Business Review

At a glance

Sales in both operating divisions considerably above prior-year level
Strong decrease in EBIT before special items due to lower margins and volumes as well as higher fixed costs

The Chemicals segment increased sales to third parties by €1,316 million compared with the previous year to €14,895 million. The Petrochemicals division recorded sales of €10,546 million, €871 million higher than in the previous year. The Intermediates division increased sales by €445 million to €4,349 million.

Factors influencing sales – Chemicals
	Chemicals	Petrochemicals	Intermediates
Volumes	–10.6%	–9.8%	–12.7%
Prices	15.2%	13.6%	19.0%
Portfolio	–0.1%	–0.1%	–0.1%
Currencies	5.2%	5.3%	5.2%
Sales	9.7%	9.0%	11.4%

The positive sales development was primarily the result of significantly higher prices. This was mainly attributable to sharp increases in prices for raw materials and energy. Price increases in the first half of 2022 were also driven by strong demand and supply chain disruptions, particularly in China as a result of the strict zero-COVID policy. In this market environment, the Petrochemicals division raised prices in all business areas, especially for steam cracker products, styrene monomers and in the propylene value chain. Intermediates mainly raised prices in the amines business. By contrast, following price increases in early 2022, the butanediol and derivatives business recorded a significant decline in prices in the second half of the year, particularly in Asia. This primarily reflected a significant slowdown in demand.

Sales growth was supported by positive currency effects, primarily relating to the U.S. dollar.

Sales in both operating divisions were reduced by significantly lower volumes due to weaker demand, especially in the second half of the year. The Petrochemicals division recorded lower volumes, especially for steam cracker products, in the propylene value chain and for styrene monomers. In the Intermediates division, sales volumes declined in the butanediol and derivatives business in particular.

Segment data – Chemicals (Million €)

2022

2021

+/–

Sales to third parties

14,895

13,579

9.7%

of which Petrochemicals

10,546

9,674

9.0%

Intermediates

4,349

3,904

11.4%

Intersegment transfers

4,860

4,269

13.8%

Sales including transfers

19,754

17,848

10.7%

Income from operations before depreciation, amortization and special items^a

2,774

3,842

–27.8%

Income from operations before depreciation and amortization (EBITDA)^a

2,771

3,882

–28.6%

EBITDA margin

18.6

28.6

−

Depreciation and amortization^b

1,013

767

32.1%

Income from operations (EBIT)^a

1,758

3,115

–43.6%

Special items

–198

EBIT before special items^a

1,956

3,092

–36.7%

Return on capital employed (ROCE)^a

15.6

33.9

−

Assets^a

10,481

10,482

0.0%

Investments including acquisitions^c

1,701

1,157

47.0%

Research and development expenses

–4.1%

a	BASF’s ethylene value chain was reorganized internally as of January 1, 2022. In this connection, the polyolefins and styrenics businesses of the joint venture BASF-YPC Company Ltd., Nanjing, China, which were previously reported under Other, were allocated to the Petrochemicals division. The prior-year figures have been adjusted. This reduced income from integral companies accounted for using the equity method, EBITDA before special items, EBITDA, EBIT and EBIT before special items in Other by €118 million in 2021 and increased these indicators in the Petrochemicals division accordingly. The operating assets were also reallocated as part of the reorganization and increased the Chemicals segment’s assets by €114 million as of December 31, 2021.
b	Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)
c	Additions to property, plant and equipment and intangible assets

The segment’s income from operations (EBIT) before special items declined by €1,136 million to €1,956 million. Both operating divisions recorded a considerable decline in earnings compared with the exceptionally strong previous year. EBIT before special items in the Petrochemicals division decreased mainly as a result of lower margins and volumes, as well as a lower contribution from shareholdings accounted for using the equity method. The Intermediates division’s earnings were below the prior-year level, primarily due to higher fixed costs. The main drivers here were higher energy prices, inflation and currency effects.

At €1,758 million, EBIT was €1,357 million lower than in 2021. This included special charges, mainly for the impairment of a plant in Ludwigshafen, Germany.

More information on our outlook for 2023

Division sales by region (Location of customer)
Divisions	Europe	North America	Asia Pacific	South America, Africa, Middle East	Total (million €)
Petrochemicals	60%	27%	8%	5%	10,546
Intermediates	40%	20%	37%	3%	4,349

Steam cracker

A steam cracker is a plant in which steam is used to “crack” naphtha (petroleum) or natural gas. The resulting petrochemicals are the raw materials used to produce most of BASF’s products.

Value chain

A value chain describes the successive steps in a production process: from raw materials through various intermediate steps, such as transportation and production, to the finished product.

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Business Review

At a glance

Chemicals – sales

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