Outlook 2018

Sales and earnings forecast for the BASF Group

• Slight sales growth, mainly from higher volumes
• EBIT before special items expected to be up slightly on 2017 level

Our forecast for 2018 includes the agreed acquisition of significant parts of Bayer’s seed and non-selective herbicide businesses, which is expected to close in the first half of 2018. Based on the timing of the acquisition, the seasonality of the businesses to be taken over and the anticipated integration costs, this is likely to have a positive impact on sales and a negative impact on earnings for the Agricultural Solutions segment and the BASF Group in 2018. This outlook also includes the intended acquisition of Solvay’s integrated polyamide business in the third quarter of 2018. However, we currently do not expect this transaction to have any material effect on sales and earnings for 2018.

We anticipate slightly higher BASF Group sales in 2018, largely as a result of volumes growth. We expect considerable sales growth in the Agricultural Solutions and Oil & Gas segments, and slightly higher sales in the Functional Materials & Solutions and Performance Products segments and in Other. Our planning for the Chemicals segment assumes slightly lower sales due to price factors.

EBIT before special items is expected to be up slightly on the 2017 level. This will mainly be driven by significantly higher contributions from the Performance Products, Functional Materials & Solutions and Oil & Gas segments. We are forecasting a slight improvement in the earnings generated by Other. After a strong result in 2017, we expect considerably lower EBIT before special items in the Chemicals segment, primarily as a result of lower margins. We anticipate a slight decrease in the Agricultural Solutions segment: The agreed transaction with Bayer is likely to have a negative effect on earnings in 2018. Excluding this acquisition, we would expect the segment to record slight growth in EBIT before special items.

EBIT for the BASF Group is forecast to decline slightly in 2018. We anticipate special charges in the form of integration costs in connection with the agreed acquisitions. In contrast, the Performance Products and Oil & Gas segments in particular recorded special income in 2017. EBIT in the Chemicals and Agricultural Solutions segments is expected to be considerably below the 2017 figure. We are forecasting slightly higher EBIT for the Performance Products and Oil & Gas segments and Other, and considerable growth in the Functional Materials & Solutions segment.

We aim to once again earn a significant premium on our cost of capital in 2018. However, compared with the previous year, the BASF Group’s EBIT after cost of capital will decrease considerably. This will mainly be due to lower EBIT as well as the additional cost of capital from the planned acquisitions. In the Chemicals and Agricultural Solutions segments, we anticipate a considerable decrease in EBIT after cost of capital, and a considerable increase in the Performance Products, Functional Materials & Solutions and Oil & Gas segments.

The intended merger of our oil and gas activities with the business of DEA Deutsche Erdoel AG and its subsidiaries is not taken into account in this outlook. On signature of the final transaction agreements, the Oil & Gas segment’s earnings would no longer be included in sales and EBIT for the BASF Group – retroactively as of January 1, 2018 and with the prior-year figures restated. Rather, this would be presented in the income before minority interests of the BASF Group as a separate item, income from discontinued operations. From the transaction closing date, we would presumably account for BASF’s share of income generated by the joint venture – Wintershall DEA – using the equity method and include this in EBIT for the BASF Group. The gain from the change from full consolidation to the equity method would be shown in income from discontinued operations.

The significant risks and opportunities that could affect our forecast are described in the Opportunities and Risks Report.