General
Information
Last Update:
March 1, 2012
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Sales and income from operations

Sales

+15%

Sales increase significantly, sales volumes rise in most divisions; months-long suspension of oil production in Libya negatively impacts sales and earnings growth

Income from operations

+11%

  • Considerable earnings increase
    year-on-year
  • High demand from many customer industries
  • Higher raw material costs largely passed on to customers

Sales (million €)

Income from operations (million €)

Positive economic development led to an approximately 2.5% increase in demand in the chemicals business1, and most divisions improved their sales volumes. Prices rose as a result of higher raw material costs, especially in the Petrochemicals and Catalysts divisions. However, we were unable to fully pass on the increased raw material costs to our customers in all product lines, which negatively affected our margins. The integrated Cognis businesses were included for the full year for the first time, which had a positive influence on sales and earnings growth. Our sales and earnings only included the styrenics business until it was transferred to the Styrolution joint venture on October 1, 2011. Other company acquisitions and divestitures had only a small influence on the development of our sales and earnings.

1 Our chemicals business includes the Chemicals, Plastics, Performance Products and Functional Solutions segments.

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Factors influencing sales BASF Group

 

 

Change in million €

Change in %

Volumes

311

.

Prices

7,800

12

Currencies

(1,372)

(2)

Acquisitions and changes in the scope of consolidation

3,246

5

Divestitures

(361)

.

Total change in sales

9,624

15

Sales in the Chemicals segment rose significantly compared with the previous year mostly as a result of higher prices. We were largely able to pass on increased raw material costs to our customers, especially because market supplies of some products continued to be scarce. The Petrochemicals division in particular benefited from this development. High capacity utilization rates, our cost-cutting programs and good margins all led to an increase in income from operations.

Sales in the Plastics segment were considerably above the previous year’s level. Especially in the first half of the year, demand from numerous customer industries grew, particularly from the automotive industry. We raised prices in response to increasing raw material costs; they declined only in the TDI business. This prevented income from operations in the Polyurethanes division from matching the level of the previous year. However, significantly increased earnings in the Performance Polymers division were able to mostly compensate for this development.

Sales in the Performance Products segment improved, mainly driven by the full-year inclusion of the Cognis businesses as well as by increased prices due to higher raw material costs. Furthermore, our products were in high demand from most customer industries, especially during the first half of 2011. Special items related to the Cognis integration had a negative influence on earnings in some divisions. Overall, however, the integrated Cognis businesses made a positive contribution and played a decisive role in the year-on-year increase in the segment’s income from operations.

In the Functional Solutions segment, higher sales volumes and a significant sales increase were predominantly attributable to high demand from the automotive industry. In the Catalysts division, sales growth was also boosted by a sharp increase in precious metal prices. Sales also rose in the Construction Chemicals and Coatings divisions. The segment’s decline in income from operations was mainly a result of special charges in the Coatings and Construction Chemicals divisions; even the significantly increased earnings contribution from the Catalysts division could not compensate for this.

Sales in the Agricultural Solutions segment grew primarily as a result of high demand. We were able to increase sales volumes in the growth markets of Asia and Eastern Europe in particular. Prices remained stable overall, but the depreciation of the U.S. dollar negatively affected sales growth. Income from operations exceeded the previous year’s level despite increases in expenditures for research and development as well as for the expansion of our sales activities in growth markets.

Sales increased significantly in the Oil & Gas segment as a result of higher prices. In the Exploration & Production business sector, however, the months-long suspension of oil production in Libya led to a decline in volumes. In contrast, sales volumes in Natural Gas Trading were slightly higher than in the previous year. Income from operations for the segment declined as a result of the lower contribution from Libya.

Sales in Other increased to €6,275 million from €5,851 million in the previous year. As of October 1, 2011, our styrenics business was transferred to the Styrolution joint venture; this unit therefore only contributed to the sales and earnings of Other for the first nine months of 2011. During this period, sales in Styrenics significantly exceeded the level of the previous year. Sales also developed positively in the fertilizer business and raw materials trading. Income from operations in Other rose from minus €707 million to €178 million. This increase is predominantly attributable to gains on the disposal of our styrenics business in the amount of €593 million. In addition, special charges as well as expenses for the long-term incentive program were both lower.

EBIT after cost of capital amounted to €2,551 million. This means we once again earned a high premium on our cost of capital.

Income from operations

  • Earnings rise compared with the previous year despite months-long suspension of oil production in Libya
  • Special income results from transfer of styrenics business to the Styrolution joint venture
  • High premium earned on cost of capital
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