Net Assets and Financial Position

Net assets

Total assets rose by €2,646 million compared with the 2020 year-end to €82,938 million.

Noncurrent assets declined by €605 million. This was mainly due to the decline in deferred taxes caused by lower pension provisions. Lower carrying amounts of non-integral shareholdings accounted for using the equity method were primarily a result of the dividend payment from Wintershall Dea GmbH. This was offset by an increase in the carrying amount of integral shareholdings accounted for using the equity method, primarily due to the positive result of BASF-YPC Company Ltd. The value of property, plant and equipment was above the level of December 31, 2020, particularly due to positive currency effects. These were partially offset by depreciation, which was higher than the additions. Amortization of intangible assets also exceeded additions and more than compensated for positive currency effects.

Current assets rose by €3,251 million to €33,119 million compared with the 2020 year-end. This was mainly attributable to higher trade accounts receivable resulting from the positive business performance in the first half of 2021 as well as to increased inventories due to higher raw materials prices. The €1,614 million increase in other receivables was due primarily to the rise in precious metal trading items. The decline in cash and cash equivalents and the derecognition of the disposal group in connection with the sale of the global pigments business as of June 30, 2021, had an offsetting effect.

Financial position

Equity rose by €3,689 million compared with December 31, 2020, to €38,087 million. This was driven by net income and other comprehensive income, which rose as a result of actuarial gains and translation effects. Dividends paid in the second quarter of 2021 in the amount of €3,031 million had an offsetting effect. The equity ratio increased from 42.8% to 45.9%.

Noncurrent liabilities decreased by €4,297 million compared with the 2020 year-end to €25,317 million primarily due to the considerable decline in pension provisions as a result of higher interest rates in relevant currency zones. The decline in noncurrent financial indebtedness mainly reflected the reclassification of two bonds and one bank loan with a total carrying amount of €924 million to current financial indebtedness. Currency effects had an offsetting impact.

Current liabilities rose by €3,254 million compared with the 2020 year-end to €19,534 million, primarily a result of higher current provisions attributable mainly to higher provisions for rebates and bonus payments. The rise in current financial indebtedness was primarily due to new bank loans taken out in the amount of €1.3 billion and the reclassification of the above-mentioned bonds and bank loan from noncurrent to current financial indebtedness. The repayment of a €1 billion bond and of commercial paper at BASF SE had an offsetting effect. The increase in trade accounts payable reflects the positive business performance in the first half of 2021.

Net debt¹ rose by €1,564 million compared with December 31, 2020, to €16,241 million. This resulted from the decline in cash and cash equivalents and the slight increase in financial indebtedness.

In the first half of 2021, cash flows from operating activities rose by €800 million compared with the prior-year period to €2,012 million. The increase was primarily attributable to the €3,365 million rise in net income. An offsetting factor was the €954 million higher amount of cash tied up in net working capital, due mainly to a larger increase in trade accounts receivable and expansion of inventories, which had been reduced in the prior-year period. This was partially compensated by the release of cash from the expansion of trade accounts payable in contrast to a decrease in the first half of 2020. Furthermore, income from companies accounted for using the equity method, which increased by €1,301 million, was eliminated through miscellaneous items.

Cash flows from investing activities improved considerably in the first half of 2021 by €2,413 to –€112 million. Payments from divestitures were received in the amount of €1,118 million in the first half of 2021, whereas payments in the amount of €1,245 million were made in the prior-year period for the acquisition of Solvay’s polyamide business. Payments made for property, plant and equipment and intangible assets were slightly below the prior-year figure at €1,223 million.

Cash flows from financing activities amounted to –€3,434 million, €8,101 million below the figure for the prior-year period. While the repayment of financial and similar liabilities slightly exceeded additions in the first half of 2021, primarily net additions to financial and similar liabilities amounting to €7,799 million led to a considerable rise in financing cash flows in the first half of 2020. Dividends totaling €3,152 million, of which €3,031 million were paid to shareholders of BASF SE, were slightly above the figures from the first half of 2020.

Free cash flow² improved considerably by €872 million to €789 million.

BASF enjoys good credit ratings, especially compared with competitors in the chemical industry. On July 16, 2021, Standard & Poor’s confirmed its long and short-term rating for BASF of “A/A-1” and raised its outlook from “negative” to “stable.” On June 11, 2021, Fitch confirmed its rating for BASF of “A/F1/outlook stable.” Moody’s most recently confirmed its rating of “A3/P-2/outlook stable” on February 12, 2021.