4 – Reporting by segment and region

BASF’s business was conducted by 14 operating divisions aggregated into five segments for reporting purposes to the end of 2014. The divisions are allocated to the segments based on their business models.

The Chemicals segment comprises the classical chemicals business with basic chemicals and intermediates. It forms the core of BASF’s Production Verbund and is the starting point for a majority of the value chains. In addition to supplying the chemical industry and other sectors, the segment ensures that other BASF divisions are supplied with chemicals for producing downstream products. The Chemicals segment is made up of the Petrochemicals, Monomers and Intermediates divisions.

The Performance Products segment consisted of the Dispersions & Pigments, Care Chemicals, Nutrition & Health, Paper Chemicals and Performance Chemicals divisions to the end of 2014. Customized products allow customers to make their production processes more efficient or to give their products improved application properties. The Paper Chemicals division was dissolved as of January 1, 2015. The paper chemicals business will be continued in the Performance Chemicals and Dispersions & Pigments divisions.

The Functional Materials & Solutions segment bundles system solutions, services and innovative products for specific sectors and customers, especially the automotive, electrical, chemical and construction industries. It comprises the Catalysts, Construction Chemicals, Coatings, and Performance Materials divisions.

The Agricultural Solutions segment consists of the Crop Protection division, whose products secure yields and guard crops against fungal infections, insects and weeds, in addition to serving as biological and chemical seed treatments. Plant biotechnology research is not assigned to this segment; it is reported in Other.

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

Activities not assigned to a particular division are reported in Other. These include the sale of raw materials, engineering and other services, rental income and leases, the production of precursors not assigned to a particular segment, the steering of the BASF Group by corporate headquarters, and corporate research.

With cross-divisional corporate research, BASF is creating new businesses and ensuring its long-term competence with regard to technology and methods. This includes plant biotechnology research.

Earnings from currency conversion that are not allocated to the segments are also reported under Other, as are earnings from the hedging of raw material prices and foreign currency exchange risks. Furthermore, revenues and expenses from the long-term incentive (LTI) program are reported here.

Transfers between the segments are generally executed at adjusted market prices which take into account the higher cost efficiency and lower risk of Group-internal transactions. 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.

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

 

 

2014

2013

Corporate research costs

 

(389)

(386)

Costs of corporate headquarters

 

(218)

(237)

Other businesses

 

590

251

Foreign currency results, hedging and other measurement effects

 

(2)

(190)

Miscellaneous income and expenses

 

(114)

(102)

Income from operations of Other

 

(133)

(664)

Income from operations in Other increased by €531 million year-on-year to minus €133 million.

This was primarily due to the disposal gains of €458 million, shown under other businesses, from BASF’s share in Styrolution Holding GmbH, Frankfurt am Main, Germany; this income was dampened by lower contributions to income, mainly as a result of lower plant availability at the Moerdijik site of the joint operation Ellba C.V., Rotterdam, Netherlands.

Furthermore, the rise in income from operations in Other was attributable to improvement in foreign currency results, hedging and other measurement effects, largely due to income from a provision reversal for the long-term incentive program of €54 million; in 2013, this had led to expenses of €104 million. The results from the translation of foreign currencies were an additional contributing factor.

Assets of Other (in million €)

 

 

December 31, 2014

December 31, 2013

Assets of businesses included in Other

 

2,241

3,351

Financial assets

 

540

643

Deferred tax assets

 

2,193

1,006

Cash and cash equivalents/marketable securities

 

1,737

1,844

Net interest income from overfunded pensions

 

91

47

Other liabilities/deferrals

 

3,027

2,260

Assets of Other

 

9,829

9,151

Reconciliation reporting Oil & Gas (in million €)

 

 

2014

2013

Income from operations

 

1,688

2,403

Net income from shareholdings

 

246

(2)

Other income

 

124

71

Income before taxes and minority interests

 

2,058

2,472

Income taxes

 

(519)

(620)

Income before minority interests

 

1,539

1,852

Minority interests

 

(75)

(122)

Net income

 

1,464

1,730

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

In income from operations, lower oil and gas prices, and the currency-related decrease in earnings contributions from BASF’s share in the Yuzhno Russkoye natural gas field were nearly offset by the activities acquired in Norway in the previous year. However, higher special charges and lower special income compared with the previous year led to a decline in income from operations. In 2014, the sale of oil and gas investments in the North Sea to the MOL Group resulted in special income of €132 million, whereas impairments on exploration licenses reduced income from operations by €230 million. In 2013, there had been higher special income of €429 million due to the reclassification of GASCADE Gastransport GmbH, Kassel, Germany, and the disposal of a 15% share in the Edvard Grieg development project in return for assets from Statoil ASA amounting to €164 million.

Net income from shareholdings improved significantly. This was due to the sale of VNG – Verbundnetz Gas AG to EWE AG.

The Oil & Gas segment’s other income relates to income and expenses not included in the segment’s income from operations, as well as the interest result and other financial result. As in the previous year, other income largely consisted of currency effects from Group loans. The tax rate remained the same. In 2014, highly taxed operating income in Norway had a negative effect on the tax rate. Counterbalancing this were reversals of tax liabilities.

Segments 2014 (in million €)

 

 

Chemicals

Perfor­mance Products

Functional Materials & Solutions

Agri­cultural Solutions

Oil & Gas

Thereof Ex­ploration &
Production

Other

BASF Group

Sales

 

16,968

15,433

17,725

5,446

15,145

2,938

3,609

74,326

Intersegmental transfers

 

6,135

489

832

37

907

502

16

8,416

Sales including intersegmental transfers

 

23,103

15,922

18,557

5,483

16,052

3,440

3,625

82,742

Income from operations

 

2,396

1,417

1,150

1,108

1,688

1,305

(133)

7,626

Assets

 

12,498

14,502

12,987

7,857

13,686

9,476

9,829

71,359

Thereof goodwill

 

59

2,099

2,218

1,931

1,765

1,765

69

8,141

other intangible assets

 

284

1,653

1,220

364

1,248

1,226

57

4,826

property, plant and equipment

 

6,898

4,637

3,166

1,240

6,676

5,115

879

23,496

investments accounted for using the equity method

 

841

177

348

1,480

440

399

3,245

Debt

 

3,920

5,049

3,508

1,687

3,669

2,609

25,331

43,164

Research expenses

 

185

369

379

511

50

50

390

1,884

Additions to property, plant and equipment and intangible assets

 

2,085

849

650

391

3,162

3,092

148

7,285

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

 

816

815

528

189

938

857

131

3,417

Thereof impairments

 

54

18

45

2

230

230

5

354

Segments 2013 (in million €)

 

 

Chemicals

Perfor­mance Products

Functional Materials & Solutions

Agri­cultural Solutions

Oil & Gas

Thereof Ex­ploration &
Production

Other

BASF Group

Sales

 

16,994

15,534

17,252

5,227

14,776

2,929

4,190

73,973

Intersegmental transfers

 

6,388

489

835

36

1,160

305

53

8,961

Sales including intersegmental transfers

 

23,382

16,023

18,087

5,263

15,936

3,234

4,243

82,934

Income from operations

 

2,086

1,100

1,027

1,208

2,403

1,569

(664)

7,160

Assets

 

10,908

13,614

11,899

6,777

11,855

7,731

9,151

64,204

Thereof goodwill

 

56

1,967

2,032

1,796

1,023

1,023

62

6,936

other intangible assets

 

256

1,818

1,331

364

1,554

1,530

65

5,388

property, plant and equipment

 

5,383

4,154

2,722

925

5,188

3,616

857

19,229

investments accounted for using the equity method

 

826

165

316

1,725

624

1,142

4,174

Debt

 

3,122

4,078

2,751

1,374

3,099

2,207

22,107

36,531

Research expenses

 

178

377

367

469

67

67

391

1,849

Additions to property, plant and equipment and intangible assets

 

1,958

1,497

611

324

3,167

2,945

169

7,726

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

 

870

887

471

167

746

564

131

3,272

Thereof impairments

 

95

58

20

1

54

54

10

238

Regions 2014 (in million €)

 

 

 

Europe

Thereof Germany

North America

Asia Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

 

 

Sales

 

 

40,911

15,126

15,213

12,341

5,861

74,326

Share

 

%

55.0

20.4

20.5

16.6

7.9

100.0

Location of companies

 

 

 

 

 

 

 

 

Sales

 

 

42,854

32,241

15,467

11,643

4,362

74,326

Sales including intersegmental transfers

 

 

50,401

38,346

17,981

12,270

4,595

85,247

Income from operations

 

 

5,010

1,894

1,548

673

395

7,626

Assets

 

 

41,487

22,987

14,605

10,251

5,016

71,359

Thereof intangible assets

 

 

7,631

2,725

4,088

795

453

12,967

property, plant and equipment

 

 

13,979

7,172

4,638

3,279

1,600

23,496

investments accounted for using the equity method

 

 

1,951

1,229

35

1,259

0

3,245

Additions to property, plant and equipment and intangible assets

 

 

4,880

1,774

917

835

653

7,285

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

 

 

2,304

1,169

662

331

120

3,417

Employees as of December 31

 

 

71,474

53,277

17,120

17,060

7,638

113,292

Regions 2013 (in million €)

 

 

 

Europe

Thereof Germany

North America

Asia Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

 

 

Sales

 

 

41,221

14,446

14,272

12,450

6,030

73,973

Share

 

%

55.7

19.5

19.3

16.8

8.2

100.0

Location of companies

 

 

 

 

 

 

 

 

Sales

 

 

43,335

31,571

14,573

11,679

4,386

73,973

Sales including intersegmental transfers

 

 

50,307

36,984

17,025

12,188

4,580

84,100

Income from operations

 

 

4,485

2,164

1,488

817

370

7,160

Assets

 

 

38,838

21,945

12,683

8,797

3,886

64,204

Thereof intangible assets

 

 

7,204

2,997

3,947

812

361

12,324

property, plant and equipment

 

 

11,943

6,457

3,740

2,476

1,070

19,229

investments accounted for using the equity method

 

 

2,961

2,028

24

1,189

0

4,174

Additions to property, plant and equipment and intangible assets

 

 

5,799

1,867

782

696

449

7,726

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

 

 

2,201

1,103

663

300

108

3,272

Employees as of December 31

 

 

70,977

52,523

16,996

16,708

7,525

112,206

In the United States, sales to third parties in 2014 amounted to €13,877 million (2013: €13,000 million) according to company location and €13,329 million (2013: €12,438 million) according to customer location. In the United States, intangible assets, property, plant and equipment, and investments accounted for using the equity method amounted to €7,983 million compared with €7,345 million in the previous year.