BASF, owner of McIntosh plant, to cut dividend

BASF SE, the German firm that bought Ciba Specialty Chemicals, said Thursday it would have to cut its dividend because the poor economy and cost of integrating Ciba have depressed profits.

The former Ciba plant in McIntosh has about 500 employees and 150 contractors.

The world's largest chemical company, BASF said profit fell to 237 million euros (or about

$348 million) in the July-September quarter, down 68 percent from the same quarter of 2008. Analysts polled by Thomson Reuters had expected profit of 333 million euros.

Revenue fell to 12.8 billion euros ($19 billion) down 19 percent from the 2008 quarter.

The firm, based in Ludwigshafen, Germany, said business in the third quarter picked up from earlier in the year as customers restocked depleted inventories.

"In the past three months, our business has stabilized at a low level," said Jurgen Hambrecht, chairman of the board of executive directors. "Positive impulses are coming from Asia, especially from China, and from parts of South America. Europe and North American remain weak."

But the firm said it expected operating profit to decline in the fourth quarter, and said Ciba integration costs would further hurt profit.

Hambrecht said BASF, which paid a 1.95-euro-per-share dividend in 2008, would cut that payout, but not by too much. "You will see a decent dividend," he said.

The performance products division, including the former Ciba, saw sales rise 25 percent to 2.65 billion euros. Operating profit fell 43.4 percent to

125 million euros due to restructuring charges.

Hambrecht said the Ciba integration was running faster than planned, and as a result, BASF would incur 800 million euros of the 1.1 billion-euro integration cost by year's end. The company said it now expects the combined company to save 450 million euros a year, up from 400 million.

He said former Ciba operations, before charges, made an operating profit of about 20 million euros in the third quarter, and are expected to make

40 million euros in the fourth quarter. The turnaround stems from cost cuts and putting profit before the volume of chemicals made, he said.

He said 33 of 56 planned closures of Ciba sites are complete. The new owners have said they don't plan to close McIntosh.