BASF warns crop protection markets to remain challenging

Wednesday, 7 September 2016 00:01 - - {{hitsCtrl.values.hits}}

LUDWIGSHAFEN (Reuters): BASF, the world’s third-largest crop chemicals supplier, became the latest player in the industry to warn that agricultural markets would remain volatile and challenging.

The German group reiterated that its crop protection unit would seek to match last year’s profitability in 2016, “which is a stretch but that’s our commitment,” the unit’s head Markus Heldt said at a news conference at BASF’s Ludwigshafen headquarters.

Among farmers, there is “a wait and see mentality with regard to investment and spending on crop protection,” said BASF’s Harald Schwager, management board member in charge of the unit.

The crop protection and seeds industries have been hit by low prices for agricultural produce, Latin American farmers struggling to get bank credit for procurement expenses and weak emerging-market currencies.

BASF’s crop protection division in 2015 chalked up earnings before interest and tax (EBIT) before special items of 1.1 billion euros ($1.23 billion) over sales of 5.8 billion euros, a margin of 18.7 percent.

The group, which also produces industrial chemicals, engineering plastics, oil and gas, has remained on the sidelines of major consolidation moves in the agricultural industry. It said on Tuesday it would lie in wait for antitrust-related selloff of businesses as rivals merge.

German rival Bayer said over night that merger negotiations with Monsanto Co had advanced and that it was willing to sweeten its offer to more than $65 billion to acquire the world’s largest seeds company.