Financial Position

Equity rose by €6,216 million compared with December 31, 2020, to €40,614 million. Net income was a contributing factor. Dividend payments disbursed in the second quarter of 2021 in the amount of €3,031 million had an offsetting effect. The increase in other comprehensive income was especially a result of actuarial gains and translation effects. The equity ratio increased from 42.8% to 47.2%.

Noncurrent liabilities decreased by €4,448 million to €25,166 million primarily due to lower pension provisions resulting from higher interest rates. Furthermore, noncurrent financial indebtedness fell by €727 million largely because of the reclassification of two bonds and a loan to current financial indebtedness in the total amount of around €900 million. Exchange rates and interest had an offsetting effect.

Current liabilities as of the end of the third quarter of 2021 rose by €4,042 million compared with December 31, 2020, to €20,322 million. This was attributable in part to the €1,899 million rise in provisions associated primarily with higher provisions for rebates and bonus payments. Additionally, current financial indebtedness increased by €1,292 million through BASF SE’s increased commercial paper balance and the previously mentioned reclassification of two bonds and a loan from noncurrent to current financial indebtedness. The scheduled repayment of a eurobond in the amount of around €1 billion had an offsetting effect. Trade accounts payable rose due to positive business performance.

Net debt¹ increased by around €2 billion compared with December 31, 2020, to €16,680 million.

Cash flows from operating activities amounted to €1,896 million in the third quarter of 2021, €204 million below the figure for the prior-year quarter. Cash tied up in net working capital was the main reason for the decline. Increased inventories negatively affected operating cash flows by €1,107 million, following a slight decrease in inventories in the prior-year period. Cash released from the decline in trade accounts receivable did not completely offset this. Cash flows from operating activities were bolstered by higher net income: Taking into account lower depreciation and amortization, which had included high impairments in the prior-year quarter, cash flows from operating activities improved by €600 million.

Cash flows from investing activities were –€1,818 million and included net payments of €627 million made for acquisitions/­divestitures, primarily in connection with the formation of the joint venture with Shanshan. Cash inflow from the disposal of the construction chemicals business in the amount of €2,692 million had led to overall positive cash flows from investing activities in the third quarter of 2020. Payments made for property, plant and equipment and intangible assets were €83 million above the prior-year figure at €819 million. Net payments made for financial assets and miscellaneous items totaled €372 million and related mainly to the acquisition of shares in the Hollandse Kust Zuid wind farm.

Cash flows from financing activities were almost balanced at –€56 million. The decrease in financial and similar liabilities in the prior-year quarter had led to negative cash flows from financing activities in the amount of –€3,889 million.

Free cash flow² was €1,077 million, which reflects a €287 million decrease from the figure from the prior-year quarter due primarily to lower cash flows from operating activities.

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