Information on Q2 2022: BASF Group

The BASF Group increased sales by €3,221 million compared with the prior-year quarter to €22,974 million. This was primarily due to significant price increases in almost all segments. In all segments, the sales performance was supported by positive currency effects, mainly relating to the U.S. dollar. In addition, portfolio effects in the Surface Technologies segment in connection with the acquisition of a majority shareholding in BASF Shanshan Battery Materials contributed to sales growth. This more than compensated for negative portfolio effects in the Industrial Solutions segment, mainly from the sale of the global pigments business. Slightly lower sales volumes overall had an offsetting effect. Volume growth in the Agricultural Solutions and Nutrition & Care segments was unable to fully offset the decline in volumes in the other segments, especially in the Surface Technologies segment.

Factors influencing BASF Group sales in Q2 2022

At €2,339 million, income from operations (EBIT) before special items¹ was €16 million below the figure for the second quarter of 2021. The slight decline in earnings was mainly attributable to considerably lower EBIT before special items in the Chemicals and Materials segments. EBIT before special items also declined considerably in the Surface Technologies segment. By contrast, the Agricultural Solutions and Nutrition & Care segments posted considerably higher earnings, while the Industrial Solutions segment recorded slight earnings growth. EBIT before special items attributable to Other improved considerably.

Overall, special items in EBIT led to income of €11 million in the second quarter of 2022, after an expense of €39 million in the prior-year quarter. Gains on divestitures totaled €173 million, primarily from the sale of 25.2% of the Hollandse Kust Zuid offshore wind farm. This was partially offset by restructuring expenses of €133 million, mainly in connection with the discontinuation of our business activities in Russia and Belarus² as well as the carve-out of the newly established BASF Automotive Catalysts & Recycling unit within the Catalysts division. Expenses totaling €28 million arose from other charges and income as well as integration costs.

EBIT³ rose by €34 million to €2,350 million. This includes income from integral companies accounted for using the equity method, which declined by €82 million to €101 million. The contribution from BASF-YPC Company Ltd. amounted to €72 million, compared with €103 million in the prior-year period.

Q2 sales

Million €, relative change

Q2 EBITDA before special items

Million €, absolute change

Income from operations before depreciation, amortization and special items (EBITDA before special items)⁴ rose by €76 million to €3,293 million and EBITDA⁴ increased by €197 million to €3,396 million in the second quarter of 2022.

Net income from shareholdings improved by €477 million compared with the prior-year period to €433 million. This was mainly attributable to the higher earnings contribution from Wintershall Dea (€446 million; Q2 2021: –€12 million) due to higher oil and gas prices.

The financial result amounted to –€125 million after –€83 million in the prior-year period, primarily as a result of higher interest expenses for financial indebtedness. Additions to valuation allowances on finance-related receivables and cash equivalents in particular reduced the other financial result by €16 million compared with the second quarter of 2021.

Overall, income before income taxes rose by €469 million to €2,658 million. The tax rate was 18.0%, as in the prior-year quarter.

Income after taxes increased by €385 million to €2,179 million. Noncontrolling interests amounted to €90 million, down €50 million from the prior-year figure. One reason was a lower earnings contribution from BASF TotalEnergies Petrochemicals LLC. This was partially offset by positive earnings from the BASF Shanshan companies, which were not yet included in the prior-year quarter. As a result, net income amounted to €2,090 million (Q2 2021: €1,654 million).

Earnings per share rose to €2.31 in the second quarter of 2022, after €1.80 in the prior-year period. Earnings per share adjusted⁴ for special items and amortization of intangible assets amounted to €2.37 (Q2 2021: €2.03).

Cash flows from operating activities amounted to €1,228 million in the second quarter of 2022, a decrease of €1,309 million compared with the prior-year quarter. This was mainly attributable to bonus payments, which rose by almost €1 billion. In addition, a stronger buildup of inventories led to cash tied up of €847 million compared with €562 million in the second quarter of 2021. Overall, cash tied up in net working capital amounted to €1,661 million. In the prior-year quarter, the changes in net working capital almost offset each other. The €436 million improvement in net income to €2,090 million was almost offset by the €377 million increase in reclassifications of equity-accounted income, which is reported under miscellaneous items.

Cash flows from investing activities amounted to –€639 million after a cash inflow of €323 million in the prior-year quarter, which included the proceeds from the divestiture of the global pigments business. At €369 million, net payments received for divestitures and acquisitions were €756 million below the figure for the prior-year quarter and were therefore the main driver for the decline in cash flows from investing activities. In addition, payments made for property, plant and equipment and intangible assets amounted to €892 million in the second quarter of 2022, €125 million higher year on year.

Cash flows from financing activities resulted in a cash outflow of €1,386 million in the second quarter of 2022. This was €2,758 million lower than in the second quarter of 2021. The improvement was attributable to cash inflows of €2,061 million from the change in financial and similar liabilities, after this had led to cash outflows of €999 million in the prior-year quarter. By contrast, the dividend payment exceeded that of the previous year by €46 million. The figure for the second quarter of 2022 also includes payments of €256 million made for share buybacks.

Free cash flow⁵ amounted to €336 million in the second quarter of 2022, after €1,770 million in the second quarter of the prior year.