Results of Operations

Sales declined by €641 million compared with the first half of 2019 to €29,433 million. The decrease was mainly attributable to lower volumes in the Materials, Surface Technologies and Industrial Solutions segments and in Other. Higher sales volumes in the Agricultural Solutions, Nutrition & Care and Chemicals segments were unable to compensate for this. Sales were lifted by portfolio effects, especially from the polyamide business acquired from Solvay in the Materials segment. A slightly higher price level owing to strong growth in precious metal prices in the Surface Technologies segment also had a positive impact on sales. This more than offset lower prices in almost all other segments.

Factors influencing BASF Group sales in H1 2020

Compared with the first half of 2019, income from operations (EBIT) before special items¹ declined by €879 million to €1,866 million. This was primarily due to significantly lower contributions from the Materials, Chemicals and Surface Technologies segments. EBIT before special items also declined considerably in the Industrial Solutions segment. By contrast, the Nutrition & Care segment considerably increased EBIT before special items, while the Agricultural Solutions segment posted slight growth. EBIT before special items improved considerably in Other.

Special items of minus €351 million arose in the first half of 2020, compared with minus €459 million in the prior-year period. These primarily related to expenses in connection with the carve-out of the global pigments business and to integration expenses, mainly for the polyamide business acquired from Solvay. Expenses arising from the “Helping Hands” aid campaign were also recognized as special items. In the prior-year period, higher expenses arose from restructuring measures in connection with our excellence program, from the impairment of a natural gas-based investment on the U.S. Gulf Coast, and from the integration of the businesses acquired from Bayer.

Income from operations (EBIT)² declined by €771 million compared with the first half of 2019 to €1,515 million. This figure includes income from integral companies accounted for using the equity method, which declined by €99 million to €34 million, mainly due to the scheduled turnarounds at the Verbund site in Nanjing, China.

Compared with the prior-year period, income from operations before depreciation, amortization and special items (EBITDA before special items)³ decreased by €719 million to €3,808 million and EBITDA³ by €818 million to €3,498 million.

At minus €956 million, net income from shareholdings was €912 million below the prior-year figure. This was primarily due to the impairment of €819 million on the shareholding in Wintershall Dea in the second quarter of the current year, mainly as a result of lower oil and gas price forecasts and changed reserve estimates. Excluding the impairment of Wintershall Dea, the earnings contributed by the shareholding, which has been accounted for using the equity method since May 1, 2019, declined to minus €112 million (H1 2019: €26 million). Solenis’ earnings contribution improved by €57 million compared with the first half of 2019 to minus €12 million.

The financial result improved by €111 million to minus €282 million. This mainly reflected the €80 million improvement in the other financial result due to higher fair values of derivatives. The interest result improved by €31 million year on year to minus €210 million.

Income before taxes decreased by €1,572 million to €277 million. The tax rate rose to 102.5% due to the non-tax-relevant impairment of Wintershall Dea (H1 2019: 24.0%).

Income after taxes from continuing operations declined by €1,413 million to minus €7 million.

Income after taxes from discontinued operations, which in 2020 comprises the construction chemicals business, amounted to €36 million after €5,963 million in the prior-year period. The high income in 2019 was primarily attributable to the book gain of €5,684 million on the deconsolidation of Wintershall following the merger of Wintershall and DEA as of May 1, 2019.

Noncontrolling interests rose to €22 million after €9 million in the prior-year period. This was largely due to the turnaround of the steam cracker in Port Arthur, Texas, in the first half of 2019.

Net income decreased by €7,353 million to €7 million.

Earnings per share declined to €0.01 in the first half of 2020, compared with €8.01 in the first half of 2019. Earnings per share adjusted⁴ for special items and amortization of intangible assets amounted to €1.51 (H1 2019: €2.47).

Segment sales and EBIT before special items

In the Chemicals segment, sales were considerably lower than in the first half of 2019. This was mainly attributable to significantly lower prices in both divisions. In the Petrochemicals division in particular, price levels declined as a result of higher product availability on the market, lower raw materials prices and continued weak demand. Higher sales volumes in the Petrochemicals division had an offsetting effect. We were able to increase volumes of steam cracker products after the scheduled turnarounds of our steam crackers in Port Arthur, Texas, and Antwerp, Belgium, in the prior-year period. EBIT before special items declined considerably in both divisions, but especially in the Petrochemicals division due to lower margins and lower income from our equity-accounted joint venture in Nanjing, China, as a result of scheduled turnarounds. In the Intermediates division, the decrease in EBIT before special items was primarily attributable to lower margins, a decline in sales volumes and higher fixed costs, mainly from the gradual startup of the new acetylene plant in Ludwigshafen, Germany.

Sales in the Materials segment declined considerably compared with the prior-year period. This was mainly due to lower volumes, especially in the Performance Materials division, as a result of weaker demand from all customer industries, but especially from the automotive industry. Lower prices, particularly for isocyanates and polyamides in the Monomers division, also contributed to the sales decrease. Portfolio effects from the acquisition of the integrated polyamide business from Solvay had an offsetting impact in both divisions. EBIT before special items declined considerably in both divisions, but especially in the Monomers division. This was primarily the result of lower isocyanate margins. In the Performance Materials division, the decrease in EBIT before special items was largely due to the development of sales volumes.

Sales in the Industrial Solutions segment were considerably below the level of the first half of 2019. This was primarily the result of lower sales volumes in both divisions. A lower price level due to lower raw materials prices, especially in the Dispersions & Pigments division, also contributed to the sales decrease. Sales were likewise reduced by the transfer of BASF’s paper and water chemicals business, which was previously reported under the Performance Chemicals division, to the Solenis group as of January 31, 2019. EBIT before special items declined considerably compared with the prior-year period. This was largely attributable to the considerable earnings decrease in the Performance Chemicals division, mainly from the development of sales volumes and the transfer of BASF’s paper and water chemicals business to the Solenis group. EBIT before special items in the Dispersions & Pigments division declined slightly due to lower volumes.

We considerably increased sales in the Surface Technologies segment, mainly as a result of higher precious metal prices in the Catalysts division. Sales development was also positively impacted by currency effects in the Catalysts division. Lower sales volumes due to weak demand from the automotive industry, especially in the Coatings division, had an offsetting effect. EBIT before special items in both divisions was considerably below the prior-year level due to the development of sales volumes, especially in the Coatings division.

We slightly increased sales in the Nutrition & Care segment. This was primarily due to significantly higher sales volumes in the Nutrition & Health division, especially in the aroma ingredients, pharmaceutical and human nutrition businesses. Volumes rose slightly in the Care Chemicals division. Offsetting factors were a lower price level in the Care Chemicals division as a result of lower raw materials prices and negative currency effects in both divisions. EBIT before special items improved considerably due to a significantly higher contribution from the Nutrition & Health division. This was mainly driven by higher margins on the back of volumes growth. In the Care Chemicals division, EBIT before special items was slightly below the level of the first half of 2019, largely due to higher fixed costs, primarily as a result of a one-off contractual payment in the prior-year period.

The Agricultural Solutions segment recorded a slight improvement in sales compared with the first half of 2019. This was due to higher volumes, especially in North and South America. By contrast, sales were dampened by negative currency effects, particularly in the region South America, Africa, Middle East. Prices were on a level with the prior-year period. We slightly increased EBIT before special items. This was mainly driven by higher sales and lower fixed costs.

Sales in Other declined considerably compared with the prior-year period. This primarily reflected the decrease in commodity trading and the remaining activities of the paper and water chemicals business. EBIT before special items was considerably above the figure for the first half of 2019. This was largely attributable to valuation effects for our long-term incentive program.

H1 sales

Million €, relative change

H1 EBIT before special items

Million €, absolute change