|
Chemical stocks slump
|
 |
April 29, 1999: 7:01 a.m. ET
Hoechst and BASF suffer big falls in Q1 earnings; second half outlook brighter
|
LONDON (CNNfn) - Chemical stocks in Europe went into a sharp slump Thursday, after two of Germany's biggest chemical companies unveiled tumbling first-quarter earnings.
Hoechst and BASF reported huge falls in first quarter net profit, with the latter also sounding a cautious note about its likely first-half performance.
BASF stock tumbled almost 5 percent to 40.05 euros, and Hoechst shares slipped 2 percent to 43.10 euros. The bad news spilled over into other stocks, with domestic rival Bayer (FBAY) dipping 2 percent, and France's Rhône-Poulenc (PRPP) fell more than 2 percent in Paris and Ciba Specialty Chemicals slid a similar amount in Zurich.
Ludwigshafen-based Hoechst reported a 22 percent fall in net profit for the first three months of the year to 323 million euros. This equates to 0.52 euros per share versus 0.67 in Q1 1998.
Its pretax earnings declined 18 percent to 552 million euros, in line with analysts' expectations. Sales fell 8 percent to 6.77 billion euros.
BASF, Europe's biggest chemical company, said a sharp drop in prices was to blame for the slump against an "excellent first quarter of 1998." It also said exchange rate movements hit earnings.
And the company's prognosis for the first half was equally downbeat. "As a result of the comparatively low orders in hand in many divisions, we expect sales and earnings in the first half of 1999 to be lower than the year-ago figure," the company said.
But BASF sees a recovery in the second half where it expects numbers at the operating level, at least, "to be closer to those for the same period last year."
Hoechst was more upbeat about the outlook for what it sees as its core businesses. The Frankfurt-based giant is planning to focus on life sciences, after it spins off its remaining industrial chemical businesses into a joint venture, called Aventis, with Rhône-Poulenc.
"For the full year we continue to expect a double-digit increase in operating profit from the life sciences businesses," the company said. But it warned that "the industrial businesses are likely to remain under pressure for the rest of the year."
Hoechst's net profit from continuing operations collapsed 64 percent to 52 million euros. This translates into an EPS figure of 0.09 euros, versus 0.24 last time.
Hoechst's sales slipped 9 percent to 4.18 billion euros. The company said its life sciences business compensated for the decline in earnings from its industrial chemicals divisions. "The decline was mainly due to very difficult conditions in most industrial markets, which are characterized by overcapacity, firmer raw material costs, and pressure on selling prices," the company said.
|
|
|
|
|
|
Hoechst
BASF
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
