Germany's BASF, the world's largest chemicals company by sales, cut its earnings forecasts and its projections for the broader market today.
It has become the latest industrial group to fall victim to weak demand in its main European market.
"We have seen a very slow Q3 in terms of demand for Europe. And we don't feel really a positive momentum going into Q4 and going into 2015," the company's chief executive Kurt Bock said.
BASF, whose products include car coatings, foam chemicals and catalytic converters, said slowing growth in emerging markets and lower oil and gas prices also contributed to its gloomy outlook.
Those trends were mitigated by strong petrochemicals margins in the US, benefiting from cheap shale gas supplies, though falling oil prices hurt its oil and gas unit Wintershall, which accounts for about a quarter of group operating profit.
BASF lowered its forecast for core earnings (EBITDA) in 2015 to between €10-12 billion from €14 billion and cut its outlook for global chemical production growth in 2015 to 4% from 4.9%.
While BASF relies on Asia for growth, Europe is its most important market, accounting for more than half of group sales.
BASF said it aimed to achieve an earnings improvement of €1.3 billion next year, €300m more than planned, thanks to an efficiency programme running ahead of schedule.
The 150 year-old company, the first to mass produce nitrogen fertilizers about a century ago, said restructuring of its paper chemicals, plastic additives and pigments businesses would also contribute about €500m to earnings from 2017.
Third-quarter operating income rose by 9%, more than expected, shored up by strong US petrochemicals margins, a sharp rise in natural gas trading volumes and lower costs for its long-term incentive programme because of the weaker outlook.
That was tempered by weak demand in Europe and a disappointing farming pesticides business, where a seasonal slowdown was exacerbated by cautious purchasing behaviour due to expectations of price cuts.
Quarterly earnings before interest and tax (EBIT), adjusted for one-off items, rose to €1.84 billion, ahead of the €1.74 billion average estimate in a Reuters poll.
The company said its sales rose 3% to €18.3 billion, also ahead of the poll average of €17.3 billion.
