'BASF was preparing for tough times,' a company statement quoted chairman Juergen Hambrecht as saying.

'We are responding flexibly to market developments and are acting quickly,' he added.

The group would temporarily shut down 80 sites and reduce operations at 100 others in Europe, Asia and North America, and dropped its 2008 profit target.

It expected the closures to last until early January, but was ready to reboot production quickly if demand picked up, a spokesman told AFP.

A total of 20,000 staff would be affected, including 5,000 at the group's headquarters in southwestern Ludwigshaven, BASF said.

It did not foresee outright layoffs for now. The company planned to use 'flexible working time arrangements' to adapt in coming months.

Once such measures had been exhausted however, 'the company cannot rule out the need for short-time working at individual sites worldwide', a statement said.

BASF said it had been hit by 'a massive decline in demand', primarily in the automotive, construction and textile industries, and that the cutbacks would involve production of ammonia, styrene and polyamide, which are used to produce engineering plastics, coatings and fibers.

In late October, the group had already signalled potential problems, but 'since then, customer demand in key markets has declined significantly', Mr Hambrecht said.

'In particular, customers in the automotive industry have cancelled orders at short notice.'

While BASF's rival Dow Chemical appears to be resisting the global downturn somewhat better, the French group Rhodia has also announced reduced production of polyamides owing to slumping auto sector output.

In early November, the German chemical federation VCI lowered its sector forecast for 2008, and the BASF announcement could be followed by many more, analysts said.

For the second time in less than a month, BASF lowered its operating profit outlook for this year to less than that posted in 2007 of 7.6 billion euros (S$14.5 billion).

The situation in 2009 was 'difficult to foresee', Mr Hambrecht said.

Investors quickly piled out of BASF stock, and it shed 13.65 per cent to 21.96 euros on the Frankfurt stock exchange, which lost 4.92 per cent overall on Wednesday.

'The times will remain very tough, also in 2009' for the company, Merck Finck analysts said.

They downgraded BASF from hold to sell, while noting that 'the only positive point is probably that the demand is usually weakest at the beginning of difficult times due to inventory reductions' by customers.

BASF would now focus on cost and budget discipline, and 'also proceed swiftly with the planned acquisition and integration of Ciba to further optimise our business', the statement said.

The German group is taking over the Swiss specialist chemicals company in a deal that values Ciba at around 3.8 billion euros.

BASF said on November 12 that it sought through the purchase to boost activities in niche markets such as coverings, water treatment and products used in paper manufacturing. -- AFP