BASF, the world's biggest chemicals maker, said Wednesday that its full-year profits came out lower than expected last year due to falling oil prices. BASF said in a statement that underlying or operating profit tumbled by 18 percent to 6.2 billion euros ($6.7 billion) in 2015 on a 5.0-percent decline in revenues to 70.4 billion euros. "This significant decline (in operating profit) compared with the level of the previous year is mainly due to impairments in the oil and gas segment," the company explained.
It put the impairments or writedowns at an estimated 600 million euros, which it would book in the fourth quarter. BASF had previously been expecting to book only "slightly lower" operating profit for 2015 after having already cut its full-year goals at the end of October in face of slowing growth in China and the weaker-than-expected global economy.
"The reason for the impairments in the oil and gas segments is the strong decline in oil and gas prices in the past months," the statement said. "The assumptions for oil and gas prices have also been reduced for subsequent years." BASF attributed the decline in full-year sales "primarily to the divestiture of the natural gas trading and storage activities." In September, BASF announced it had agreed with Russian gas behemoth Gazprom to go ahead with an asset swap the two had put on ice due to tensions between Russia and the West. Under the deal, BASF's subsidiary Wintershall will obtain shares in a western Siberian gas field. In exchange it will hand over its stake in their joint venture gas storage and trading business, plus a stake in an oil and gas exploration unit in the North Sea. BASF said it would publish full details of 2015 earnings on February 26.