Actual Development Compared with Outlook for 2018

BASF Group sales increased slightly in 2018, in line with our forecast. EBIT before special items declined considerably in 2018 and was thus lower than the slight increase forecast at the beginning of the year. On the one hand, we adjusted our forecast in September 2018 to a slight decline in EBIT before special items compared with the adjusted figure for 2017 as a result of the changed presentation of the oil and gas business following the signing of the definitive agreement with LetterOne. On the other, earnings development in the Functional Materials & Solutions and Performance Products segments in particular did not meet our expectations. As a result, EBIT also declined considerably in 2018 instead of slightly as we had anticipated. EBIT after cost of capital declined considerably, as expected.

We increased sales slightly in the Chemicals segment, after predicting a slight decline in sales at the beginning of 2018. The anticipated decrease in isocyanate prices as a result of additional capacities occurred later in the year than expected. EBIT before special items declined considerably as forecast.

Sales in the Performance Products segment declined slightly, contrary to our forecast of a slight increase. We were unable to increase sales volumes as expected due to the continued lower availability of citral-based products in the Nutrition & Health division and lower sales volumes in the Care Chemicals division, especially for oleochemical surfactants and fatty alcohols, as well as in the hygiene business. As a result, EBIT before special items did not increase considerably as anticipated, but declined slightly.

Sales in the Functional Materials & Solutions segment increased slightly in line with our forecast. Margins did not improve as expected due to the increase in raw materials prices, and so we recorded a considerable decline instead of a considerable increase in EBIT before special items.

We achieved a considerable increase in sales in the Agricultural Solutions segment, as forecast. The acquisition of significant businesses from Bayer, which was originally expected in the first half of 2018, was delayed until August 2018. The later-than-expected closing of the transaction and the seasonality of the businesses meant that earnings were more negatively impacted than anticipated. Earnings were also weighed down by currency effects in all regions. Consequently, EBIT before special items declined considerably instead of slightly. EBIT before special items excluding the acquired Bayer activities also declined considerably compared with the previous year, rather than the slight increase we forecast.

In Other, both sales and EBIT before special items increased considerably and were thus higher than our forecast of a slight increase. The stronger sales development was mainly attributable to higher sales volumes in raw materials trading. The improvement in earnings was primarily due to valuation effects for our long-term incentive program.

In 2018, we invested a total of €3.5 billion in capital expenditures (capex), excluding additions from acquisitions, capitalized exploration, IT investments, restoration obligations and right-of-use assets arising from leases. This includes capex of €383 million in the former Oil & Gas segment for the first three quarters of 2018. The figure forecast at the beginning of 2018 was approximately €4.0 billion and included investments of €0.7 billion in the former Oil & Gas segment. Capex in the Functional Materials & Solutions segment and Other in particular was below the planned values.