Business Review

• Sales down 18% to €9,532 million due to lower volumes and prices
• EBIT before special items declines 50% to €791 million as a result of considerably lower contributions from both divisions

Sales to third parties in the Chemicals segment declined by €2,162 million year on year to €9,532 million in 2019. This was mainly due to the considerable sales decrease in the Petrochemicals division of €1,891 million to €6,670 million. Sales also declined considerably in the Intermediates division by €271 million to €2,862 million.

Sales development was attributable to lower volumes and prices in both divisions, but especially in the Petrochemicals division. Here, sales volumes declined significantly as a result of the scheduled turnarounds of our steam crackers in North America and Europe. In addition, lower capacity utilization of the condensate splitter in Port Arthur, Texas, had a negative impact on volumes development in North America. The slight decline in volumes in the Intermediates division was largely attributable to lower sales volumes for butanediol and derivatives, especially in the businesses serving the automotive and textile industries.

Prices also decreased significantly overall, particularly in the Petrochemicals division. Prices declined in all regions and business areas here, largely following the decrease in raw materials prices for naphtha and butane, our most important feedstocks. Prices were also pushed down by new ethylene capacities in the United States as well as the trade conflict between the United States and China and the resulting market uncertainty. Price levels declined considerably in the Intermediates division, likewise in all regions and especially in the acids and polyalcohols business.

Positive currency effects in both divisions had a slight offsetting effect.

Petrochemicals – Sales by region

Location of customer

Intermediates – Sales by region

Location of customer

Income from operations (EBIT) before special items decreased by €796 million compared with the previous year to €791 million. The considerable decline in EBIT before special items affected both divisions, but especially Petrochemicals, and was the result of lower volumes and margins.

In particular, earnings from steam cracker products in the Petrochemicals division declined over the course of the year due to lower volumes, mainly owing to the scheduled turnarounds of our steam crackers in Europe and North America. Higher product availability on the market of ethylene, ethylene glycols and styrene monomers also contributed to the decrease in margins and earnings. In addition, fixed costs rose. In the previous year, we had received insurance refunds; in addition, maintenance expenses, especially for our steam crackers, were above the 2018 figure.

Margins in the Intermediates division declined slightly overall. In the acids and polyalcohols business, margins were significantly lower due to higher product availability on the market.

EBIT declined by €951 million to €622 million. EBIT includes a special charge from the impairment of project costs for a planned methane-to-propylene plant on the U.S. Gulf Coast.

The construction of the new acetylene plant in Ludwigshafen, Germany, went according to plan and was started up on schedule in late 2019. In Nanjing, China, BASF built a plant for the production of several specialty amines. Our 50-50 joint venture there, BASF-YPC Company Limited, completed a capacity expansion for propionic acid.