Results of Operations

Sales rose by €307 million to €33,428 million compared with the first half of 2017. This was due to higher sales prices, especially in the Functional Materials & Solutions, Chemicals and Oil & Gas segments, as well as volumes growth in all segments except Performance Products. Negative currency effects, primarily relating to the U.S. dollar, dampened sales in all segments.

Factors influencing BASF Group sales, 1st half 2018

We increased income from operations (EBIT) before special items¹ by €160 million to €4,868 million, largely thanks to the significantly improved contribution from the Oil & Gas segment. EBIT before special items rose slightly in the Chemicals segment but decreased slightly in the Performance Products segment and declined considerably in the Functional Materials & Solutions and Agricultural Solutions segments.

Special items in EBIT totaled minus €56 million in the first half of 2018, compared with minus €76 million in the prior-year period. 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. Special income from divestitures, especially in the Oil & Gas segment, had an offsetting effect.

EBIT² rose by €180 million year on year to €4,812 million.

Compared with the prior-year period, income from operations before depreciation, amortization and special items (EBITDA before special items)³ decreased by €64 million to €6,734 million and EBITDA³ by €55 million to €6,680 million.

The financial result declined by €62 million to minus €388 million. This was attributable to 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 €118 million to €4,424 million. The tax rate increased from 22.5% to 25.8%, mainly as a result of higher earnings contributions from companies in countries with a high tax rate, particularly in the Oil & Gas segment in Norway. Minority interests decreased by €9 million to €122 million.

Net income declined by €46 million to €3,159 million.

Earnings per share were €3.44 in the first half of 2018, compared with €3.49 in the prior-year period. Earnings per share adjusted³ for special items and amortization of intangible assets amounted to €3.70 (first half of 2017: €3.75).

Sales and EBIT before special items in the segments

Sales in the Chemicals segment rose slightly compared with the first half of 2017. This was attributable to higher prices, especially in the Monomers and Intermediates divisions, as well as volumes growth in the Petrochemicals division in particular. By contrast, sales were negatively impacted by currency effects, primarily relating to the U.S. dollar. EBIT before special items slightly exceeded the prior-year figure as a result of higher margins and volumes.

In the Performance Products segment, sales declined slightly year on year. The main driver was negative currency effects in all divisions, mostly relating to the U.S. dollar. Sales were also reduced by lower volumes in the Nutrition & Health division, primarily because of the lower availability of citral-based products, and in the Care Chemicals division. Portfolio effects in the Performance Chemicals and Dispersions & Pigments divisions likewise had a dampening effect on sales. By contrast, sales prices rose. EBIT before special items declined slightly compared with the prior-year period, mainly as a result of lower volumes and negative currency effects.

In the Functional Materials & Solutions segment, we achieved slight sales growth as against the prior-year period. This was mainly attributable to higher prices. We also increased our sales volumes. Negative currency effects had an offsetting impact. EBIT before special items was considerably below the figure for the first half of 2017, largely as a result of lower margins and higher fixed costs.

Sales in the Agricultural Solutions segment declined slightly compared with the prior-year period. This was primarily due to negative currency effects in all regions. We increased sales volumes slightly; prices were on a level with the first half of 2017. EBIT before special items declined considerably, mainly as a result of negative currency effects and higher fixed costs.

The Oil & Gas segment posted considerable year-on-year sales growth on the back of higher prices and volumes. The price of a barrel of Brent crude oil averaged $71 in the first half of 2018 (first half of 2017: $52). Gas prices on the European spot markets were also significantly higher than in the first half of 2017. Volumes growth was driven by higher volumes from Norway and stronger trading volumes. This was partially offset by currency effects. EBIT before special items improved considerably as a result of higher oil and gas prices and a significantly higher earnings contribution from Norway.

Sales in Other rose considerably compared with the prior-year period due to higher sales volumes and prices in raw materials trading. EBIT before special items also grew considerably. This was primarily attributable to an improved foreign currency result.

First-half sales
(million €, relative change)

First-half EBIT before special items
(million €, absolute change)