✓ audited

4 – Reporting by segment and region

BASF’s worldwide business is conducted by 15 operating divisions that are divided 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. We produce a wide variety of basic chemicals and intermediates for both internal and external customers in our integrated production facilities.

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, the paper industry, the food and animal feed industry, producers of hygiene products, users of oil field and mining chemicals as well as leather and textiles processors. The segment Performance Products consists of the Dispersions & Pigments, Care Chemicals, Nutrition & Health, Paper Chemicals and Performance Chemicals divisions.

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.

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

For more on the segments in the Management’s Analysis, see
Chemicals
Plastics
Performance Products
Functional Solutions
Agricultural Solutions
Oil & Gas

Activities not assigned to a particular division are reported in Other. These include the sale of other raw materials, engineering and other services, rental income and leases. The fertilizer activities were also reported under Other until their disposal in the first quarter of 2012. The sales and earnings of the styrenics business, which BASF transferred to the Styrolution joint venture as of October 1, 2011, were included in Other for the first nine months of 2011. The participation in Styrolution is accounted for using the equity method in the Consolidated Financial Statements.

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 corporate research, which is also reported under Other, we develop cross-division and cross-segment growth fields and ensure the long-term competence of BASF with regard to technology and methods, including plant biotechnology.

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 (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. Assets, as well as their depreciation and amortization, are allocated to the segments 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 €)

 

2012

2011

Corporate research costs

(391)

(348)

Costs of the corporate headquarters

(255)

(246)

Styrenics, fertilizers, other businesses

826

997

Foreign currency results, hedging and other measurement effects

(460)

(199)

Miscellaneous income and expenses

13

(26)

 

(267)

178

The decline in income from operations in Other is particularly due to the lack of an earnings contribution from the styrenics business. Furthermore, the €299 million in expenses arising from the long-term incentive program were €174 million higher than in 2011 as a result of the development of the stock price.

Earnings in Other in 2012 contained gains of €645 million on the disposal of the fertilizer business. In the previous year, this item had contained the disposal gain of €593 million from the styrenics business. The foreign currency result under Other decreased compared with the previous year.

Miscellaneous income and expenses in 2012 included income of €75 million arising from the adjustment of pension plans and similar obligations; in 2011 this item contained €68 million in income from the repeal of a fine imposed on the former Ciba by the E.U. in 2009.

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Assets of Other (million €)

 

2012

2011

Assets of businesses included under Other

2,317

2,272

Financial assets

2,925

2,700

Deferred tax assets

1,545

941

Cash and cash equivalents/marketable securities

1,800

2,067

Defined benefit assets

43

128

Miscellaneous receivables/prepaid expenses/
assets of the disposal group not allocated to operations

1,634

1,863

 

10,264

9,971

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 segment’s income from operations, the interest result as well as the other financial result.

The increase in income from operations and higher income taxes are attributable to the continuous oil production in Libya throughout 2012.

The rise in income from participations resulted in part from higher profits at OAO Severneftegazprom (SNG), Krasnoselkup, Russia, 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.

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Reconciliation reporting Oil & Gas (million €)

 

2012

2011

Income from operations

3,904

2,111

Income from participations

112

100

Other income

(131)

(92)

Income before taxes and minority interests

3,885

2,119

Income taxes

2,428

896

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

1,880

439

Income before minority interests

1,457

1,223

Minority interests

256

159

Net income

1,201

1,064

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Segments 2012 (million €)

 

Chemicals

Plastics

Performance Products

Functional Solutions

Agricultural Solutions

Oil & Gas

Thereof Ex-
ploration &
Production

Other

BASF Group

Sales

13,824

11,402

15,871

11,460

4,679

16,700

5,330

4,793

78,729

Change (%)

6.7

3.7

1.1

0.9

12.3

38.6

67.5

(23.6)

7.1

Intersegmental transfers

5,726

619

456

204

29

1,143

3

134

8,311

Sales including intersegmental transfers

19,550

12,021

16,327

11,664

4,708

17,843

5,333

4,927

87,040

Income from operations

1,718

874

1,286

435

1,026

3,904

3,422

(267)

8,976

Change (%)

(29.6)

(30.6)

(5.5)

1.9

27.0

84.9

103.0

.

4.5

Assets

7,299

5,846

13,496

9,765

6,527

11,130

5,841

10,264

64,327

Thereof goodwill

24

148

1,906

2,060

1,870

325

325

52

6,385

intangible assets

116

105

1,859

1,528

424

1,759

1,740

65

5,856

property, plant and equipment

3,665

2,499

3,990

1,858

785

4,508

2,194

872

18,177

Debt

2,684

1,893

4,372

2,408

1,485

3,692

1,571

21,989

38,523

Research and development expenses

145

157

345

243

430

32

32

394

1,746

Additions to property, plant and equipment and intangible assets

920

659

786

572

1,054

1,206

800

200

5,397

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

691

440

827

459

156

817

635

150

3,540

Thereof impairments

6

38

89

200

200

2

335

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Segments 2011 (million €)

 

Chemicals

Plastics

Performance Products

Functional Solutions

Agricultural Solutions

Oil & Gas

Thereof Ex-
ploration &
Production

Other

BASF Group

Sales

12,958

10,990

15,697

11,361

4,165

12,051

3,182

6,275

73,497

Change (%)

13.9

11.8

27.7

17.1

3.3

11.7

(16.7)

7.2

15.1

Intersegmental transfers

6,295

694

490

195

27

1,015

2

411

9,127

Sales including intersegmental transfers

19,253

11,684

16,187

11,556

4,192

13,066

3,184

6,686

82,624

Income from operations

2,442

1,259

1,361

427

808

2,111

1,686

178

8,586

Change (%)

5.7

(1.1)

1.2

(6.6)

7.9

(9.6)

(12.1)

.

10.6

Assets

6,920

5,297

13,680

9,725

5,350

10,232

5,315

9,971

61,175

Thereof goodwill

25

122

1,946

2,023

1,410

389

389

47

5,962

intangible assets

89

104

2,079

1,645

165

1,806

1,760

69

5,957

property, plant and equipment

3,500

2,353

3,844

1,718

669

5,062

2,246

820

17,966

Debt

1,849

1,349

3,321

2,309

1,123

3,267

1,335

22,572

35,790

Research and development expenses

132

149

330

192

412

23

23

367

1,605

Additions to property, plant and equipment and intangible assets

622

423

648

359

150

1,274

692

170

3,646

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

746

419

951

494

173

505

356

119

3,407

Thereof impairments

87

4

131

109

14

345

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Regions 2012 (million €)

 

Europe

Thereof Germany

North America

Asia Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

Sales

42,882

15,885

14,460

14,927

6,460

78,729

Change (%)

9.6

8.0

3.3

3.6

8.2

7.1

Share (%)

54.5

20.2

18.4

19.0

8.2

100.0

Location of companies

 

 

 

 

 

 

Sales

45,665

32,718

14,599

13,916

4,549

78,729

Sales including interregional transfers

52,454

38,145

17,032

14,383

4,743

88,612

Income from operations

6,746

4,542

964

905

361

8,976

Assets

37,632

23,133

13,369

9,434

3,892

64,327

Thereof property, plant and equipment

10,416

6,866

3,735

3,199

827

18,177

Additions to property, plant and equipment and intangible assets

2,611

1,589

1,840

629

317

5,397

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

2,239

1,127

664

530

107

3,540

Employees as of December 31

71,144

52,844

16,917

18,128

7,073

113,262

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Regions 2011 (million €)

 

Europe

Thereof Germany

North America

Asia Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

Sales

39,124

14,705

13,995

14,410

5,968

73,497

Change (%)

17.8

20.3

8.6

15.2

13.1

15.1

Share (%)

53.3

20.0

19.0

19.6

8.1

100.0

Location of companies

 

 

 

 

 

 

Sales

41,036

28,816

14,727

13,316

4,418

73,497

Sales including interregional transfers

47,347

33,974

17,057

13,796

4,652

82,852

Income from operations

5,668

3,249

1,314

1,133

471

8,586

Assets

36,058

21,337

12,209

9,492

3,416

61,175

Thereof property, plant and equipment

10,700

6,853

3,483

3,098

685

17,966

Additions to property, plant and equipment and intangible assets

2,467

1,462

504

551

124

3,646

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

2,036

1,204

795

463

113

3,407

Employees as of December 31

70,664

52,049

16,167

17,342

6,968

111,141