Actual Development Compared with Outlook for 2020

BASF Group sales in 2020 were at the prior-year level, contrary to our forecast at the beginning of the year of sales growth to between €60 billion and €63 billion. Sales development in the Chemicals, Industrial Solutions and Materials segments in particular was weaker than expected at the beginning of 2020. Lower demand as a consequence of the coronavirus pandemic led to a slight overall decline in volumes in the BASF Group, contrary to our assumptions. After forecasting lower prices, we were able to slightly increase price levels as a result of significantly higher precious metal prices. EBIT before special items amounted to €3,560 million, falling short of the €4.2 billion to €4.8 billion range we had forecast in February 2020. Earnings developments did not meet our expectations, especially in the Surface Technologies and Agricultural Solutions segments and in Other. The BASF Group’s return on capital employed (ROCE) declined considerably rather than slightly compared with 2019. ROCE was also considerably below the cost of capital percentage. In April 2020, we withdrew the outlook provided in February 2020 due to the uncertainty surrounding the length and spread of the coronavirus pandemic, as well as the measures to contain it. In October 2020, we forecast sales of between €57 billion and €58 billion. We expected EBIT before special items of between €3.0 billion and €3.3 billion and a ROCE of between 0.0% and 1.0%.

Sales in the Chemicals segment declined considerably in 2020, after we had expected slight growth at the beginning of the year. This was largely the result of lower prices than expected in both divisions. Also, volumes were at the prior-year level overall, contrary to our forecast of volume growth. We were able to increase volumes in the Intermediates division as planned. By contrast, sales volumes in the Petrochemicals division remained at the prior-year level. This was primarily due to the effects of the coronavirus pandemic and lower product availability owing to the unplanned outage at the steam cracker in Port Arthur, Texas. EBIT before special items declined considerably as expected. ROCE declined considerably instead of rising slightly as expected. This was due to lower margins in both divisions as a result of the effects of the coronavirus pandemic and special charges, mainly for impairments on property, plant and equipment.

Sales in the Materials segment declined considerably, contrary to our forecast of considerable sales growth. Lower prices and negative currency effects exceeded the positive contribution from the acquisition of Solvay’s integrated polyamide business. Volumes did not meet expectations either and were lower rather than higher. This was mainly attributable to weaker demand from our customer industries as a result of the coronavirus pandemic, especially from the automotive industry. EBIT before special items and ROCE declined considerably as expected.

Sales in the Industrial Solutions segment declined considerably, falling short of our expectations of slight growth. This was primarily due to lower price levels in both divisions. Contrary to our forecast, we recorded lower volumes in the Performance Chemicals division. In the Dispersions & Pigments division, too, sales volumes were merely on a level with the previous year. In a continued challenging market environment, the segment’s EBIT before special items was at the prior-year level, after we had forecast a considerable increase. This was mainly driven by volumes development. ROCE was considerably below the prior-year level, as expected.

We considerably improved sales in the Surface Technologies segment, outperforming our forecast of a slight increase. The increase was primarily attributable to considerably higher sales in the Catalysts division as a result of higher precious metal prices. This more than offset the sales decrease in the Coatings division, which declined considerably rather than slightly. EBIT before special items declined considerably, contrary to our expectations of a slight increase. This was mainly due to volumes development in the Coatings division and higher fixed costs in the Catalysts division. Improved earnings in precious metal trading were unable to compensate for this. ROCE declined considerably and was thus below our expectations. This was largely the result of special charges, mainly for goodwill impairments in the surface treatments cash-generating unit, and for property, plant and equipment in the Catalysts division.

In the Nutrition & Care segment, sales declined slightly instead of rising considerably as forecast. Although both divisions increased sales volumes as forecast, this was unable to compensate for negative currency effects and the expected decrease in price levels. EBIT before special items also declined slightly instead of rising slightly, mainly as a result of sales developments. Rather than increasing considerably as expected, ROCE rose only slightly, primarily due to impairments in connection with the optimization of production sites within the Nutrition & Health division.

Contrary to our forecast at the beginning of the year of a considerable increase, sales in the Agricultural Solutions segment declined slightly in a continued challenging market environment. We only increased sales volumes slightly, not considerably, which meant that significantly negative currency effects could not be offset. EBIT before special items declined considerably as a result. We had anticipated a slight increase at the beginning of 2020. ROCE also declined considerably, contrary to our assumption of a slight increase. This was primarily due to special charges for streamlining the global glufosinate-ammonium production network.

Sales in Other were considerably below the previous year in 2020, instead of being at the 2019 level as expected. This was mainly due to the sales decrease in commodity trading and the remaining activities of BASF’s paper and water chemicals business, which were not part of the transfer to Solenis and are reported under Other. We were unable to considerably increase EBIT before special items as forecast. Instead, EBIT before special items declined considerably due to lower contributions from other businesses.

In 2020, we invested a total of €2.9 billion in capital expenditures (capex), excluding additions from acquisitions, IT investments, restoration obligations and right-of-use assets arising from leases. The figure forecast in February 2020 was €3.4 billion and the figure forecast in April 2020 was €2.8 billion.