A cyclist rides his bike bast the entrance of the BASF plant in Schweizerhalle
A cyclist rides his bike past the entrance of the BASF plant and former Ciba production site in Schweizerhalle near Basel July 7, 2009. Reuters

Chemical giant BASF SE's earnings slipped 4.3 percent in the third quarter on economic uncertainty and cautious spending among its customers.

The Ludwigshafen, Germany-based chemical producer recorded net income of €1.19 billion ($1.68 billion) versus €1.25 billion in the prior year quarter, even as sales rose 11.6% to €17. 61 billion.

Although demand for BASF products remained strong, growth slowed from the first half as downstream customers planned more cautiously, cut inventories and held off on purchasing in anticipation of falling prices, the company said in its earnings statement Thursday. Escalating raw material prices was also a contributing factor.

While sales volumes in almost all segments remained steady compared with a year ago, the company's Oil & Gas segment saw a decline in production volumes in Libya, after operations were suspended in February over the unrest. Production was resumed in the middle of October and is currently being ramped up, said the company.

BASF also recorded gains in all its operating regions, with strength seen in its European and North American assets acquired from Cognis.

The company's European segment's EBIT before special items fell 23 percent to €1.23 billion, primarily on the suspension of oil production in Libya. Sales, however, grew 12 percent to €9.36 billion.

Earnings in North American operations grew 26 percent to €301 million as sales grew 7 percent to €3.55 billion on strong performance from chemicals and agricultural products.

Asia sales also rose on price increases and healthy demand in the company's Catalysts and Performance Polymers unit, but earnings were hit by lower margins in its Polyurethanes segment. In South America, crop protection products boosted profits.

BASF said it expects this trend to persist into the fourth quarter, and anticipates worldwide growth in GDP, industrial and chemical production for the full year will be less than one percentage point lower than its previous forecast.

We remain cautious despite the current good performance as economic growth is likely to slow further. In particular, credit restrictions in China, as well as the debt crises in Europe and the United States will adversely impact economic growth, said Kurt Bock, the board chairman.

Bock added the company will further reduce costs while improving efficiency and will concentrate on product innovation and growing its business in emerging markets.

BASF is the world's largest chemical company and operates in markets including chemicals, plastics, agricultural solutions and oil and gas. It has a workforce of 109,000..