Nevertheless, BASF was able to keep its sales volumes at the level of the prior-year quar-ter thanks mainly to higher volumes in the Agricultural Solutions and Surface Technologies segments.
Income from operations (EBIT) before special items was €1.1 billion, down by 24% compared with the level of the third quarter of 2018. This was primarily due to significantly lower contributions from the Materials and Chemicals segments. As expected, isocyanate prices declined considerably. In addition, there were scheduled turnarounds at the steam crackers and falling margins for cracker products. These factors had a significant negative impact on earnings in the two segments.
“In our downstream divisions, we were successful despite the difficult market environ-ment and posted a considerable improvement compared with the prior-year quarter,” said Dr. Martin Brudermüller, chairman of the Board of Executive Directors of BASF SE.
EBITDA increased to €2.3 billion, compared with €2.2 billion in the third quarter of 2018. EBITDA before special items was down by 8% to €2.1 billion. EBIT amounted to €1.4 billion, nearly matching the prior-year level. Net income amounted to €911 million, compared with €1.2 billion in the third quarter of 2018.
Earnings per share in the third quarter of 2019 fell to €1.00 from €1.31 in the prior-year quarter. Adjusted earnings per share were €0.86, compared to €1.51 in the prior-year quarter. Cash flows from operating activities amounted to €2.0 billion, compared with €2.9 billion in the third quarter of 2018. Free cash ﬂow declined to €1.1 billion as a result of lower cash flows from operating activities.
The geopolitical conditions are and will remain challenging for BASF. “In particular, the trade conflict between the United States and China is weighing on our business. Moreo-ver, there are uncertainties related to Brexit,” said Brudermüller. “These events are acting as a drag on the economy – not only in export-oriented countries in Europe. The United States is also experiencing a noticeable slowdown. Growth continues in China, albeit at a slower pace. Production in the global automotive industry again declined compared with the already low level at the end of the first half of the year.
“It is not within our power to change the unfavorable underlying conditions,” said Brudermüller. “However, we know exactly what we have to address within BASF. And we are working on this with speed and determination. We are rapidly and systematically reshap-ing our organization – toward greater customer focus and leaner structures.”