BASF's fine chemicals division has reported a modest increase in sales for Q3, but EBIT was impacted by the implementation of measures aimed at reducing costs in the longer term. For the quarter ended September 30, sales were up seven per cent to €464m from €432 for the same period of last year. EBIT was -€26m compared to €1m last year - but EBIT before special items was €8m.
Since the poor EBIT performance was attributed in part to the combination of human and animal nutrition under one sole nutrition unit from the beginning of this month with a view to reducing costs longer-term, it may be that this is just a temporary blot on the bigger picture and the foundation for a more positive future.
While no information has been given about the levels of savings it expects to realise as a result of combining the units, a spokesperson told NutraIngredients.com that the aim is to fulfil, as soon as possible, the financial expectations of the group - that is, "to earn a premium on the cost of capital".
According to head of the fine chemicals division Dr Wolfgang Büchele, the implications of the combined nutrition unit for BASF's customers are that it will allow for "a speedier and more flexible response to market requirements".
There will be no changes in production, since although the vitamin and carotenoid portfolio for each use is very similar, the formulations have some important differences. BASF said that further measures to reduce costs and increase efficiency and flexibility at its site in Minden, Germany, also affected the Q3 EBIT.
Beyond such reorganisation, over the past two months BASF has set out to tackle rising costs of raw materials in the nutrition sector with a series of price increases. So far feed-grade vitamin E, food- and feed-grade B2, and vitamin A have all been affected.
It is not alone; DSM Nutritional Product announced a price increase across its vitamins, premix and citric acid portfolio at the beginning of October. However nutrition cannot take great credit for the sales increase at BASF, which was attributed to further increases in sales volumes of aroma chemicals and the acquisition of the pharma custom synthesis business and Engelhard's personal care since the comparative period of last year.
In keeping with the pattern over recent quarters, lysine prices continued to be under pressure and sales volumes "significantly reduced".