Additional Indicators For Results of Operations ROCE declines from 15.4% to 11.4%, adjusted earnings per share from €6.44 to €5.87 EBITDA before special items and EBITDA considerably below previous year We also use alternative performance measures (APMs) to steer the BASF Group. Investors, analysts and rating agencies use them to assess our performance. These are not defined by IFRS. As such, the methods of calculation can differ from those used by other companies. Alternative performance measures for the results of operations are EBIT before special items, EBIT after cost of capital, EBITDA before special items, EBITDA, the EBITDA margin, ROCE1 and adjusted earnings per share. Other APMs are net debt,2 free cash flow2 and capital expenditure (capex).3 We have used the indicator return on capital employed (ROCE) since the 2018 business year. It measures the profitability of the capital employed by the segments. ROCE was 11.4%, after 15.4% in the previous year. More information on the determination of ROCE 1 The financial return on assets reported in the previous year was the starting point for determining the return on assets, adjusted for special items from acquisitions and divestitures, which was used as a compensation parameter. The return on assets is no longer reported on, as this was replaced by ROCE as the compensation-relevant indicator from 2018 onward. 2 For more information on these indicators, see the Financial Position 3 For more information on capex, see Value-Based Management and Material Investments and Portfolio Measure (XLS:) Download ROCE (Million €) 2018 2017 EBIT of BASF Group 6,033 7,587 – EBIT of Other (491) (691) EBIT of segments 6,524 8,278 Cost of capital basis of segments, average of month-end figures 56,990 53,750 ROCE % 11.4 15.4 (XLS:) Download Capital employed (Million €) 2018 2017 4 Including customer/supplier financing and other adjustments Intangible assets 13,375 11,666 + Property, plant and equipment 18,519 18,128 + Investments accounted for using the equity method 1,800 1,685 + Inventories 10,951 9,896 + Accounts receivable, trade 10,320 10,660 + Current and noncurrent other receivables and other assets4 1,749 1,715 + Assets of disposal groups 276 – Cost of capital basis of segments, average of month-end figures 56,990 53,750 + Deviation from cost of capital basis at closing rates as of December 31 5,823 (625) + Assets not included in cost of capital 23,743 25,643 of which disposal group for the oil and gas business 14,088 – Assets of the BASF Group as of December 31 86,556 78,768 Income from operations before depreciation, amortization and special items (EBITDA before special items) and income from operations before depreciation and amortization (EBITDA) are indicators that describe operational performance independent of age-related depreciation and amortization of assets and extraordinary valuation allowances (impairments or reversals of impairments). Both figures are therefore particularly useful in cross-company comparisons. EBITDA before special items is also highly useful in making comparisons over time. The EBITDA margin is a relative indicator and is calculated as the ratio of EBITDA to sales revenue, enabling operational performance to be compared independent of the size of the underlying business. EBITDA before special items declined by €1,257 million year on year to €9,481 million in 2018. At €9,166 million, EBITDA was down €1,599 million from the prior-year figure. The EBITDA margin was 14.6% in 2018, compared with 17.6% in the previous year. (XLS:) Download EBITDA before special items (Million €) 2018 2017 5 Excluding depreciation, amortization and valuation allowances attributable to the discontinued oil and gas business EBIT 6,033 7,587 – Special items (320) (58) EBIT before special items 6,353 7.645 + Depreciation and amortization5 3,080 2,959 + Valuation allowances on intangible assets and property, plant and equipment5 48 134 Depreciation, amortization and valuation allowances on intangible assets and property, plant and equipment 3,128 3,093 EBITDA before special items 9,481 10,738 (XLS:) Download EBITDA (Million €) 2018 2017 1 Excluding depreciation, amortization and valuation allowances attributable to the discontinued oil and gas business EBIT 6,033 7,587 + Depreciation and amortization1 3,080 2,959 + Valuation allowances on intangible assets and property, plant and equipment1 53 219 Depreciation, amortization and valuation allowances on intangible assets and property, plant and equipment 3,133 3,178 EBITDA 9,166 10,765 Sales revenue 62,675 61,223 EBITDA margin % 14.6 17.6 Compared with earnings per share, adjusted earnings per share has firstly been adjusted for special items. Secondly, amortization and valuation allowances (impairments and reversals of impairments) on intangible assets were eliminated. Amortization of intangible assets primarily results from the purchase price allocation following acquisitions and is therefore of a temporary nature. The effects of these adjustments on income taxes and on noncontrolling interests are also considered. This makes adjusted earnings per share a suitable measure for making comparisons over time and predicting future profitability. In 2018, adjusted earnings per share amounted to €5.87 compared with €6.44 in the previous year. For information on the earnings per share according to IFRS, see the Notes to the Consolidated Financial Statements (XLS:) Download Adjusted earnings per share (Million €) 2018 2017 Income after taxes 4,979 6,352 – Special items (320) (58) + Amortization and valuation allowances on intangible assets 563 539 – Amortization and valuation allowances on intangible assets contained in special items 1 32 – Adjustments to income taxes 231 537 – Adjustments to income after taxes from discontinued operations (34) 188 Adjusted income after taxes 5,664 6,192 – Adjusted noncontrolling interests 273 277 Adjusted net income 5,391 5,915 Weighted average number of outstanding shares (in thousands) 918,479 918,479 Adjusted earnings per share € 5.87 6.44 back next