Financial Position

Equity rose by €7,019 million compared with December 31, 2021, to €49,100 million. This was mainly due to translation adjustments and actuarial gains. Retained earnings decreased by €160 million, mainly due to share buybacks for around €1.3 billion. Income after taxes had an offsetting effect and was €1,148 million higher than the dividends paid in the second quarter of 2022, which amounted to €3,072 million. The equity ratio increased from 48.2% to 50.6%.

Noncurrent liabilities declined by around €2 billion to €23,216 million, primarily due to significantly lower pension provisions resulting from higher interest rates. The €1,943 million increase in noncurrent financial indebtedness largely reflected the issue of new eurobonds with a total volume of €3.5 billion as well as currency effects. This was partially offset by the reclassification of two bonds with an aggregate carrying amount of around €1.7 billion from noncurrent to current financial indebtedness.

Current liabilities rose by €4,633 million compared with December 31, 2021, to €24,714 million as of September 30, 2022, mainly due to the €3,201 million increase in current financial indebtedness. This was primarily attributable to the placement of commercial paper amounting to around €1 billion by BASF SE, the above-mentioned reclassification of two bonds from noncurrent to current financial indebtedness, and current liabilities to banks, which rose by around €1 billion. The scheduled repayment of a USD bond and a GBP bond with an aggregate carrying amount of €739 million had an offsetting effect. Current provisions rose by approximately €1 billion, largely owing to higher provisions for rebates. Trade accounts payable increased by €769 million. This was partially offset by the €564 million decrease in other liabilities, mainly due to lower advance payments received.

Net debt¹ rose by €4,591 million compared with December 31, 2021, to €18,942 million.

Cash flows from operating activities amounted to €2,301 million in the third quarter of 2022, €405 million better than in the prior-year quarter. The improvement was mainly due to a €714 million increase in cash released from net working capital, which more than offset the €344 million decline in net income. Changes in net working capital resulted from a €2,362 million reduction in receivables and a simultaneous €858 million reduction in operating liabilities. This released cash of €1,504 million, €441 million above the figure for the third quarter of 2021. In addition, cash tied up in inventories declined by €273 million compared with the prior-year quarter.

Cash flows from investing activities amounted to –€680 million, an improvement of €1,138 million compared with the third quarter of 2021. In the previous year, this included payment of the net purchase price for the shareholding in BASF Shanshan Battery Materials (€600 million), while the figure for the third quarter of 2022 included the proceeds from the sale of the kaolin minerals business (€222 million). At €1,006 million, payments made for property, plant and equipment and intangible assets were €187 million above the figure for the prior-year quarter.

Cash flows from financing activities amounted to –€2,188 million, after –€56 million in the prior-year quarter. The decrease was mainly due to the €1,938 million reduction in financial indebtedness and similar liabilities as well as payments of €233 million made under the share buyback program in the third quarter of 2022.

Free cash flow² amounted to €1,295 million in the third quarter of 2022, €218 million higher than in the prior-year quarter.

BASF enjoys good credit ratings, especially compared with com­petitors in the chemical industry. Fitch’s rating of A/F1/outlook stable from June 11, 2021, remained unchanged. Standard & Poor’s confirmed BASF’s long and short-term rating of A/A-1 on August 1, 2022, and revised its outlook from stable to negative. Moody’s most recently confirmed its rating of A3/P-2/outlook stable on October 13, 2022.