Actual Development Compared With Outlook for 2022

Sales, earnings and ROCE forecast for the BASF Group

The BASF Group increased sales to €87.3 billion in 2022, significantly exceeding the range forecast at the beginning of the year of €74 billion to €77 billion. However, sales were within the forecast range of €86 billion to €89 billion communicated in July 2022. The Materials, Chemicals and Industrial Solutions segments outperformed initial forecasts with considerable sales growth. We had originally anticipated only a slight increase in the Materials segment. We had expected a considerable decline in the Chemicals segment and a slight decrease in the Industrial Solutions segment. Sales in Other also improved considerably instead of slightly as forecast. Growth in BASF Group sales was mainly driven by significant price increases in the segments as a result of raw materials and energy price developments. Portfolio effects had a positive impact, as expected. We were only able to increase sales volumes as forecast in the Agricultural Solutions segment. Contrary to our expectations, we recorded lower volumes in all other segments as a result of weaker demand.

At €6.9 billion, EBIT before special items was within both the forecast range of €6.6 billion to €7.2 billion from February 2022 and the adjusted range of €6.8 billion to €7.2 billion from July 2022. The Agricultural Solutions and Nutrition & Care segments considerably increased EBIT before special items, as expected. The Chemicals and Materials segments recorded a considerable decline in earnings as forecast. The Surface Technologies and Industrial Solutions segments did not develop as expected: The Surface Technologies segment significantly increased EBIT before special items, while the Industrial Solutions segment recorded slight earnings growth; we had assumed a slight deterioration in earnings in each case. EBIT before special items in Other improved slightly, also performing better than expected. We had forecast a considerable decrease.

At 10.0%, ROCE was above the cost of capital of 9%. Our expectations for ROCE materialized in all segments except Nutrition & Care, where ROCE was slightly lower instead of considerably higher as forecast. Overall, ROCE for the BASF Group amounted to 10.0%, below the range we had forecast in February of between 11.4% and 12.6% and below the revised range from July 2022 of 10.5% to 11.0%. This reflected a significant increase in the cost of capital base amid lower earnings.

CO₂ emissions forecast for the BASF Group

CO₂ emissions amounted to 18.4 million metric tons, well below the range forecast in February 2022 of 19.6 million metric tons to 20.6 million metric tons and at the lower end of the adjusted range from July 2022 of 18.4 million metric tons to 19.4 million metric tons. The main drivers here were the significant reduction in production volumes and the temporary shutdown of emission-intensive plants. One example is the ammonia plants, where production was curbed or temporarily shut down due to high natural gas prices. We continued to use electricity from renewable sources and purchase green electricity certificates.

Capex forecast for the BASF Group

In 2022, we invested a total of €4.1 billion in capital expenditures (capex), excluding additions from acquisitions, IT investments, restoration obligations and right-of-use assets arising from leases. The figure forecast in February 2022 was around €4.6 billion.

Sales, earnings and ROCE forecast for the segments

We considerably increased sales in the Chemicals segment in 2022 after forecasting a considerable decrease at the beginning of the year. Contrary to expectations, both divisions were able to significantly raise prices following sharp increases in raw materials and energy prices. At the beginning of 2022, we initially expected prices to decrease. Volumes were lower than expected due to weaker demand, especially in the second half of the year. The segment’s EBIT before special items and ROCE declined considerably, as forecast.

Contrary to our assumption of slight sales growth, the Materials segment increased sales considerably. Here, too, this was mainly due to significant price increases after we had assumed lower prices in February. Weaker demand reduced sales volumes in both divisions. We had initially expected volume growth. EBIT before special items and ROCE declined considerably as forecast.

Sales in the Industrial Solutions segment rose considerably in 2022, despite our expectations of a slight decline. This was mainly due to significantly higher prices than originally assumed. These more than offset both the negative portfolio effects from the divestiture of the global pigments business and lower sales volumes. In February, we had assumed that volumes could be increased. The segment’s EBIT before special items rose slightly, contrary to our forecast of a slight decrease. The expected margin-driven earnings growth in the Performance Chemicals division more than offset the decline in the Dispersions & Resins division, which was mainly due to the divestiture of the global pigments business. ROCE was slightly above the prior-year level, as forecast.

In line with our forecast, sales in the Surface Technologies segment were considerably below the prior-year figure. EBIT before special items rose considerably; we had expected a slight decrease. The increase was due to considerable earnings growth in the Catalysts division as a result of higher earnings contributions from the automotive catalysts and battery materials businesses. This mainly reflected stronger growth in the automotive industry in 2022. ROCE was considerably lower, as forecast.

In the Nutrition & Care segment, sales and EBIT before special items rose considerably as expected. ROCE declined slightly, contrary to our forecast of a considerable increase. This was mainly attributable to higher net working capital due to the increase in energy and raw materials prices.

The Agricultural Solutions segment recorded strong growth in sales, EBIT before special items and ROCE, as expected.

Sales in Other improved considerably due to much stronger-than-forecast sales growth in commodity trading. We had originally assumed a slight sales increase. EBIT before special items was slightly above the prior-year level; we had expected a considerable decline. This was primarily attributable to higher income from the long-term incentive program, among other factors. Income also arose from hedging transactions.

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