4 – Reporting by Segment and Region In 2018, BASF’s business was conducted by 13 divisions in five segments until a binding agreement between BASF and LetterOne was signed on September 27, 2018, to merge their oil and gas activities; from that date until the end of the year, business was conducted by 12 divisions in four segments. The divisions are allocated to the segments based on their business models. BASF adjusted its segment structure as part of its updated strategy. The changes effective as of January 1, 2019, affect all segments except the Agricultural Solutions segment. Since then, the 12 divisions are allocated to six segments. The composition of a number of divisions has changed as well. The propylene oxide and propylene glycol business will be transferred from the Petrochemicals division to the Monomers division. The superabsorbents business will be allocated to the Petrochemicals division rather than the Care Chemicals division. The styrene, polystyrene and styrene-based foams business, which previously fell mainly under Performance Materials and a small part under Other, will be bundled in Petrochemicals. The new segment structure will enable an even more differentiated steering of the businesses, taking into account market-specific requirements and the competitive environment. It will further increase the transparency of the segments’ results and highlight the importance of the Verbund and value chains to business success. The aggregation of the segments based on business models reflects the divisions’ focal points, their customer groups, the focus of their innovations, their investment relevance and sustainability aspects. The Chemicals segment comprises the classic chemicals business with basic chemicals and intermediates. It continues to form the core of BASF’s Production Verbund and contributes to the organic growth of BASF’s key value chains. Customers include the chemical and plastics industries as well as internal outlets. The segment’s competitiveness will be augmented through technological leadership and operational excellence. The Chemicals segment was composed of the Petrochemicals, Monomers and Intermediates divisions until December 31, 2018. As of January 1, 2019, the Monomers division is allocated to the new Materials segment. The Performance Products segment consisted of the Dispersions & Pigments, Care Chemicals, Nutrition & Health and Performance Chemicals divisions until the end of 2018. They focus on tailor-made solutions enabling customers to improve the application properties of their products and optimize production processes, for example. Close customer contact and meeting the demanding requirements of a wide range of industries were crucial to business success. The divisions in this segment were separated into two segments as of January 1, 2019. The new Industrial Solutions segment comprises the Dispersions & Pigments division and the Performance Chemicals division. This segment develops and markets ingredients and additives for industrial applications such as polymer dispersions, pigments, resins, electronic materials, antioxidants and admixtures. Its customers come from key industries such as automotive, plastics and electronics. The new Nutrition & Care segment combines the Care Chemicals and Nutrition & Health divisions. This segment produces ingredients for consumer products in the area of nutrition, cleaners and personal care. Its customers include food and feed producers as well as the pharmaceutical, cosmetics, and the detergent and cleaner industries. Until the end of 2018, the Functional Materials & Solutions segment bundled industry and customer-specific system solutions, services and innovative products, especially for the automotive, electronics, chemical and construction sectors, as well as applications for household, sports and leisure. An in-depth understanding of applications, the development of innovations in close cooperation with customers, and adaptation to different regional needs were key success factors. The segment was made up of the Catalysts, Construction Chemicals, Coatings, and Performance Materials divisions. The divisions of this segment were allocated to two new segments as of January 1, 2019: The new Materials segment consists of the Performance Materials division and the Monomers division, formerly pertaining to the Chemicals segment. This segment offers advanced materials and their precursors for new applications and systems. Its product portfolio includes isocyanates and polyamides as well as inorganic basic products and specialties for plastics and plastics processing in various industries. The new Surface Technologies segment comprises the Catalysts, Coatings and Construction Chemicals divisions. It offers a platform for chemical surface solutions. Its product spectrum includes catalysts and battery materials for the automotive and chemical industries, surface treatments, colors and coatings as well as cement modifications and construction materials. The Agricultural Solutions segment comprises the Agricultural Solutions division, which was previously known as Crop Protection and was renamed after the acquisition of significant businesses from Bayer and the associated expansion of its portfolio. As an integrated provider of crop protection and seeds, Agricultural Solutions will continue to grow, primarily organically through innovation, and through targeted portfolio enhancement. Its portfolio comprises fungicides, herbicides, insecticides and biological crop protection products, as well as seeds and seed treatment products. Furthermore, Agricultural Solutions offers farmers innovative solutions, including those based on digital technologies, combined with practical advice. Activities that are not allocated to any of the continued operating divisions continue to be recorded under Other. These include other businesses such as commodity trading, engineering and other services, rental income and leases, steering the BASF Group by corporate headquarters, and cross-divisional corporate research. Cross-divisional corporate research, which includes plant biotechnology research, works on long-term topics of strategic importance to the BASF Group. Furthermore, it focuses on the development of specific key technologies, which are of central importance for the divisions. Earnings from currency translation that are not allocated to the segments are also reported under Other, as are earnings from the hedging of raw materials prices and foreign currency exchange risks. Furthermore, gains and losses from the long-term incentive (LTI) program are reported here. Discontinued operations and all remaining activities after divestiture not previously reported under Other are reported under Other as of January 1, 2019. The latter includes, for example, participating interests accounted for using the equity method or supply obligations assumed in the context of divestitures. Reclassification affects the remaining activities for the leather and textile chemicals business, previously recorded in the Performance Products segment, and the remaining activities for the industrial coatings business, previously recorded in the Functional Materials & Solutions segment. Furthermore, the following will also be reported here in the future: remanent fixed costs resulting from organizational changes or restructuring; function and region-related restructuring costs not allocated to a division; idle capacity costs from internal human resource platforms. Since the signing of the binding agreement between BASF and LetterOne to merge their oil and gas activities, the former Oil & Gas division has been reported as a discontinued oil and gas business. The segment of the same name was dissolved. The assets and liabilities of the oil and gas business were reclassified to a disposal group as of the end of the third quarter of 2018. Since then, they are included in Other. The oil and gas business focuses on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East. It benefits from strong partnerships and its technological expertise. In Europe, it is also active in the transport of natural gas together with its Russian partner Gazprom. For more information on the discontinued oil and gas business, see Note 2.5 The same accounting rules are used for segment reporting as those used for the Group, which are presented in Note 1. Transfers between the segments are generally executed at adjusted market-based prices, taking into account the higher cost efficiency and lower risk of intragroup 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. Assets not used by the segments are reported under Other. (XLS:) Download Sales by operating division1 (Million €) 2018 2017 1 Indications and sectors are given for the Agricultural Solutions segment, which comprises just one operating division. Petrochemicals 6,904 6,389 Monomers 6,464 6,963 Intermediates 3,133 2,979 Chemicals 16,501 16,331 Dispersions & Pigments 5,292 5,398 Care Chemicals 4,913 5,079 Nutrition & Health 1,696 1,844 Performance Chemicals 3,911 3,896 Performance Products 15,812 16,217 Catalysts 7,469 6,658 Construction Chemicals 2,456 2,412 Coatings 3,856 3,969 Performance Materials 7,654 7,706 Functional Materials & Solutions 21,435 20,745 Fungicides 2,287 2,357 Herbicides 2,436 2,371 Insecticides 670 663 Functional Crop Care 463 305 Seeds & Traits 300 – Agricultural Solutions 6,156 5,696 Other 2,771 2,234 BASF Group 62,675 61,223 (XLS:) Download Income from operations (EBIT) of Other (Million €) 2018 2017 Costs for cross-divisional corporate research (414) (379) Costs of corporate headquarters (249) (224) Other businesses 38 81 Foreign currency results, hedging and other measurement effects 327 88 Miscellaneous income and expenses (193) (257) Income from operations of Other (491) (691) Income from operations of Other increased by €200 million year on year from minus €691 million to minus €491 million. The costs for cross-divisional corporate research increased by €35 million to €414 million, and the costs of corporate headquarters were €25 million higher at €249 million. Income from other businesses fell by €43 million to €38 million. The line item foreign currency results, hedging and other measurement effects increased by €239 million to €327 million. This was due to an increase of €195 million to €262 million from the release of provisions for the LTI program. The line item miscellaneous income and expenses amounted to minus €193 million compared with minus €257 million in the previous year. (XLS:) Download Assets of Other (Million €) Dec. 31,2018 Dec. 31,2017 1 For more information, see Note 2.5 Assets of businesses included in Other 2,134 2,007 Financial assets 570 606 Deferred tax assets 2,342 2,118 Cash and cash equivalents/marketable securities 2,644 6,547 Defined benefit assets 63 70 Other receivables/prepaid expenses 1,902 2,328 Operating assets of the former Oil & Gas segment (2017) and of the oil and gas business disposal group (2018)1 12,570 11,967 Other assets of the oil and gas business disposal group1 1,518 – Assets of Other 23,743 25,643 (XLS:) Download Segments 2018 (Million €) Chemicals Performance Products Functional Materials & Solutions Agricultural Solutions Other2 BASF Group 2 Other includes assets and liabilities as well as amortization of intangible assets and depreciation of property, plant and equipment of the discontinued oil and gas business. For more information, see Note 2.5. Until reclassification to the disposal group, additions to intangible assets and property, plant and equipment (including acquisitions) of the discontinued oil and gas business, also included in Other, amounted to €468 million in 2018. Sales 16,501 15,812 21,435 6,156 2,771 62,675 Intersegmental transfers 6,105 498 837 58 2 7,500 Sales including transfers 22,606 16,310 22,272 6,214 2,773 70,175 Research and development expenses 129 394 412 679 414 2,028 Income from companies accounted for using the equity method 196 22 43 – 8 269 Income from operations 3,360 1,338 1,235 591 (491) 6,033 Assets 13,264 14,903 17,654 16,992 23,743 86,556 of which goodwill 55 2,079 3,773 3,236 68 9,211 other intangible assets 104 895 1,878 4,441 25 7,343 property, plant and equipment 7,837 4,875 4,554 2,660 854 20,780 investments accounted for using the equity method 1,000 360 410 – 433 2,203 Liabilities 4,104 5,421 4,587 3,080 33,255 50,447 Additions to intangible assets and property, plant and equipment (including acquisitions) 1,325 765 872 7,110 663 10,735 Amortization and depreciation of intangible assets and property, plant and equipment 1,072 867 682 394 735 3,750 of which impairments and reversals of impairments 29 10 5 7 2 53 (XLS:) Download Segments 2017 (Million €) Chemicals Performance Products Functional Materials & Solutions Agricultural Solutions Other1 BASF Group 1 Other includes assets and liabilities as well as amortization of intangible assets and depreciation of property, plant and equipment of the discontinued oil and gas business. For more information, see Note 2.5. Additions to intangible assets and property, plant and equipment (including acquisitions) of the discontinued oil and gas business, also included in Other, amounted to €988 million in 2017. Sales 16,331 16,217 20,745 5,696 2,234 61,223 Intersegmental transfers 6,063 506 805 36 (3) 7,407 Sales including transfers 22,394 16,723 21,550 5,732 2,231 68,630 Research and development expenses 128 395 431 507 382 1,843 Income from companies accounted for using the equity method 257 (1) 49 – 18 323 Income from operations 4,208 1,510 1,545 1,015 (691) 7,587 Assets 13,233 14,432 17,364 8,096 25,643 78,768 of which goodwill 56 2,078 3,718 1,929 1,572 9,353 other intangible assets 103 1,048 2,045 208 837 4,241 property, plant and equipment 7,497 5,000 4,163 1,366 7,232 25,258 investments accounted for using the equity method 1,026 369 393 − 2,927 4,715 Liabilities 4,461 5,419 4,385 1,768 27,979 44,012 Additions to intangible assets and property, plant and equipment (including acquisitions) 1,149 800 1,056 185 1,174 4,364 Amortization and depreciation of intangible assets and property, plant and equipment 1,166 917 706 267 1,146 4,202 of which impairments and reversals of impairments 129 53 28 2 (72) 140 (XLS:) Download Regions 2018 (Million €) Europe of which Germany North America Asia Pacific South America, Africa, Middle East BASF Group 1 The sum of sales including interregional transfers for all the regions can differ from the sum of sales including intersegmental transfers for all the segments, as the segments are viewed globally, and therefore shipments and services between regions within the same segment are not classified as transfers. Location of customer Sales 26,546 6,965 16,143 14,646 5,340 62,675 Share % 42.3 11.1 25.8 23.4 8.5 100.0 Location of company Sales 28,502 18,113 16,659 13,886 3,628 62,675 Sales including interregional transfers1 35,805 24,083 19,161 14,872 4,006 73,844 Income from companies accounted for using the equity method 36 10 0 233 – 269 Income from operations 3,210 1,140 802 1,820 201 6,033 Assets 45,562 23,739 22,079 13,576 5,339 86,556 of which intangible assets 7,281 3,874 7,308 1,499 466 16,554 property, plant and equipment 9,231 6,357 6,286 4,416 847 20,780 investments accounted for using the equity method 637 289 122 1,444 – 2,203 Additions to intangible assets and property, plant and equipment (including acquisitions) 5,317 3,674 4,461 585 372 10,735 Amortization of intangible assets and depreciation of property, plant and equipment including impairments and reversals of impairments 2,031 1,180 990 479 250 3,750 (XLS:) Download Regions 2017 (Million €) Europe of which Germany North America Asia Pacific South America, Africa, Middle East BASF Group 1 The sum of sales including interregional transfers for all the regions can differ from the sum of sales including intersegmental transfers for all the segments, as the segments are viewed globally, and therefore shipments and services between regions within the same segment are not classified as transfers. Location of customer Sales 26,507 7,159 15,357 14,343 5,016 61,223 Share % 43.3 11.7 25.1 23.4 8.2 100.0 Location of company Sales 28,045 18,663 15,937 13,658 3,583 61,223 Sales including interregional transfers1 35,243 24,452 18,570 14,534 3,890 72,237 Income from companies accounted for using the equity method 23 5 9 291 – 323 Income from operations 4,090 1,838 1,236 2,209 52 7,587 Assets 43,924 24,631 16,201 13,547 5,096 78,768 of which intangible assets 7,167 2,736 4,428 1,499 500 13,594 property, plant and equipment 13,876 7,019 5,281 4,337 1,764 25,258 investments accounted for using the equity method 3,153 989 115 1,447 – 4,715 Additions to intangible assets and property, plant and equipment (including acquisitions) 2,455 1,228 958 711 240 4,364 Amortization of intangible assets and depreciation of property, plant and equipment including impairments and reversals of impairments 2,399 1,234 1,011 516 276 4,202 In the United States, sales to third parties in 2018 amounted to €14,775 million (2017: €13,909 million) according to location of companies and €14,062 million (2017: €13,127 million) according to location of customers. In the United States, intangible assets, property, plant and equipment, and investments accounted for using the equity method amounted to €12,958 million compared with €9,279 million in the previous year. In China, sales to third parties in 2018 amounted to €7,595 million (2017: €5,976 million) according to location of companies and €6,731 million (2017: €6,676 million) according to location of customers. In China, intangible assets, property, plant and equipment, and investments accounted for using the equity method amounted to €4,162 million compared with €4,206 million in the previous year. back next