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Mar. 10, 2011
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Sales and earnings

Sales

+26%

Record level achieved; considerable increase in volumes as a result of economic recovery in key customer industries; higher prices for many products

Income from operations

+111%

Earnings more than doubled compared with previous year; increase in chemicals business in particular thanks to high capacity utilization and good margins, especially for basic products

As a result of the economic recovery, demand from our key customer sectors increased and sales volumes rose significantly. Business developed positively in all regions, with growth impetus coming particularly from Asia. Prices of many products were higher than the year before. In the Petrochemicals and Catalysts divisions in particular there were substantial price increases. The appreciation of numerous currencies against the euro also helped to boost the already good sales. In addition, the full-year inclusion of the former Ciba businesses had a positive impact on sales growth. Other company purchases and divestitures only had a small influence on sales; the acquisition of Cognis took effect on December 9, 2010.

Sales (million €)

Sales (bar chart)
  Download (Download XLS xls, 16 kB)

Factors influencing sales (million €)

 

 

2010

Change compared with 2009 (%)

Volumes

5,718

11.3

Prices

3,923

7.7

Currencies

2,364

4.7

Acquisitions and changes in the scope of consolidation

1,233

2.4

Divestitures

(58)

(0.1)

 

13,180

26.0

In the Chemicals segment, sales were far above the 2009 level thanks to higher prices and volumes. For some products, there were temporary supply shortages. Higher raw materials costs could largely be passed on in our sales prices. The Petrochemicals division benefited particularly from this development. There was a strong improvement in income from operations in the segment thanks to increased margins, especially for basic products, and higher volumes.

The Plastics segment also posted a strong rise in sales compared with the previous year. The economic upswing in key customer industries led to a noticeable revival of demand. The automotive industry in particular recovered more quickly than we had expected. Capacity utilization rates at our plants were good. While prices in the Polyurethanes business remained broadly stable, they rose in the Performance Polymers division mainly as a result of higher raw materials costs. With margins generally stable, there was a strong improvement in income from operations.

The Performance Products segment benefited from the economic recovery as well as the quick and successful integration of Ciba and the restructuring of the combined businesses. Demand and sales grew in all divisions, due in part to inventory restocking along the entire value-adding chain, especially in the first half of the year. While special items resulting from the integration of Ciba had a negative impact on the segment’s earnings in 2009, in 2010 measures to reduce fixed costs and the realization of synergies led to a strong improvement in earnings.

In the Functional Solutions segment, sales were far above the 2009 level thanks to higher volumes and prices. In the Catalysts and Coatings divisions, an increase in volumes and sales was mainly attributable to improved demand from the automotive industry. In the Construction Chemicals division, however, sales growth was not as strong. Thanks to our strict cost discipline and our measures to increase efficiency, all three divisions made a considerable contribution to the segment’s strong improvement in income from operations.

Agricultural Solutions significantly exceeded the very good sales level of the previous year. Sales volumes of insecticides, herbicides and fungicides were higher than in the previous year. Lower prices were offset by the increase in business volume and positive currency effects. Income from operations remained nearly stable despite increases in selling expenses as well as research and development expenses.

Sales declined in the Oil & Gas segment. The reasons for this were different for each business sector: In Exploration & Production, volumes declined due largely to the OPEC production restrictions in Libya. However, this was almost entirely offset by higher crude oil prices and a stronger U.S. dollar. In Natural Gas Trading, sales volumes increased but sales declined due to lower gas prices. Despite the decline in sales, income from operations in the segment improved slightly.

Sales in Other rose to €5,851 million from €4,577 million in the previous year, primarily as a result of higher prices and sales volumes in the Styrenics business. Income from operations in Other, however, declined from minus €627 million to minus €707 million, attributable primarily to higher expenses for the long-term incentive program. This was partially offset by better foreign currency results and a higher earnings contribution from Styrenics.

Earnings after cost of capital amounted to €3,500 million, a new record for BASF. This means we earned a high premium on our cost of capital.

Income from operations

  • Considerably lower special charges from integration costs and restructuring measures
  • Realization of the expected synergies from the integration of Ciba
  • High premium earned on cost of capital

Income from operations (million €)

Income from operations (bar chart)
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