4 – Segment Reporting The BASF Group’s business is run by 11 divisions, structured in six segments: Chemicals: Petrochemicals, Intermediates Materials: Performance Materials, Monomers Industrial Solutions: Dispersions & Pigments, Performance Chemicals Surface Technologies: Catalysts, Coatings Nutrition & Care: Care Chemicals, Nutrition & Health Agricultural Solutions: Agricultural Solutions The divisions are allocated to the segments based on their business models and according to their focal points, customer groups, the focus of their innovations, their investment relevance and sustainability aspects. The Chemicals segment comprises the Petrochemicals and Intermediates divisions and is the cornerstone of BASF’s Verbund structure. It supplies the other segments with basic chemicals and intermediates, contributing to the organic growth of our key value chains. Alongside internal transfers, customers include the chemical and plastics industries. The segment’s competitiveness is strengthened by technological leadership and operational excellence. The Materials segment is composed of the Performance Materials division and the Monomers division. The segment offers advanced materials and their precursors for new applications and systems. Its product portfolio includes isocyanates and polyamides as well as inorganic basic products and specialties for plastics and plastics processing. The Industrial Solutions segment consists of the Dispersions & Pigments and the Performance Chemicals divisions. The segment develops and markets ingredients and additives for industrial applications, such as polymer dispersions, pigments, resins, electronic materials, antioxidants and additives. Its customers come from key industries such as automotive, plastics and electronics. The Surface Technologies segment bundles chemical solutions for surfaces with the Catalysts and Coatings divisions. Its product spectrum includes catalysts and battery materials for the automotive and chemical industries, surface treatments, colors and coatings. The Nutrition & Care segment comprises the Care Chemicals division and the Nutrition & Health division. The segment produces ingredients and solutions for consumer applications in the areas of nutrition, home and personal care. Its customers include food and feed producers as well as the pharmaceutical, cosmetics, and the detergent and cleaner industries. The Agricultural Solutions segment consists of the division of the same name. As an integrated provider, its portfolio comprises fungicides, herbicides, insecticides and biological crop protection products, as well as seeds and seed treatment products. Furthermore, Agricultural Solutions offers farmers innovative solutions, including those based on digital technologies, combined with practical advice. Activities that are not allocated to any of the continuing divisions are recorded under Other. These include other businesses, which comprise commodity trading, engineering and other services, rental income and leases. Discontinued operations and certain activities remaining after divestitures are also reported here. The former Construction Chemicals division is classified as a discontinued operation. As such, it has been reported under Other since the sale of the construction chemicals business to an affiliate of Lone Star was agreed on December 21, 2019. The following activities are also presented under Other: The steering of the BASF Group by corporate headquarters. Cross-divisional corporate research, which includes plant biotechnology research, works on long-term topics of strategic importance to the BASF Group. Furthermore, it focuses on the development of specific key technologies, which are of central importance for the divisions. Results from currency translation that are not allocated to the segments; earnings from the hedging of raw materials prices and foreign currency exchange risks; and gains and losses from the long-term incentive (LTI) program. Remanent fixed costs resulting from organizational changes or restructuring; function and region-related restructuring costs not allocated to a division; idle capacity costs from internal human resource platforms. (XLS:) XLS Reconciliation of segment income to income before income taxes (Million €) H1 2020 2019 EBIT before special items of the segments 2,245 3,172 EBIT before special items of Other (379) (427) EBIT before special items 1,866 2,745 Special items of the segments (281) (231) Special items of Other (70) (228) Special items (351) (459) EBIT of the segments 1,964 2,941 EBIT of Other (449) (655) EBIT 1,515 2,286 Net income from shareholdings (956) (44) Financial result (282) (393) Income before income taxes 277 1,849 (XLS:) XLS Reconciliation of segment assets to the assets of the BASF Group (Million €) June 30, 2020 June 30, 2019a a The carrying amounts of non-integral investments accounted for using the equity method previously presented under “Assets of businesses included in Other” have been reclassified to “Other financial assets and non-integral investments accounted for using the equity method.” Segment assets 60,476 60,537 Assets of businesses included in Other 2,207 2,631 Other financial assets and non-integral investments accounted for using the equity method 12,610 14,685 Deferred tax assets 2,826 2,973 Cash and cash equivalents / marketable securities 5,562 2,165 Defined benefit assets 125 199 Other receivables / prepaid expenses 3,828 2,334 Assets of the construction chemicals business disposal group 2,735 2,873 Assets of Other 29,893 27,860 Assets of the BASF Group 90,369 88,397 The same accounting rules are used for segment reporting as those used for the Group. Transfers between the segments are generally executed at adjusted market-based prices, taking into account the higher cost efficiency and lower risk of intragroup transactions. Assets, as well as their depreciation and amortization, are allocated to the segments based on economic control. Assets used by more than one segment are allocated based on the percentage of usage. Income from operations (EBIT) before special items is used for the internal steering of the segments and complements the key management indicator, ROCE. EBIT is calculated from gross profit on sales, selling expenses, general administrative expenses, research and development expenses, other operating income and expenses, and income from integral companies accounted for using the equity method. To calculate EBIT before special items, this figure is then adjusted for special items. Special items arise from the integration of acquired businesses, restructuring costs, certain impairments, gains or losses resulting from divestitures and sales of integral investments accounted for using the equity method, and other expenses and income that arise outside of ordinary business activities. EBIT and EBIT before special items are alternative performance measures that are not defined under IFRS and are to be considered as being complementary to the indicators defined by IFRS. back next