Despite the promising news of 4Q profit increases for 2016, BASF’s upcoming year looks fraught with uncertainty.
The German chemical giant’s profit was buoyed by stronger growth in its chemicals segments in the last quarter of 2016, resulting in a net profit of $728.84 million.
Yet, BASF’s stocks fell last week as the company reported that it is expecting a “considerable slowdown” in economic growth in the European Union.
The company has also been hampered by a range of other factors including losses from the fatal accident at its Ludwigshafen site last year. BASF also announced that proposed oil and gas investment deals with Iran are now in limbo due to uncertainty over the status of economic sanctions.
BASF’s CEO signaled that the company doesn’t intend to change its stance on big mergers. As other companies in the industry have looked to boost growth through M&As, BASF has taken a more cautious approach by buying smaller assets. It could even scoop up a number of divestitures from major deals including Dow-DuPont, ChemChina-Syngenta and Bayer-Monsanto. The company’s largest acquisition was its purchase of Chemetall last year for $3.2 billion.
Instead of big deals, BASF’s CEO, Kurt Bock, has been more focused on cutting costs and increasing earnings, margins and share prices.