segment

In an extremely difficult environment, BASF’s (www.basf.com) business declined in the first quarter of 2009. At €12.2 billion, sales were 23% lower than in the first quarter of 2008, primarily due to persistently weak demand. Income from operations (EBIT) before special items fell by 58% to €985 million as a result of a substantial decrease in volumes in many divisions.

BASF responded swiftly to the crisis: The company has tailored production to reflect the decline in demand and reduced inventories. Compared with the first quarter of 2008, cash flow nearly doubled, and net debt has been reduced by around €1.5 billion since the beginning of the year.

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Cost reduction and efficiency programs are being implemented rigorously and rapidly. With the excellence program NEXT, BASF intends to further improve productivity and effectiveness in all functions and working areas: The aim is to reduce costs, increase efficiency and speed up all business processes. In conjunction with ongoing cost-cutting activities, the company expects this to progressively increase earnings by more than €1 billion per year as of 2012.

A drastic decline in sales was recorded in the Plastics segment, mainly due to substantially lower volumes compared with the same quarter of the previous year. Earnings declined considerably and were slightly negative – in particular, as a result of low margins and high costs of idle capacity in the Performance Polymers division.

BASF SE, Ludwigshafen, Germany