Alternative Performance Measures

The Half-Year Management’s Report also uses the following alternative performance measures, not defined by IFRS, to describe the BASF Group’s results of operations. These should not be viewed in isolation, but treated as supplementary information.

The special items used to calculate some alternative performance measures arise from the integration of acquired businesses, restructuring measures, impairments, gains or losses resulting from divestitures and sales of shareholdings, and other material expenses and income that generally do not arise in conjunction with ordinary business activities.

Adjusting for special items makes EBIT before special items an especially suitable figure for illustrating the development of operating business over time as well as for forecasts. It is therefore among the most important performance measures for managing the BASF Group.

Income from operations before depreciation and amortization (EBITDA) describes operational performance independently of age-related amortization and depreciation of assets and any valuation allowances (impairments or write-ups). It is therefore particularly useful for comparing companies.

Compared with earnings per share², this measure has been adjusted for special items and amortization of intangible assets. The latter primarily result from the purchase price allocation following acquisitions. The amortization of intangible assets is therefore of a temporary nature. Adjusted earnings per share is therefore a suitable measure for long-term comparability and predicting future profitability.