Results of Operations

Continued high inflation and higher interest rates as well as increasing geopolitical tensions led to economic uncertainty and dampened demand in many sectors. As a result, the global economy as well as global industrial and chemical production grew in part at a considerably more moderate pace than in the previous year. In this market environment, BASF’s business also largely fell short of expectations: Sales, EBIT before special items and ROCE declined considerably overall compared with the 2022 business year. By contrast, the Agricultural Solutions and Surface Technologies segments increased their EBIT before special items considerably and slightly, respectively, in this challenging market environment.

• More information on the business reviews by segment
• More information on the development of CO₂ emissions

Sales amounted to €68,902 million in the 2023 business year – a decrease of €18,424 million compared with the previous year. This sales development was mainly driven by considerably lower prices and volumes. Lower raw materials prices in particular led to lower prices in almost all segments. Considerable price increases in the Agricultural Solutions segment were unable to compensate for this. Sales volumes fell significantly in all segments as a result of weak demand from many of our customer industries. Currency effects, mainly relating to the Chinese renminbi, also weighed down sales performance. Portfolio effects, mainly in the Industrial Solutions segment and especially due to the sale of the kaolin minerals business as of September 30, 2022, also had a negative impact on sales.

Sales

Million €

Income from operations (EBIT) before special items declined by €3,072 million compared with the prior-year figure, to €3,806 million, primarily due to a considerably lower earnings contribution from Chemicals and Materials. EBIT before special items decreased in the Chemicals segment, primarily due to lower margins and volumes, as well as lower contributions from shareholdings accounted for using the equity method. Earnings were lower in the Materials segment, largely as a result of lower polyamide and ammonia margins. The Nutrition & Care and Industrial Solutions segments’ EBIT before special items was considerably lower than the prior-year figure, mainly as a result of lower volumes and margins. Conversely, the Agricultural Solutions segment strongly increased EBIT before special items, primarily as a result of price increases and a one-time payment that was received. The slight earnings growth in Surface Technologies was attributable to the considerably higher EBIT before special items in the Coatings division due to price and volume increases, which more than compensated for the significant decline in earnings of the Catalysts division. EBIT before special items attributable to Other improved considerably, mainly as a result of higher income from other businesses and lower corporate research costs.

EBIT before special items

Million €

Special items¹ in EBIT amounted to -€1,566 million in 2023 compared with -€330 million in the previous year. Special expenses resulted in particular from other charges due to impairments totaling around €1.1 billion. These comprised impairments on property, plant and equipment in the Surface Technologies segment, especially in the battery materials business, on plants in the Agricultural Solutions segment, and on tangible and intangible assets in the Materials segment. Furthermore, special charges totaling €396 million (previous year: €249 million) resulted from restructuring measures, in particular in connection with the cost savings program focusing on Europe, the adjustments to production structures at the Verbund site in Ludwigshafen, Germany, and the carve-out of the BASF Environmental Catalyst and Metal Solutions unit within the Catalysts division. Special charges from divestitures amounted to €59 million after a special income of €174 million in 2022. Integration costs of €17 million resulted mainly from the integration of the BASF Shanshan companies acquired in 2021.

At €2,240 million, EBIT for the BASF Group in 2023 was considerably lower than the prior-year figure. This figure includes income from integral companies accounted for using the equity method, which declined by €194 million to €192 million. This decline was mainly attributable to the €175 million lower earnings contribution by BASF-YPC Company Ltd., Nanjing, China.

EBIT

Million €

We use the indicator return on capital employed (ROCE) to measure our rate of return. ROCE fell to 4.5% (2022: 10.0%) due to a sharp decline in earnings.²

• More information on the calculation of ROCE
• The calculation of EBIT as part of our statement of income is shown in the Consolidated Financial Statements