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Basf sees falling input demand in Brazil

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Weak farmer demand around the world weighed on revenues for BASF's agrichemical division, with a 'considerably reduction in volumes'.

The division made an operating income of E590m in the first three months of 2016, a 3% increase on the first three months of 2015, attributed to higher margins in line with higher prices and reduced fixed costs.

But rising prices could not offset 'considerably' lower sales volumes and negative currency effects. The agricultural segment's revenues fell by 6% to E1.78bn over the reported period.

Rising volumes

South America saw a 'considerable' reduction in volumes and currency-related revenues, with insecticide and fungicide sales falling sharply in Brazil, again through a combination of lower demand from struggling producers and high stocks.

While European sales were relatively strong, with higher product prices and volumes, these gains were wiped out by exchange rates.

The North American and Asian markets were affected by reduced demand, with growers slow to come to the market and the company facing high stock levels.

Herbicide and fungicide demand declined in North America, while inventory levels were high in China and Japan.

Falling volumes

BASF's agricultural division is seen as a potential player in the current restructure of the global agrochemical sector prompted by ChemChina's takeover of Syngenta and the merger of the Dow and DuPont agrichemical operations.

BASF as a whole saw its operating profit fall by 8% to E1.9bn on 29% lower revenues at E14.21bn, largely due to its exposure to the oil and gas sectors.

BASF shares were down 0.3% at E72.72 in mid-day deals in Frankfurt.

By Jamie Day

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