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4 – Reporting by segment and region

BASF’s worldwide business is conducted by operating divisions that are aggregated into six segments for reporting purposes on the basis of similar products, production processes and customer industries.

Chemicals consists of the Inorganics, Petrochemicals and Intermediates divisions. Its portfolio ranges from basic chemicals to the starting materials for the production of a variety of downstream products such as plastics, coatings, detergents, medicines.

Plastics, consisting of the Performance Polymers and Polyurethanes divisions, offers a variety of engineering plastics and the associated system solutions and services.

The Performance Products segment offers innovative and specific system solutions for numerous processing industries. These include, for example, the plastics processing industry, automotive suppliers, the paper industry, refineries, users of oilfield and mining chemicals as well as leather and textiles processors. To integrate the Cognis activities, BASF established a new division in the Performance Products segment. For this reason, the Care Chemicals division was split into two divisions: The new division Nutrition & Health comprises products and system solutions for the health and nutrition market as well as for the fragrances and flavors industry. The Care Chemicals division comprises products and system solutions for cleaning, care, cosmetics and hygiene. The segment now consists of the Dispersions & Pigments, Care Chemicals, Nutrition & Health, Paper Chemicals and Performance Chemicals divisions. The previous year’s figures have been adjusted accordingly.

Functional Solutions comprises the Catalysts, Construction Chemicals and Coatings divisions. In this segment, we bundle tailor-made system solutions and innovative products for specific industries, in particular for the automotive, chemical and construction sectors.

The Agricultural Solutions segment corresponds to the Crop Protection division, which primarily offers crop protection products that guard against fungal diseases, insects and weeds.

Oil & Gas is composed of the Oil & Gas division with the Exploration & Production and Natural Gas Trading business sectors.

Activities not assigned to a particular division are reported in Other. This comprises primarily the styrenics and fertilizers businesses. In addition, the sale of raw materials, engineering and other services, rental income and leases are reported in Other.

Group corporate costs consist of the expenses for steering the BASF Group and are not allocated to the segments, but rather reported under Other.

With our cross-divisional corporate research, which is also reported under Other, we develop growth clusters and ensure the long-term competence of BASF with regard to technology and methods.

Earnings from currency conversion reported under Other include earnings not allocated to the segments from the hedging of forecasted sales, from currency positions that are macrohedged as well as from the conversion of financial liabilities. In addition, Other also includes income and expenses from the BASF long-term incentive program (LTI program) as well as the results of the hedging of raw material price risks that were not allocated to the segments.

Transfers between the segments are almost always executed at market-based prices. The allocation of assets and depreciation to the segments is based on economic control. Assets used by more than one segment are allocated based on the percentage of usage.

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Income from operations (EBIT) of Other (million €)

 

 

2010

2009

Corporate research costs

(323)

(319)

Costs of the corporate center

(226)

(209)

Styrenics, fertilizers, other businesses

400

339

Foreign currency results, hedging and other measurement effects

(460)

(512)

Miscellaneous income and expenses

(98)

74

 

(707)

(627)

Compared with the previous year, income from operations in the Styrenics business increased sharply, while it decreased significantly in the fertilizer business.

The foreign currency result of Other improved significantly compared with the previous year. Charges arising from the long-term incentive program in 2010 grew by €206 million to €418 million compared with the previous year due to the development in the stock price.

In 2010, miscellaneous income and expenses contain charges related to closed sites among other things.

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Assets of Other (million €)

 

 

2010

2009

Assets of businesses included under Other

2,690

2,647

Financial assets

3,281

2,960

Deferred tax assets

1,112

1,042

Cash and cash equivalents/marketable securities

1,509

1,850

Defined benefit assets

260

549

Miscellaneous receivables/prepaid expenses

1,915

1,513

 

10,767

10,561

The reconciliation reporting Oil & Gas reconciles the income from operations in the Oil & Gas segment with the contribution of the segment to the net income of the BASF Group.

The Oil & Gas segment’s miscellaneous earnings relate to income and expenses not included in the income from operations of the segment, the interest result as well as the other financial result.

The increase in income from participations resulted primarily from higher profits at OAO Severneftegazprom (SNG), Krasnoselkup, the Russian Federation, which is accounted for using the equity method. SNG holds the production license to the Yuzhno Russkoye natural gas field in Western Siberia. BASF has a 35% share in the commercial success of the field. The increase in miscellaneous income related mainly to results from foreign currency hedging not allocated to the segments, which are reported in Other.

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Reconciliation reporting Oil & Gas (million €)

 

 

2010

2009

Income from operations

2,334

2,289

Income from financial assets

226

62

Miscellaneous earnings

(69)

(243)

Income before taxes and minority interests

2,491

2,108

Income taxes

1,340

1,223

Thereof income taxes on oil-producing operations non-compensable with German corporate income tax

983

870

Income before minority interests

1,151

885

Minority interests

228

173

Net income

923

712

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Segments 2010 (million €)

 

 

 

 

 

 

 

 

Chemicals

Plastics

Performance
Products

Functional Solutions

Agricultural Solutions

Oil & Gas

Thereof Exploration & Production

Other

BASF Group

Sales

11,377

9,830

12,288

9,703

4,033

10,791

3,819

5,851

63,873

Change (%)

51.4

37.9

31.3

36.4

10.6

(5.0)

(0.7)

27.8

26.0

Intersegmental transfers

5,476

546

438

159

25

852

41

275

7,771

Sales including intersegmental transfers

16,853

10,376

12,726

9,862

4,058

11,643

3,860

6,126

71,644

Income from operations

2,310

1,273

1,345

457

749

2,334

1,918

(707)

7,761

Change (%)

214.3

129.8

.

327.1

(2.6)

2.0

7.7

(12.8)

111.1

Assets

6,526

5,114

13,409

9,364

5,063

9,150

5,158

10,767

59,393

Thereof goodwill

22

118

1,859

2,041

1,394

389

389

50

5,873

property, plant and equipment

3,484

2,287

3,983

1,676

619

4,414

2,005

778

17,241

Debt

1,900

1,289

3,723

2,154

1,123

2,825

1,279

23,722

36,736

Research and development expenses

130

141

289

179

393

15

15

345

1,492

Additions to property, plant and equipment and intangible assets

535

250

3,000

208

145

996

478

170

5,304

Amortization of intangible assets and depreciation of property, plant and equipment

690

448

817

404

189

643

510

179

3,370

Thereof impairments

2

3

89

11

96

96

1

202

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Segments 2009 (million €)

 

 

 

 

 

 

 

 

Chemicals

Plastics

Performance
Products

Functional Solutions

Agricultural Solutions

Oil & Gas

Thereof Exploration
& Production

Other

BASF Group

Sales

7,515

7,128

9,356

7,115

3,646

11,356

3,847

4,577

50,693

Change (%)

(32.7)

(21.8)

15.2

(24.2)

7.0

(21.4)

(27.5)

(31.2)

(18.6)

Intersegmental transfers

3,564

363

319

147

33

702

38

245

5,373

Sales including intersegmental transfers

11,079

7,491

9,675

7,262

3,679

12,058

3,885

4,822

56,066

Income from operations

735

554

(150)

107

769

2,289

1,781

(627)

3,677

Change (%)

(46.3)

2.8

.

(29.1)

9.1

(40.5)

(46.3)

31.3

(43.1)

Assets

5,688

4,530

9,242

8,265

4,681

8,301

4,997

10,561

51,268

Thereof goodwill

22

115

1,214

1,894

1,366

389

389

69

5,069

property, plant and equipment

3,446

2,353

3,390

1,514

592

3,980

1,930

1,010

16,285

Debt

1,384

1,053

2,412

2,003

1,046

2,669

1,516

22,092

32,659

Research and development expenses

129

126

285

163

355

13

13

327

1,398

Additions to property, plant and equipment and intangible assets

482

249

3,753

174

183

1,012

647

119

5,972

Amortization of intangible assets and depreciation of property, plant and equipment

836

440

1,076

404

204

541

407

210

3,711

Thereof impairments

183

7

377

38

2

607

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Regions 2010 (million €)1

 

 

 

 

 

 

Europe

Thereof
Germany

North
America

Asia,
Pacific

South
America,
Africa,
Middle East

BASF Group

Location of customers

 

 

 

 

 

 

1

The regional classification of some Central American countries has been changed. The previous year’s figures have been adjusted accordingly.

Sales

33,201

12,225

12,886

12,510

5,276

63,873

Change (%)

16.4

14.6

35.9

43.7

32.7

26.0

Share (%)

51.9

19.1

20.2

19.6

8.3

100.0

Location of companies

 

 

 

 

 

 

Sales

35,156

25,426

13,246

11,642

3,829

63,873

Sales including interregional transfers

41,312

30,197

15,205

12,098

4,037

72,652

Income from operations

5,206

3,769

1,107

1,271

177

7,761

Assets

35,494

21,494

11,885

8,411

3,603

59,393

Thereof property, plant and equipment

10,134

6,424

3,569

2,853

685

17,241

Additions to property, plant and equipment and intangible assets

3,364

2,273

981

788

171

5,304

Amortization of intangible assets and depreciation of property, plant and equipment

2,137

1,140

697

432

104

3,370

Employees as of December 31

69,809

50,801

16,487

15,965

6,879

109,140

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Regions 2009 (million €)

 

 

 

 

 

 

Europe

Thereof
Germany

North
America

Asia,
Pacific

South
America,
Africa,
Middle East

BASF Group

Location of customers

 

 

 

 

 

 

Sales

28,532

10,666

9,480

8,706

3,975

50,693

Change (%)

(22.2)

(22.7)

(21.0)

(6.6)

(7.4)

(18.6)

Share (%)

56.2

21.0

18.7

17.2

7.9

100.0

Location of companies

 

 

 

 

 

 

Sales

30,375

21,543

9,404

7,997

2,917

50,693

Sales including interregional transfers

34,393

24,729

10,564

8,263

3,164

56,384

Income from operations

2,390

1,855

503

503

281

3,677

Assets

31,994

18,790

10,177

6,392

2,705

51,268

Thereof property, plant and equipment

9,789

6,006

3,352

2,526

618

16,285

Additions to property, plant and equipment and intangible assets

4,194

2,101

1,123

521

134

5,972

Amortization of intangible assets and depreciation of property, plant and equipment

2,429

1,242

750

428

104

3,711

Employees as of December 31

67,621

48,586

16,027

14,817

6,314

104,779