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Economy
European chemical firms are buoyed by 2018, wary of 2019
Industry leaders forecast turbulent markets in the year ahead
by Alex Scott
March 6, 2019
| A version of this story appeared in
Volume 97, Issue 10
Several of Europe’s largest chemical producers enjoyed growth in 2018, with most increasing sales and earnings before exceptional items—if not net earnings. After maintaining growth in recent years, though, some are concerned that 2019 will bring turbulent market conditions.
Evonik Industries boosted earnings 31.0% to $1.1 billion in 2018 on the back of a 4.0% hike in sales to $17.2 billion. The German firm aims to increase the share of its products and solutions that have sustainability benefits. But it warned that political uncertainties and weaker economic growth mean its 2019 profits will be the same or slightly lower than in 2018. “It’s not going to be an easy year,” said Chairman Christian Kullmann.
DSM also said it is strengthening its production of sustainable products. The Dutch firm increased sales in 2018 by 7.3% to $10.8 billion, and although its net earnings tumbled 39.0% to $1.2 billion, its earnings before exceptional items were up 26.0% to $2.1 billion. DSM forecasts a 10% increase this year.
Full-year results
Solvay had a positive year in 2018, with earnings growth of 5.3% before exceptional items. But net earnings were down 19.0%, and outgoing CEO Jean-Pierre Clamadieu warned that conditions will be tougher this year for automotive, electronic, and oil and gas markets.
BASF attributed a 22.6% drop in its 2018 earnings partly to slowing demand for chemicals from the automotive sector. The trade conflict between the US and China—plus unusually low water levels on the Rhine River that restricted chemical shipments—also contributed to the earnings decline, the firm says.
BASF expects the global economy to grow 2.8% in 2019, with growth in Europe and China lower than in 2018. Another challenge is the UK’s exit from the European Union. But it also forecasts solid economic growth in the US and Brazil. Overall, BASF Chairman Martin Brudermüller warned, financial performance in first two quarters of 2019 could be “weak.”
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