Financial Position

Equity fell from €32,568 million on December 31, 2016, to €32,442 million, primarily as a result of translation effects. The equity ratio grew from 42.6% to 42.9% due to the reduced level of total assets.

Noncurrent liabilities rose from €28,611 million to €28,723 million. This was mainly because of the €1,712 million rise in noncurrent financial indebtedness. The main factor slowing this increase was the €1,247 million decline in provisions for pensions and similar obligations, influenced in part by the slightly higher discount rate in the eurozone.

The higher level of noncurrent financial indebtedness resulted primarily from the issue of bonds with a nominal value totaling €1.9 billion. Among these were bonds of $600 million with nondilutive warrants due in 2023. Upon exercise, the warrants will be cash-settled only; no new shares will be issued, nor will existing shares of BASF SE be delivered. As a hedge, BASF has purchased corresponding call options. Liabilities to credit institutions also increased. Contrasting these developments were reclassifications into current financial indebtedness and currency effects.

Current liabilities declined from €15,317 million to €14,486 million. This was mainly the result of a €577 million decrease in current financial indebtedness, brought about primarily by reduced liabilities to credit institutions as well as the scaling back of the U.S. dollar commercial paper program. The lower amount of trade accounts payable also contributed here.

In total, financial indebtedness grew by €1,135 million to €17,447 million. Net debt¹ increased by €1,168 million to €15,569 million compared with December 31, 2016.

At €3,802 million, cash provided by operating activities in the first half of 2017 was up by €463 million year-on-year. This improvement was largely the result of higher net income. In addition, the change in miscellaneous items led to a greater amount of released funds; in the first half of the previous year, higher disposal gains had been reclassified to cash used in investing activities, and BASF SE had taken over pension payments. Contrasting this development was an increase in net working capital.

In the first half of 2017, cash used in investing activities amounted to minus €2,365 million; in the first half of 2016, minus €1,988 million had been used in investing activities. One factor here was an increase in tied-down cash resulting from the steeper rise in financing-related receivables. Moreover, lower payments were received for the disposal of property, plant and equipment and intangible assets. By contrast, €1,642 million was paid for property, plant and equipment and intangible assets, representing a decrease of €337 million compared with the previous first half.

Cash used in financing activities in the first half of 2017 was minus €886 million, compared with minus €1,814 million in the first half of 2016. Increased cash inflows from financial indebtedness were largely responsible for the improvement. These inflows came primarily from the more extensive issue of new bonds as well as the rise in noncurrent liabilities to credit institutions in the first half of 2017. In the first half of 2016, the expansion of the U.S. dollar commercial paper program and an increase in current liabilities to credit institutions were the main drivers behind cash inflows. Dividends of €2,755 million were paid to shareholders of BASF SE in the first half of 2017, which was €91 million more than in the same period of the previous year. Minority shareholders of Group companies received €82 million in dividends, representing a decline of €22 million.

Free cash flow amounted to €2,160 million, compared with €1,360 million in the same period of the previous year. Both the higher level of cash provided by operating activities and the lower level of payments made for property, plant and equipment and intangible assets contributed to this increase.

Our ratings have remained unchanged since the publication of the BASF Report 2016. Rated “A1/P-1/outlook stable” by Moody’s, “A/A-1/outlook stable” by Standard & Poor’s and “A/S-1/outlook stable” by Scope, BASF enjoys good credit ratings, especially compared with competitors in the chemical industry.