Last December, BASF issued an earnings warning for 2018, indicating that earnings for the year would likely be lower than previously expected. This is due to a number of reasons including: sharper-than-expected price declines in isocyanates, lower cracker margins, operational issues due to low water levels of the Rhine river, as well as more macro-related factors, such as softening demand from the automotive sector since third-quarter 2018, and softer demand from Chinese customers, exacerbated by the looming trade conflict between the U.S. and China. Our revised forecast points to fund from operations (FFO) to debt of around 35% in 2018 and 2019, which is commensurate with the current rating, but leaves no headroom for further acquisitions in the near-term, or
