BASF Can't Rule out Adjusted EBIT Loss in 2Q Due to Pandemic -- Update

--BASF forecasts significant hit to 2Q earnings and expects slow recovery in second half of the year

--Net profit for 1Q missed expectations, but sales and EBIT before special items beat consensus estimates

--Wintershall DEA IPO won't take place in current environment

By Kim Richters

BASF SE expects second-quarter earnings to decrease significantly and can't rule out a potential loss, it said Thursday after pulling its full-year guidance overnight due to the coronavirus pandemic.

The German chemical company expects earnings before interest, taxes and special items in the range of a low three-digit million euros at best in the second quarter, Chief Executive Martin Brudermueller said in a telephone conference.

It could also drop below zero, he said, adding that this would be the "worst case scenario."

The company is facing decline in demand from customers like the automotive industry, which is experiencing production shutdowns and supply-chain disruptions amid the pandemic.

BASF, which pulled its guidance for 2020 late Wednesday ahead of quarterly earnings, forecasts a significant decline in sales volume in the second quarter and a slow recovery in the second half of the year as a result of the pandemic.

As for the first quarter, net profit fell to 885 million euros ($960.9 million) from EUR1.41 billion a year earlier, missing analysts' expectations of EUR920 million.

Quarterly earnings before interest and taxes fell 18% to EUR1.46 billion, and EBIT before special items declined 6% to EUR1.64 billion. Analysts had expected BASF to post EBIT before special items of EUR1.47 billion.

Sales rose 7% to EUR16.75 billion, BASF said, beating consensus estimates of EUR14.98 billion.

The company expected to list oil-and-gas spinoff Wintershall DEA on the stock market this year but now said that an initial public offering wouldn't take place in the current environment.

BASF doesn't intend to apply for emergency state aid to cope with the pandemic, its management said in the conference. It has applied for employee short-time work, however, with a total of 6,700 employees across Europe participating so far.

Write to Kim Richters at [e-mail]

(END) Dow Jones Newswires

April 30, 2020 06:01 ET (10:01 GMT)

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