Although overall sales for the quarter were down 8 per cent to €13.2bn compared to the corresponding period in 2008, the company registered a net profit of €455m, a figure that beat market expectations, sending share prices rising.
The improvement in earnings shows that the company’s large scale cost cutting and restructuring are now having a positive effect on its financial performance.
Ciba integration led to big cutbacks
Back in July 2009, the company announced that it was cutting 3,700 jobs and closing more than 20 production sites worldwide as part of the integration of the Ciba performance chemicals division.
Of BASFs six business divisions the one that is most involved with the cosmetics and personal care industry is performance products, of which the care chemicals division is the biggest supplier.
The care chemicals division posted a 1.4 per cent increase in sales during the fourth quarter, to €686m, boosted by the integration of the Ciba business, which helped to counterbalance negative pricing and currency effects.
Big drop in full year group sales
In the full year 2009, care chemicals posted a 5.5 per cent dip in sales to €3.40bn, while volumes dipped 9 per cent. The company said that the performance of this category was also impacted by the integration of the Ciba business.
Full year sales fell 19 per cent to €50.7bn compared to the figure for 2008, while net income fell 51.6 per cent to €2.91bn, a figure that reflected particularly tough trading conditions concerning heavy industries during the first six months of the year.
Looking to the full year 2010, the company said that the dip in performance during 2009 is likely to be followed by a slow and uneven economic recovery during the course of 2010.
Improving trend forecast to continue in 2010
However, the company did say that it was encouraged by the improving trend in its earnings seen in the fourth quarter and said that this trend is likely to lead to a ‘significant rise’ in earnings during 2010.
“The slow recovery is continuing,” said BASF chairman Dr. Jurgen Hambrecht. "The fourth quarter of 2009 was encouraging and gives us ground for confidence.
“Because the economic situation remains fragile, BASF will continue to rigorously implement its efficiency and restructuring programmes. The company will also continue to adjust its investment plans to the current market conditions.”