A steady performance in farm chemicals proved insufficient to prevent BASF reporting a 74% slump in second quarter earnings and lowering expectations for the full year.

Agriculture was the only one of the German industrials group's six divisions to raise profits in the April-to-June period, helped by higher prices for fungicides and weedkillers and the inclusion of Sorex Group, the Anglo-US pest control business bought last year.

Profits at the group's car coatings division tumbled 73%, while its consumer products division fell from a profit of a little over E200m to a similar loss.

Group earnings dropped to E343m on revenues down 23% at E12.5bn.

'Exceptional challenges'

The company, which in April warned of a "decline" in full-year sales and earnings, warned that the fall now looked like being "significant".

"BASF has to face some exceptional challenges in 2009," the group said.

"All segments expect for [agriculture] are affected by the recession."

The company added that it would fail to cover its cost of capital – in essence, a measure of whether money would not be better deployed elsewhere – missing a precondition its chief executive, Juergen Hambrecht, had set for keeping the dividend steady at E1.95 a share.

BASF shares slumped 6% in early deals before recovering, helped by the global rise in equity markets, to end down 1.8% at E34.20 in Frankfurt.

North American strength

The group's farm division raised operating profits rose 0.8% to E366m on revenues 1.4% higher at E1.18bn.

The improvement was led by an increase in North American sales, with European taking held back by weather delays to cereal and rapeseed crops.

Fungicide demand also dropped, a decline also reported by rivals Bayer and Syngenta.