BASF, the world’s largest chemical maker, on Wednesday said it is unable to project full-year sales and earnings guidance as the coronavirus pandemic presented headwinds that caused low visibility in its demand outlook. The company only said that seasonally lower demand for agricultural products would significantly cap gain in its operating profit before special items in the third quarter.
According to CEO Martin Brudermüller, BASF company’s customers, which accounted for 20% of its output, placed orders for only two months ahead. Hence, it has no clear visibility on demand patterns after that period. The company has a plan to cut jobs by 6,000, or 5% of global jobs, which has been accelerated due to the current crisis.
The foggy demand outlook during the new normal period prompted the company to consider impairment charges on its assets. A company takes impairment charges when it expects its assets to be worth much less. BASF registered an €878 million ($1.032 billion) net loss in the second quarter due to an impairment charge of its shareholding in Wintershall DEA.
So far, only China has shown a V-shaped recovery, Brudermüller said. BASF’s operations in the world’s second-largest economy are recovering from the lows in the first quarter amid the height of the COVID-19 pandemic.
