Information on 2nd Quarter 2018: BASF Group

Compared with the second quarter of 2017, sales rose by €518 million to €16,782 million. This was driven by higher prices in all segments, particularly in Functional Materials & Solutions and Oil & Gas. In addition, with the exception of Performance Products, all segments achieved volumes growth. This was partially offset by negative currency effects.

Factors influencing BASF Group sales, 2nd quarter 2018

We increased income from operations (EBIT) before special items¹ by €105 million year on year to €2,356 million, largely thanks to the significantly improved contribution from the Oil & Gas segment. EBIT before special items rose slightly in the Agricultural Solutions and Performance Products segments but decreased slightly in the Chemicals segment and declined considerably in the Functional Materials & Solutions segment.

Special items in EBIT totaled minus €65 million in the second quarter of 2018, compared with minus €70 million in the prior-year quarter. These mainly related to expenses for restructuring measures and integration costs, primarily in connection with the planned acquisition of the Bayer businesses described under Significant Events.

EBIT² rose by €110 million compared with the second quarter of 2017 to €2,291 million.

Income from operations before depreciation, amortization and special items (EBITDA before special items)³ and EBITDA³ were on a level with the prior-year quarter figures, at €3,295 million and €3,232 million, respectively.

Second-quarter sales
(million €, relative change)

Second-quarter EBIT before special items
(million €, absolute change)

At minus €202 million, the financial result was €28 million lower than in the second quarter of 2017. This reflected the decrease in the other financial result due to higher expenses, primarily from hedging transactions, and lower income from the capitalization of construction period interest. By contrast, both the interest result and net income from shareholdings increased.

Income before taxes and minority interests rose by €82 million to €2,089 million. At 27.1%, the tax rate was higher than in the prior-year quarter (22.1%), due among other factors to stronger earnings contributions from companies in countries with a high tax rate, especially Norway. Minority interests decreased by €25 million to €43 million.

Net income declined by €16 million to €1,480 million.

Earnings per share were €1.61 in the second quarter of 2018, compared with €1.63 in the prior-year period. Earnings per share adjusted⁴ for special items and amortization of intangible assets amounted to €1.77 (second quarter of 2017: €1.78).

Cash flows from operating activities amounted to €2,224 million in the second quarter of 2018, €745 million lower than the prior-year figure. This was largely attributable to cash tied up in miscellaneous items, due among other factors to changes in pension provisions and defined benefit assets. In the prior-year quarter, by contrast, cash was released from the change in miscellaneous items. The change in net working capital due to the stronger increase in inventories and the smaller decrease in trade accounts receivable compared with the prior-year period also contributed to the decline in cash flows from operating activities.

Cash flows from investing activities amounted to minus €1,101 million in the second quarter of 2018, compared with minus €1,150 million in the prior-year period. The improvement was primarily due to the €73 million increase in net payments received from acquisitions and divestitures as well as the €53 million decrease in payments made for property, plant and equipment and intangible assets compared with the previous year. This was offset in particular by the higher level of tied-up cash from the change in other financing-related receivables and the increase in additions to financial assets as against the second quarter of 2017.

Cash flows from financing activities amounted to minus €719 million in the second quarter of 2018, after minus €1,717 million in the prior-year quarter. This improvement was mainly attributable to higher net cash inflows from financial indebtedness compared with the prior-year period from both U.S. dollar commercial paper and bonds. The lower year-on-year increase in liabilities to credit institutions had an offsetting effect. Dividends of €2,847 million were paid to shareholders of BASF SE in the second quarter of 2018, €92 million more than in the second quarter of 2017. Minority shareholders of Group companies received €178 million in dividends, an increase of €90 million.

Free cash flow amounted to €1,402 million, compared with €2,094 million in the prior-year period. The decline in cash flows from operating activities could not be offset by the lower payments made for property, plant and equipment and intangible assets.