* Full-year earnings to drop significantly
* Q3 net income 237 million eur vs 401 mln eur seen in poll
* Confirms full-year outlook
* Says still unlikely to earn cost of capital in 2009
* Shares down 1.5 percent
(Adds details, analyst quote, CEO quote)
By Ludwig Burger
FRANKFURT, Oct 29 (Reuters) - German chemicals company BASF SE reaffirmed it would likely cut its annual dividend for the first time in 16 years as it repeated on Thursday its full-year earnings would slide significantly.
After surprisingly strong third-quarter figures two weeks ago, some analysts had speculated that meeting its long-term pledge of maintaining its dividend might come within reach after all for BASF, which paid 1.95 euros per share on its 2008 results.
But the world's largest chemicals maker, releasing detailed third-quarter figures on Thursday, said net income had slumped by two-thirds to 237 million euros ($349.3 million) on costs related to the speedier integration of Switzerland's Ciba, bought earlier this year, below the 401 million expected by analysts on average in a Reuters poll.
"The third-quarter report does not provide additional positive news for the dividend," said UniCredit analyst Andreas Heine.
BASF shares dropped as much as 5.4 percent and traded 1.5 percent lower at 36.46 euros at 0928 GMT, while the DJ Euro Stoxx European chemicals index advanced 0.3 percent.
Fourth-quarter operating profit before special items would exceed the year-earlier period but would fall short of the third quarter of 2009, the company also said.
SLOW AND UNEVEN
"After a steep plunge, we are now climbing gradually out of the trough," said Chief Executive Juergen Hambrecht. "The recovery will be slow and uneven." He reiterated BASF's sales and earnings would drop significantly in 2009 due to the economic slowdown.
On Oct. 14 BASF had posted quarterly earnings before interest and taxes (EBIT) excluding one-off items of 1.25 billion euros, surpassing the 1.04 billion analysts had predicted and lifting its stock to a 14-month high.
Those results in turn raised hopes BASF might be able to maintain its payout for 2009 -- an expectation the chemicals maker has now dashed.
Dow Chemical Co and DuPont, BASF's two U.S. peers, this month posted better-than-expected quarterly earnings combined with a decline in sales, on job cuts and plant closures.
Folding Ciba into its operations was progressing faster than initially planned and would cost 800 million euros this year, 250 million more than previously forecast, BASF added.
Annual synergies from the tie-up from 2012 would rise to 450 million euros, compared with a previous assessment of more than 400 million.
BASF shares trade at 14.2 times estimated earnings over the coming 12 months, according to StarMine, which weights estimates according to analysts' track record, slightly below the multiple for the chemical industry of 15.8, on uncertainty around whether BASF can defend its margins. (Editing by Michael Shields and David Holmes) ($1=.6785 Euro)