Complaining of “a more challenging” economic environment, BASF said it was looking at ways to reshape its business in the long term, with a merger or sale of its construction chemicals unit being considered.
“We are not satisfied with our current business performance nor with our share price development,” chief executive Martin Brudermueller said in a conference call.
Net profit at the Ludwigshafen-based group fell 10% year-on-year between July and September, to 1.2 billion euros ($1.36 billion).
Operating, or underlying profit before special items, dropped 14% to 1.47 billion euros, although revenues were 8% higher at 15.6 billion as BASF raised prices and sales volumes.
Brudermueller pointed to an unfavourable comparison with last year’s “very strong” third quarter as one reason for the profits slump, as well as negative currency effects.
But BASF was especially hard hit by the knock-on effect of tough new EU emission rules for cars that slowed auto production across the industry from September.
The car sector, for which BASF makes plastic and chemical components, is among the group’s most important customers.
“The introduction of new emission standards had an impact in Europe. The effects of trade conflict between the United States and China are also showing,” Brudermueller said.
Likewise weighing on earnings was the low level of the Rhine after a hot, dry summer in Germany, which Brudermueller said “led to production cutbacks and higher transportation costs”.
Cautious outlook
Costs also came due for integrating 7.6 billion euros of seeds and pesticides businesses, which rival Bayer was forced to sell to earn competition authorities’ green light for its takeover of US-based Monsanto.
The third quarter also brought a merger of BASF’s oil and gas subsidiary Wintershall with Russian-owned DEA.
BASF said it would unveil details of a new, strategic plan for the group in a press conference on November 20.
Already on the table is the possible divestiture of its division that makes chemicals for the construction industry, such as insulating or water-proofing material, or a merger of the unit “with a strong partner”.
The construction chemicals unit posted sales of 2.4 billion euros last year and employs around 7,000 people globally, Brudermueller said, adding that BASF was aiming for a deal “in 2019”.
Looking ahead, the group reaffirmed its cautious full-year forecast, which it had already lowered in September following the DEA deal.
BASF said it expects “slight sales growth” for 2018 compared with the previous year and a “slight decrease” in operating profit before special items.
The group’s share price slid 1.6% to 65.60 euros by 0900 GMT in Frankfurt, matching the DAX blue-chip index that was also down 1.6%.