Results of Operations H1 2022

Sales rose by €6,905 million compared with the first half of 2021 to €46,058 million. This was mainly attributable to significant price increases, especially in the Materials and Chemicals segments. Currency effects, primarily relating to the U.S. dollar, increased sales in all segments. Positive portfolio effects in the Surface Technologies segment following the acquisition of a majority shareholding in BASF Shanshan Battery Materials Co., Ltd. more than compensated for negative portfolio effects in the Industrial Solutions segment, mainly from the sale of the global pigments business. Sales development was dampened by slightly lower volumes overall. The decline in volumes in the Surface Technologies and Chemicals segments was only partially offset by volume growth in the other segments.

Factors influencing BASF Group sales in H1 2022

Compared with the prior-year period, the BASF Group’s income from operations (EBIT) before special items¹ rose by €481 million to €5,157 million. This was mainly driven by the considerable improvement in earnings in the Agricultural Solutions segment. The Nutrition & Care and Industrial Solutions segments also achieved considerably higher EBIT before special items, while the Chemicals segment posted slight growth. By contrast, EBIT before special items was considerably lower in the Surface Technologies segment. Earnings declined slightly in the Materials segment. EBIT before special items in Other improved considerably compared with the first half of 2021.

Special items in EBIT amounted to –€22 million in the first half of 2022, after –€49 million in the prior-year period. Gains on divestitures totaled €168 million, primarily from the sale of 25.2% of the Hollandse Kust Zuid offshore wind farm. Restructuring expenses of €162 million had an offsetting effect. These mainly related to the discontinuation of our business activities in Russia and Belarus,² the carve-out of the newly established BASF Automotive Catalysts & Recycling unit within the Catalysts division, and restructuring measures. Other charges and income and integration costs resulted in further expenses totaling €28 million.

Income from operations (EBIT)³ rose by €508 million compared with the first half of 2021 to €5,135 million. This figure includes income from integral companies accounted for using the equity method, which declined by €88 million to €233 million. The contribution from BASF-YPC Company Ltd., Nanjing, China, amounted to €153 million, compared with €192 million in the prior-year period.

Income from operations before depreciation, amortization and special items (EBITDA before special items)⁴ was €7,036 million compared with €6,398 million in the first half of 2021. EBITDA⁴ rose from €6,375 million to €7,105 million in the same period.

Net income from shareholdings declined by €388 million compared with the prior-year period to –€364 million. This was mainly due to impairment charges of €1.1 billion recognized by Wintershall Dea in the first quarter of 2022. These impairments were triggered by the war in Ukraine and the related political consequences and concerned, in addition to the Nord Stream 2 loan, assets in Russia and in the gas transportation business. Excluding these impairments, the after-tax earnings of Wintershall Dea attributable to BASF improved by €716 million compared with the first half of 2021 to €755 million.

The financial result amounted to –€235 million, after –€215 million in the prior-year period. At –€177 million, the interest result declined by €20 million, mainly due to higher interest expenses for financial indebtedness.

Income before taxes rose by €100 million to €4,536 million. The tax rate increased to 22.8% (H1 2021: 18.8%), mainly as a result of the decline in income from companies accounted for using the equity method, in particular from the impairment charges recognized at Wintershall Dea. This reduced the pre-tax result but did not have any effect on the tax expense.

Overall, this led to income after taxes of €3,500 million in the first half of 2022 (H1 2021: €3,604 million). Of this amount, €3,311 million was attributable to shareholders of BASF SE. Noncontrolling interests amounted to €189 million compared with €232 million in the prior-year period, primarily due to a lower earnings contribution from BASF TotalEnergies Petrochemicals LLC, Port Arthur, Texas. Positive earnings contributions from the BASF Shanshan companies, which were not yet included in the first half of 2021, had an offsetting effect.

Earnings per share were €3.65 as of June 30, 2022 (H1 2021: €3.67). Earnings per share adjusted⁵ for special items and amortization of intangible assets amounted to €5.07, after €4.03 in the first half of 2021.

Segment sales and EBIT before special items

Sales⁶ in the Chemicals segment rose considerably compared with the first half of 2021. This was mainly due to higher price levels caused by raw materials costs. The Petrochemicals division raised prices, especially for steam cracker products, styrene monomers and in the propylene and butadiene value chains. The Intermediates division increased prices in the butanediol and derivatives business, the amines business and the acids and polyalcohols business in particular. Positive currency effects supported the sales development. Sales growth was dampened by slightly lower volumes, primarily as a consequence of the coronavirus lockdowns in China in the second quarter of 2022. The segment posted a slight increase in EBIT before special items.⁶ This was due to strong earnings growth in the Intermediates division resulting from higher margins and an improved contribution from shareholdings accounted for using the equity method. By contrast, EBIT before special items declined slightly in the Petrochemicals division. This was largely attributable to higher fixed costs, mainly from currency effects and increased energy prices. Earnings were also dampened by a lower contribution from shareholdings accounted for using the equity method. Continued high margins only partially compensated for this.

The Materials segment recorded strong year-on-year sales growth. Both divisions raised prices in all business units, passing on higher raw materials prices. Positive currency effects contributed to the sales increase. Higher volumes overall had a slightly positive impact on sales. Volume growth in the Monomers division more than compensated for lower volumes in the Performance Materials division. The segment’s EBIT before special items declined slightly. The Monomers division achieved slightly higher earnings, largely from price-driven margin growth. By contrast, EBIT before special items in the Performance Materials division was considerably lower, mainly as a result of higher fixed costs.

Sales in the Industrial Solutions segment were considerably higher year on year. Sales growth was mainly driven by significantly higher prices across all business areas. Currency effects and higher volumes also increased sales in both divisions. By contrast, portfolio effects weighed heavily on sales performance, especially in the Dispersions & Resins division following the disposal of the global pigments business. Overall, EBIT before special items rose considerably. This was primarily attributable to higher margins, largely from price increases, and the development of volumes in both divisions.

The Surface Technologies segment recorded a considerable decline in sales. This was mainly due to lower volumes and prices in precious metal trading and in the mobile emissions catalysts business in the Catalysts division as a result of lower demand from the automotive industry. Higher volumes and prices in the Coatings division were unable to compensate for this. Positive currency effects had an offsetting impact. Portfolio effects in the Catalysts division following the acquisition of a majority shareholding in BASF Shanshan Battery Materials also had a positive impact on sales. EBIT before special items declined considerably in both divisions. Earnings decreased in the Coatings division, primarily as a result of higher fixed costs after these had been reduced by a one-off effect in the prior-year period. The decrease in earnings in the Catalysts division was mainly due to a significantly lower contribution from precious metal trading.

Sales in the Nutrition & Care segment rose considerably compared with the first half of 2021. The sales development was primarily the result of strong price increases across all business areas. Sales growth was supported by positive currency effects and higher volumes. Portfolio effects from the sale of the production site in Kankakee, Illinois, reduced sales in both divisions. EBIT before special items was up from the prior-year period in both divisions. The main driver was the sales-driven increase in margins, which more than compensated for the rise in fixed costs.

Sales rose considerably in the Agricultural Solutions segment. Sales growth was mainly attributable to higher prices and volumes. Currency effects also had a positive impact on sales. EBIT before special items was also well above the prior-year period as a result of higher sales. This more than compensated for higher fixed costs.

Sales in Other were considerably above the level of the first half of 2021. This primarily reflected sales growth in commodity trading. EBIT before special items improved considerably. This was mainly due to lower accruals for variable compensation components compared with the prior-year period.

H1 sales

Million €, relative change

H1 EBIT before special items

Million €, absolute change