Business review

Agricultural Solutions

In the Agricultural Solutions segment, we increased sales to third parties in 2014 by €219 million to €5,446 million through higher volumes and sales prices. Continuously falling prices for agricultural commodities put a considerable strain on our business over the course of the year. The agricultural sector grew more slowly overall than it had in 2013. In this challenging environment, income from operations before special items declined by €113 million to €1,109 million. Income from operations decreased by €100 million to €1,108 million.

For 2015, we expect prices for agricultural commodities to remain at the level of the second half of 2014. With exchange rates developing more favorably overall, we anticipate high market volatility. In this environment, we set ourselves the ambitious goal of increasing sales volumes and considerably improving sales and income from operations before special items.

Segment data1 (in million €)

 

 

 

2014

2013

Change in %

1

Research expenses, sales, earnings and all other data of BASF Plant Science are not included in the Agricultural Solutions segment; these are reported in Other.

Sales to third parties

 

 

5,446

5,227

4

Intersegmental transfers

 

 

37

36

3

Sales including intersegmental transfers

 

 

5,483

5,263

4

Income from operations before depreciation and amortization (EBITDA)

 

 

1,297

1,375

(6)

EBITDA margin

 

%

23.8

26.3

Income from operations (EBIT) before special items

 

 

1,109

1,222

(9)

Income from operations (EBIT)

 

 

1,108

1,208

(8)

Income from operations (EBIT) after cost of capital

 

 

287

447

(36)

Assets

 

 

7,857

6,777

16

Research expenses

 

 

511

469

9

Additions to property, plant equipment and intangible assets

 

 

391

324

21

Crop Protection

  • Volumes and price-driven sales increase of €219 million to €5,446 million
  • Income from operations before special items falls by €113 million to €1,109 million

We improved sales to third parties by €219 million to €5,446 million compared with the previous year. This was mostly attributable to vigorous business in Europe and North America as well as increased demand for fungicides and herbicides. In the first half of the year, negative currency developments particularly affected our business in the emerging markets (volumes 5%, prices 2%, currencies −3%).

Compared with 2013, sales in Europe grew by €100 million to €2,046 million. This was mainly because of a strong start to the year, especially in western and central Europe. Demand for fungicides was high after the mild, humid winter. We were able to increase sales prices overall.

In North America, sales grew by €77 million year-on-year to €1,574 million, primarily driven by greater demand and by price increases in innovative herbicides. Sales were negatively impacted by currency exchange effects.

Sales in Asia amounted to €526 million, exceeding the level of 2013 by €13 million. This was largely on account of high demand for our fungicides in China and our successful direct business in Australia. Negative currency effects reduced sales growth in the region.

In South America, we improved sales by €29 million to €1,300 million, despite the first half of the year’s sharply negative currency effects and the pressure exerted on insecticides by generic products. Our innovative fungicide Xemium® and our herbicide Kixor® performed especially well.

At €1,109 million, income from operations before special items was €113 million below the level of the previous year. This decline was due to negative currency effects, especially in the first half of the year; declining margins resulting from an unfavorable product mix; and higher expenditures for research and development and for production and distribution as part of exploiting future growth opportunities.

Crop Protection – Sales by region (Location of customer)
Agricultural Solutions – Crop Protection – Sales by region (pie chart)