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.

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.

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

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.

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

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

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

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

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.