Statement of Cash Flows

• Cash flows from operating activities and free cash flow lower year on year

Cash flows from operating activities declined by €846 million compared with the previous year to €7,939 million in 2018. This was mainly due to the decrease in net income, despite lower amortization of intangible assets and depreciation of property, plant and equipment. The change in net working capital had an offsetting effect. This was primarily attributable to the decline in cash tied up for receivables and the higher level of cash released from operating liabilities. This was partly offset by the increase in cash tied up in inventories. The cash released in miscellaneous items in 2018 was largely the result of the increase in pension provisions as well as lower adjustments for non-cash-effective earnings contributions from equity-accounted investments compared with the previous year.

Cash flows from investing activities amounted to minus €11,804 million in 2018, compared with minus €3,958 million in 2017. Payments made for intangible assets and property, plant and equipment amounted to €3,894 million, €102 million below the prior-year figure and €144 million higher than amortization of intangible assets and depreciation of property, plant and equipment.

Acquisitions and divestitures in 2018 resulted in net payments made of €7,255 million. These mainly related to the purchase price payment to Bayer, which amounted to €7,208 million including liquid funds assumed. By contrast, net payments of €27 million were received in the previous year.

Cash tied up by changes in financial assets and miscellaneous items amounted to minus €655 million in 2018, after €11 million was released in 2017. The main contributing factors were higher additions from marketable securities and financial assets compared with the previous year, as well as the change in other financing-related receivables.

Cash flows from financing activities amounted to minus €52 million in 2018, after €394 million in 2017. Changes in financial and similar liabilities resulted in a cash inflow of €3.0 billion in the reporting year, around €0.3 billion less than in the previous year. This was primarily due to the issue of U.S. dollar commercial paper by BASF SE with a carrying amount of around €2.5 billion and bonds with a carrying amount of around €1.9 billion. The main offsetting effect was the repayment of maturing bonds in the amount of €1.8 billion. In 2018, dividends of €2,847 million were paid to shareholders of BASF SE and €174 million to noncontrolling interests.

Cash and cash equivalents amounted to €2,519 million as of December 31, 2018. They declined by a cash-effective amount of €3,917 million in 2018, mainly as a result of the purchase price payment to Bayer.

Free cash flow, which remains after deducting payments made for intangible assets and property, plant and equipment from cash flows from operating activities, represents the financial resources remaining after investments. It declined to €4,045 million compared with €4,789 million in the previous year due to the decrease in cash flows from operating activities.

Cash flow

Billion €