Income from Operations

• Considerable decline in EBIT before special items, EBIT and ROCE

Income from operations (EBIT) before special items decreased by €1,083 million to €3,560 million, mainly due to significantly lower contributions from the Chemicals and Surface Technologies segments. In the Chemicals segment, this was primarily attributable to lower margins. In the Surface Technologies segment, it was mostly the result of lower volumes in the Coatings division. EBIT before special items also declined considerably in Other and in the Materials and Agricultural Solutions segments. The decrease in the Materials segment was mainly due to lower polyamide margins and volumes. EBIT before special items was lower in the Agricultural Solutions segment, largely from currency effects. In the Nutrition & Care segment, EBIT before special items declined slightly as a result of the sales performance and a one-off payment in the Care Chemicals division in the previous year. In the Industrial Solutions segment, EBIT before special items was on a level with the previous year.

EBIT before special items^{a, b, c}

Million €

Special items in EBIT totaled –€3,751 million in 2020, compared with –€442 million in the previous year. The increase in special items is primarily attributable to the impairments of €2.9 billion on property, plant and equipment and intangible assets, which were mainly reported under other charges and income. Expenses of €76 million arose in connection with divestitures, mainly from the carve-out of our global pigments business. We recorded a positive earnings contribution of €286 million in the previous year, in particular from the transfer of BASF’s paper and water chemicals business to the Solenis group and the sale of businesses in the Agricultural Solutions segment in accordance with the conditions imposed by antitrust authorities in connection with the acquisition of the Bayer businesses. In addition, expenses from restructuring measures rose by €325 million compared with the previous year to €952 million. These largely related to expenses for measures to streamline the global glufosinate-ammonium production network and provisions in connection with the realignment of the Global Business Services unit. Integration costs amounted to €157 million in 2020, mainly for the integrated polyamide business acquired from Solvay. In the previous year, we recorded integration costs of €303 million, primarily for the integration of the businesses acquired from Bayer in the Agricultural Solutions segment.

At –€191 million, EBIT for the BASF Group in 2020 was considerably below the previous year’s level (2019: €4,201 million). This figure includes income from integral companies accounted for using the equity method, which declined from €265 million to €220 million.

EBIT^{a, b, c}

Million €

We use the indicator return on capital employed (ROCE). It measures the profitability of the capital employed by the segments. ROCE was 1.7%, after 7.7% in the previous year. The decline in ROCE was primarily due to considerably lower EBIT. Capital employed declined, mainly due to the impairments recognized as a consequence of the coronavirus pandemic, and currency effects.¹