Opportunities and Risks Report

In order to effectively measure and manage identified opportunities and risks, we quantify these where appropriate in terms of probability and economic impact in the event they occur. Where possible, we use statistical methods to aggregate opportunities and risks into risk factors. This way, we achieve an overall view of opportunities and risks at a portfolio level, allowing us to take effective measures for risk management.

Overall assessment

• Significant opportunities and risks arise from overall economic developments, margin and exchange rate volatility
• No threat to continued existence of BASF

For 2021, we anticipate a considerable global economic recovery after the downturn in the previous year due to the coronavirus pandemic. General economic uncertainty will nevertheless remain high until widespread immunization of the population has been achieved. Specifically, production stoppages due to official orders or high infection rates can lead to disruptions in the supply chains of our customer industries, with our suppliers and in our own production plants. Moreover, restricted economic activity resulting from further lockdowns can have a significant negative impact on aggregate demand. An escalation of geopolitical conflicts as well as the ongoing trade conflicts between the United States and China and the associated slowdown of the economy also pose significant risks. These developments could have a negative impact on demand for intermediate and investment goods worldwide. Opportunities arise from continued strong demand, supported by earlier and better availability and broader acceptance of the coronavirus vaccine than is assumed in our forecasts. In addition to the uncertainties surrounding market growth and the development of key customer industries, material opportunities and risks for our earnings arise from margin volatility. From today’s perspective, Brexit does not give rise to any material opportunities or risks for the BASF Group due to the trade agreement reached between the European Union and the United Kingdom.

According to our assessment, there continue to be no significant individual risks that pose a threat to the continued existence of the BASF Group. The same applies to the sum of individual risks, even in the case of a global economic crisis, such as the intensification of the coronavirus crisis.

Ultimately, however, residual risks (net risks) remain in all entrepreneurial activities that cannot be ruled out, even by comprehensive risk management.

As a non-integral shareholding, income from Wintershall Dea is reported in net income from shareholdings. The opportunities and risks resulting from the shareholding in Wintershall Dea are therefore not included in the outlook for the EBIT of the BASF Group. Opportunities and risks that have an impact on net income from shareholdings and cash flow from the shares in Wintershall Dea are monitored and tracked through BASF’s involvement in the relevant governing bodies.