BASF Shares Tumble After 1st Half Earnings Miss Expectations

   By Nathan Allen

Shares in BASF SE (BAS.XE) lost ground in early trade after the German chemicals maker posted weaker-than-expected earnings that were weighed down by substantial foreign-exchange headwinds.

Net income for the first half slipped 1% to 1.48 billion euros ($1.73 billion) falling well short of a FactSet-compiled consensus of EUR1.62 billion.

The results mark the continuation of a familiar pattern for BASF's upstream divisions, which produce oil, gas and commodity chemicals. Since 2Q 2017, upstream units have generally outperformed the more specialized downstream units, whose margins remain under pressure from high raw materials prices, Berenberg analyst Sebastian Bray said.

Earnings before interest and taxes at the functional materials unit missed expectations by almost 20%, as high prices for precious metals and battery materials wiped out gains from higher volumes, he said. EBIT at performance products undershot expectations by 13%.

At 0900 GMT shares were down 2.9% at EUR82.19, having earlier dropped as low as EUR81.50.

The negative market response was exacerbated by solid results from rivals Evonik Industries AG (EVK.XE) and Covestro AG (1COV.XE), which had raised expectations and fueled speculation of a guidance upgrade that never came, Baader Helvea analyst Markus Mayer said.

BASF left its financial guidance in place but Chief Executive Martin Brudermueller noted that global economic risks had increased significantly over the first half of the year.

"There is little to get excited about in these results in the near term," Mr. Bray said.

However, the deconsolidation of the oil-and-gas division and the purchase of some assets from Bayer AG (BAYN.XE) should serve as catalysts in the fourth quarter, he said.

Write to Nathan Allen at nathan.allen@dowjones.com

(END) Dow Jones Newswires

July 27, 2018 05:20 ET (09:20 GMT)

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