Results of Operations

The global economy recovered much more strongly than we expected in 2021 following the severe slump in the previous year due to the effects of the coronavirus pandemic. Many governments’ aid programs and rising vaccination rates were key contributing factors to this. In this market environment, growth in global industrial production and in the global chemical industry (excluding pharmaceuticals) was also significantly above the prior-year level and the long-term average. BASF’s business also developed favorably: We considerably increased sales and earnings.

• Business reviews by segment

Sales rose by €19,449 million compared with the previous year to €78,598 million in 2021. This was mainly driven by higher prices and volumes in all segments. Price levels increased in the Chemicals, Surface Technologies and Materials segments in particular. Sales volumes grew primarily in the Surface Technologies and Materials segments. Currency effects, mainly relating to the U.S. dollar, had an offsetting effect. Sales performance was also weighed down by negative portfolio effects, especially in the Industrial Solutions segment following the divestiture of the global pigments business. This could only be partly offset by positive portfolio effects, mainly from the acquisition of a majority shareholding in BASF Shanshan Battery Materials Co., Ltd. in the Surface Technologies segment.

Sales^{a, b}

Million €

• More information on the development of Accelerator sales
• More information on the development of CO₂ emissions

Income from operations (EBIT) before special items rose by €4,208 million to €7,768 million, largely due to considerably higher earnings in the Chemicals and Materials segments. Earnings development in the Chemicals segment was primarily driven by higher margins, higher sales volumes and an improvement in equity-accounted income. Earnings growth in the Materials segment was mainly attributable to higher margins in isocyanates and polyamides, as well as positive volume development. EBIT before special items also improved considerably in the Surface Technologies and Industrial Solutions segments, largely as a result of higher volumes. By contrast, the Nutrition & Care and Agricultural Solutions segments recorded considerably lower EBIT before special items. The decline in earnings in the Nutrition & Care segment was mainly attributable to lower margins on the back of higher raw materials and energy prices, as well as an increase in fixed costs. EBIT before special items was lower in the Agricultural Solutions segment, largely due to higher fixed costs, higher raw materials prices and logistics costs, and a low-margin product mix. The segment’s earnings were additionally weighed down by negative currency effects.

• Explanation of the indicator EBIT before special items

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

Million €

Special items in EBIT totaled –€91 million in 2021, compared with –€3,751 million in the previous year, which was strongly impacted by impairments on property, plant and equipment and intangible assets in the total amount of around €2.9 billion. In 2021, restructuring measures gave rise to expenses of €99 million (2020: expenses of €952 million), mainly in the Agricultural Solutions and Materials segments and in Other. The release of provisions in connection with the restructuring of the Global Business Services unit had an offsetting effect. Integration costs amounted to €85 million (2020: integration costs of €157 million) and primarily related to the integration of the acquired BASF Shanshan companies and the polyamide business acquired from Solvay in 2020. Divestitures, which also included the disposal of the global pigments business, gave rise to special income totaling €120 million, especially from the sale of our production site in Kankakee, Illinois, the Coatings division’s precision microchemicals business and our share in the condensate splitter in Port Arthur, Texas. Other items led to special charges in the total amount of €27 million.

• Definition of special items

At €7,677 million, EBIT for the BASF Group in 2021 was considerably above the previous year, which was impacted by high impairments. This figure includes income from integral companies accounted for using the equity method, which rose by €455 million to €675 million. This was mainly attributable to the business-related increase in the earnings contributed by BASF-YPC Company Ltd., Nanjing, China, which rose by €343 million.

EBIT^{a, b, c}

Million €

We use the indicator return on capital employed (ROCE). ROCE was 13.5%, after 1.7% in the previous year. The increase in ROCE was primarily due to considerably higher EBIT.¹

• More information on the calculation of ROCE
• Calculation of EBIT as part of our statement of income