Quarterly Report • May 9, 2014
Quarterly Report
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1st Quarter 2014
| 1st Quarter | |||||
|---|---|---|---|---|---|
| 2014 | 2013 | Change in % | |||
| Sales | million € | 19,512 | 19,738 | (1.1) | |
| Income from operations before depreciation and amortization (EBITDA) | million € | 2,950 | 2,854 | 3.4 | |
| Income from operations (EBIT) before special items | million € | 2,140 | 2,214 | (3.3) | |
| Income from operations (EBIT) | million € | 2,249 | 2,169 | 3.7 | |
| Financial result | million € | (183) | (126) | (45.2) | |
| Income before taxes and minority interests | million € | 2,066 | 2,043 | 1.1 | |
| Net income | million € | 1,477 | 1,446 | 2.1 | |
| Earnings per share | € | 1.61 | 1.57 | 2.5 | |
| Adjusted earnings per share1 | € | 1.64 | 1.67 | (1.8) | |
| Cash provided by operating activities | million € | 1,704 | 2,041 | (16.5) | |
| Additions to long-term assets2 | million € | 909 | 1,566 | (42.0) | |
| Research expenses | million € | 442 | 429 | 3.0 | |
| Amortization and depreciation2 | million € | 701 | 685 | 2.3 | |
| Segment assets (as of March 31)3 | million € | 57,429 | 56,447 | 1.7 | |
| Personnel costs | million € | 2,324 | 2,279 | 2.0 | |
| Number of employees (as of March 31) | 112,305 | 111,687 | 0.6 | ||
1 For further information, see page 33
2 Intangible assets and property, plant and equipment (including acquisitions)
3 Intangible assets, property, plant and equipment, inventories and business-related receivables
| BASF Group Business Review | 1 |
|---|---|
| BASF on the Capital Market4 | 3 |
| Significant Events | 4 |
| Chemicals | 5 |
| Performance Products | 6 |
| Functional Materials & Solutions | 8 |
| Agricultural Solutions | 10 |
| Oil & Gas | 11 |
| Regional Results | 12 |
| Overview of Other Topics | 13 |
| Outlook | 14 |
| 15 |
|---|
| 16 |
| 17 |
| 18 |
| 19 |
| 20 |
| 21 |
| 33 |
4 This section is not part of the Interim Management's Report.
5 This section is not part of the Interim Financial Statements.
EBIT before special items (Change compared with 1st quarter 2013) Million €
–1% 2,140 (–74)
The cover photo shows process technicians Jana Price (left), Mario Caro (right) and engineer Natalee Gregory in the steam cracker at BASF Total Petrochemicals LLC in Port Arthur, Texas.
The Chemicals segment comprises our business with basic chemicals and intermediates. Its portfolio ranges from solvents, plasticizers and highvolume monomers to glues and electronic chemicals as well as raw materials for detergents, plastics, textile fibers, paints and coatings, plant protection and pharmaceuticals. In addition to supplying customers in the chemical industry and numerous other sectors, we also ensure that other BASF segments are supplied with chemicals for producing downstream products.
Our Performance Products lend stability, color or improved application properties to many everyday items. Our product portfolio includes vitamins and other food additives as well as ingredients for pharmaceuticals and for hygiene, household, cosmetic and personal care items. Other products from this segment improve processes in the paper industry, oil and gas production, mining and water treatment. They can also enhance the efficiency of fuels and lubricants, the effectiveness of adhesives and coatings, and the stability of plastics.
In the Functional Materials & Solutions segment, we bundle system solutions, services and innovative products for specific sectors and customers, in particular for the automotive, electrical, chemical and construction industries as well as for household applications and for sports and leisure. Our portfolio comprises catalysts, battery materials, engineering plastics, polyurethane systems, automotive and industrial coatings and concrete admixtures as well as construction systems such as tile adhesives and decorative paints.
The Agricultural Solutions segment provides innovative solutions in chemical and biological crop protection, as well as seed treatment and solutions to manage water, nutrients and plant stress. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, better nutrition, and use as renewable raw materials.
Research expenses, sales, earnings and all other data of BASF Plant Science are not included in the Agricultural Solutions segment; these are reported in Other.
We focus our exploration and production on oil and gas-rich regions in Europe, North Africa, South America, Russia and the Middle East. Together with our Russian partner Gazprom, we are active in the transport, storage and trading of natural gas in Europe.
Innovative BASF materials provide safe barriers against mineral oil residues in food packaging
Shelves filled with colorful items as far as the eye can see: row upon row of cereal, rice and noodle boxes. This sturdy packaging is essential for the food production sector, as it is lightweight and saves space when stacked. Yet recycled cardboard can contain mineral oil residues. BASF's coating solutions protect food from these substances.
Cardboard food packaging is commonly produced from recycled waste paper, in which residues of substances like newspaper printing inks can be found. The problem: These often contain mineral oils not approved for contact with food. The hydrocarbon compounds in the mineral oils can travel from the cardboard and accumulate in the foodstuffs, where they can no longer be removed or made safe through washing or boiling.
BASF has developed various barrier solutions that are applied to the internal surface of the cardboard box. These whisper-thin coatings are made up of polymers. Even at thicknesses of only 10 to 15 micrometers – a hair, by comparison, is 120 micrometers thick – the barrier coatings protect food from these contaminants for up to three years.
The barrier coatings work like a close meshwork that only lets very small molecules through, such as water vapor. Mineral oil residues cannot pass. After it has fulfilled its task, the polymer film can then be easily removed for further recycling. The recycled paper is now ready to be reprocessed back into cardboard packaging that will protect the next batch of noodles, cereal and the like.
BASF's barrier coatings protect food from the mineral oil residues that can be contained in recycled paper packaging.
This scanning electron microscope image shows the whisper-thin coating on cardboard packaging.
We had a good start to the year in our chemicals business1 and in the Agricultural Solutions segment: We increased sales volumes, which more than compensated for negative currency effects. Sales declined considerably in the Oil & Gas segment, however. At €19.5 billion, BASF Group sales were down by 1% overall.
Income from operations before special items amounted to €2.1 billion, 3% below the level of the first quarter of 2013. While we were able to considerably improve earnings in the Performance Products and Functional Materials & Solutions segments, the contribution from the Oil & Gas segment fell considerably.
Sales volumes grew compared with the first quarter of 2013. We were able to boost volumes in the chemicals business and in the Agricultural Solutions segment, while they declined in the Oil & Gas segment. Sales prices were lower overall than in the same quarter of the previous year. Currency effects also had a negative impact on sales. Portfolio measures contributed 1% to sales.
| 1st Quarter | |
|---|---|
| Volumes | 4 |
| Prices | (3) |
| Portfolio | 1 |
| Currencies | (3) |
| (1) |
In the Chemicals segment, sales matched the level of the previous first quarter. Lower prices and negative currency effects were offset by increased volumes. Sales volumes grew, particularly as a result of stronger demand in the Intermediates division as well as higher volumes in the Petrochemicals division, especially in North America. Earnings decreased slightly, mainly due to margin pressure.
Sales in the Performance Products segment were at the level of the previous first quarter despite negative currency effects and slightly lower sales prices. This was attributable to higher sales volumes. Our strict fixed cost management contributed to a considerable rise in earnings.
First-quarter sales (million €, relative change)
| Chemicals | 2014 | 4,398 | 0% |
|---|---|---|---|
| 2013 | 4,396 | ||
| Performance Products |
2014 | 3,872 | 0% |
| 2013 | 3,880 | ||
| Functional Mate rials & Solutions |
2014 | 4,236 | 1% |
| 2013 | 4,181 | ||
| Agricultural | 2014 | 1,653 | 6% |
| Solutions | 2013 | 1,556 | |
| Oil & Gas | 2014 | 4,276 | (8%) |
| 2013 | 4,660 | ||
| Other | 2014 | 1,077 | 1% |
| 2013 | 1,065 | ||
In the Functional Materials & Solutions segment, we posted slightly higher sales on account of increased volumes, thanks primarily to strong demand from the automotive industry. Negative currency effects reduced sales growth. In the Construction Chemicals division, sales declined slightly as a result of portfolio effects, as well. Earnings considerably surpassed the level of the first quarter of 2013. All divisions contributed to this.
Sales grew considerably in the Agricultural Solutions segment. This was mainly because of the considerable sales increase in the Northern Hemisphere. We were able to more than compensate for negative currency effects by raising our volumes and prices. Earnings rose slightly thanks to these higher volumes and prices.
Sales in the Oil & Gas segment were considerably below the level of the previous first quarter. In the Natural Gas Trading business sector, sales volumes were significantly down year-on-year as a result of the mild winter in Europe. Despite lower prices for crude oil and missing volumes from offshore production in Libya, sales levels remained stable in the Exploration & Production business sector. This was largely due to additional volumes from Norway. Margin pressure and lower volumes in natural gas trading as well as the smaller contribution from Libya led to a considerable earnings decline in the segment.
Sales in Other rose slightly compared with the first quarter of 2013. This was mainly the result of higher volumes in raw materials trading. Income from operations before special items declined considerably, however. Currency losses and valuation effects for the long-term incentive program played a significant role here. Whereas provisions had been reversed in the first quarter of 2013, the positive development of the BASF share led to expenses for increasing provisions in the first quarter of 2014.
EBIT included a total of €109 million in special items in the first quarter of 2014. This was largely attributable to special income from the divestiture of our shares in non-BASF-operated oil and gas fields in the British North Sea. The previous first quarter had included special items in EBIT of minus €45 million. These were related to the integration of Becker Underwood and Pronova BioPharma in addition to various restructuring measures.
EBIT therefore grew year-on-year by €80 million to reach €2,249 million. EBITDA rose by €96 million to €2,950 million.
| Chemicals | 2014 | 601 | (49) | |
|---|---|---|---|---|
| 2013 | 650 | |||
| Performance | 2014 | 427 | 48 | |
| Products | 2013 | 379 | ||
| Functional Mate | 2014 | 311 | 72 | |
| rials & Solutions | 2013 | 239 | ||
| Agricultural | 2014 | 510 | 12 | |
| Solutions | 2013 | 498 | ||
| Oil & Gas | 2014 | 494 | (136) | |
| 2013 | 630 | |||
| 2014 | (203) | (21) | ||
| Other | 2013 | (182) |
The financial result decreased by €57 million to minus €183 million. This decline was attributable to the negative value of the line item other financial result, which amounted to minus €64 million (first quarter of 2013: €11 million). The market valuation of options for the disposal of our share in the Styrolution joint venture was mainly responsible for this. Income from shareholdings and the interest result both rose slightly, however.
Income before taxes and minority interests improved year-on-year by €23 million to €2,066 million. The tax rate rose to 25.4% (first quarter of 2013: 24.4%).
Net income grew by €31 million to €1,477 million.
Earnings per share were €1.61 in the first quarter of 2014, compared with €1.57 in the same period of 2013. Adjusted for special items and amortization of intangible assets, earnings per share declined to €1.64 (first quarter of 2013: €1.67).
Information on the calculation of adjusted earnings per share can be found on page 33
| 2014 | 2013 | |
|---|---|---|
| 1st quarter | 67 | 10 |
| 2nd quarter | (46) | |
| 3rd quarter | (21) | |
| 4th quarter | 259 | |
| Full year | 202 |
| 2014 | 2013 | |
|---|---|---|
| 1st quarter | 1.64 | 1.67 |
| 2nd quarter | 1.40 | |
| 3rd quarter | 1.28 | |
| 4th quarter | 1.02 | |
| Full year | 5.37 |
| 1st Quarter 2014 | Full Year 2013 | |
|---|---|---|
| Performance (with dividends reinvested) | ||
| BASF % |
4.1 | 12.9 |
| DAX 30 % |
0.0 | 25.5 |
| DJ EURO STOXX 50 % |
2.3 | 21.6 |
| DJ Chemicals % |
0.8 | 18.2 |
| MSCI World Chemicals % |
2.6 | 20.5 |
| Share prices and trading (XETRA) | ||
| Average € |
79.34 | 71.96 |
| High € |
83.81 | 78.97 |
| Low € |
75.86 | 64.79 |
| Close (end of period) € |
80.68 | 77.49 |
| Average daily trade million shares |
2.9 | 2.8 |
| Outstanding shares (end of period) million shares |
918.5 | 918.5 |
| Market capitalization (end of period) billion € |
74.1 | 71.2 |
At the end of the first quarter of 2014, BASF shares traded at €80.68, an increase of 4.1% compared with the closing price at the end of 2013. The BASF stock thus outperformed both the German stock index DAX 30 and the European benchmark index DJ EURO STOXX 50: During the same period, the former remained stable and the latter rose slightly, by 2.3%. In the first three months of the year, the global industry indexes DJ Chemicals and MSCI World Chemicals rose by 0.8% and 2.6%, respectively.
For up-to-date information on BASF shares, visit basf.com/share
The Board of Executive Directors and the Supervisory Board proposed to the Annual Shareholders' Meeting that a dividend of €2.70 per share be paid for the 2013 business year. We stand by our ambitious dividend policy and plan to pay out just under €2.5 billion to our shareholders. Based on the year-end share price for 2013, BASF shares therefore offer a high dividend yield of 3.48%. BASF is part of the DivDAX share index, which contains the 15 companies with the highest dividend yield in the DAX 30. We aim to increase our dividend each year, or at least maintain it at the previous year's level.
With "A+/A-1 outlook stable" from rating agency Standard & Poor's and "A1/P-1 outlook stable" from Moody's, BASF has good credit ratings, especially compared with its competitors in the chemical industry. We continue to have solid financing. Since the beginning of the year, we have reduced our net debt by €647 million to around €11.9 billion.
In the first quarter of 2014, we issued a total volume of €1.55 billion in bonds: A three-year €300 million variable-rate bond, a five-year €750 million bond with a coupon of 1.375%, and a ten-year €500 million bond with a coupon of 2.5%.
Dividend per share1 (€ per share)
1 Adjusted for two-for-one stock split conducted in 2008
In order to meet the fast-growing global demand for readily biodegradable chelating agents, we are building a world-scale plant for Trilon® M in Theodore, Alabama. Trilon® M improves the cleaning power of detergents and cleaners for household as well as industrial and institutional applications. The investment will amount to around \$90 million. The new production facility is expected to start up in the second half of 2015.
We are constructing another world-scale plant in Nanjing, China: This specialty amines plant will mainly produce dimethylaminopropylamine (DMAPA) and polyetheramines (PEA). DMAPA is primarily employed in the production of personal care products, such as shampoo. Sold under the brand name Baxxodur®, PEAs are used in, for example, composites for wind turbine rotor blades. With this new facility, scheduled to start operations at the end of 2015, we will further strengthen our global production network.
Furthermore, we are exploring a potential investment in a world-scale methane-to-propylene complex on the U.S. Gulf Coast. The production of propylene to supply our North American operations would allow us to take advantage of low gas prices due to U.S. shale gas production. Propylene is one of the most important basic chemicals in the petrochemical industry. Further details on the potential investment are currently under evaluation.
We have signed an agreement to sell our PolyAd Services business to Edgewater Capital Partners, L.P. The transaction is expected to close in the second quarter of 2014. Currently allocated to the plastic additives business unit, PolyAd Services offers specialty blends and solutions to the plastics compounding and converting industry. With the sale, our plastic additives business will focus even more on our core business areas: light stabilizers, antioxidants and customer-specific blends.
As part of our strategy to concentrate our oil and gas business on the upstream sector, we plan to sell our 15.79% share in the Eastern German company Verbundnetz Gas AG (VNG) to EWE Aktiengesellschaft. The transaction requires the approval of antitrust authorities. We furthermore concluded the transaction with the Hungarian MOL Group agreed upon in December 2013. Through the divestiture of shares in selected assets on the British continental shelf, MOL Group is acquiring 14 licenses in the North Sea. The purchase price agreed upon amounts to \$375 million.
We are taking a series of steps in our paper chemicals business to further strengthen the competitiveness of our Performance Products segment. In response to decreasing market demand, we are adjusting capacities in our latex manufacturing network in Europe. At the same time, we will adjust marketing, sales and administrative functions in our paper chemicals business to better reflect regional market dynamics. We are selling our global dispersions business with alkyl ketene dimer (AKD) to Kemira Oyj. The transaction is expected to close in the first half of 2014.
| 1st Quarter | |||||
|---|---|---|---|---|---|
| 2014 | 2013 | Change in % | |||
| Sales to third parties | 4,398 | 4,396 | 0 | ||
| Thereof Petrochemicals | 2,097 | 2,016 | 4 | ||
| Monomers | 1,590 | 1,680 | (5) | ||
| Intermediates | 711 | 700 | 2 | ||
| Income from operations before depreciation and amortization (EBITDA) | 782 | 841 | (7) | ||
| Income from operations (EBIT) before special items | 601 | 650 | (8) | ||
| Income from operations (EBIT) | 600 | 650 | (8) | ||
| Assets (as of March 31) | 11,237 | 10,646 | 6 | ||
| Research expenses | 44 | 42 | 5 | ||
| Additions to property, plant and equipment and intangible assets | 272 | 324 | (16) | ||
In the Chemicals segment, sales matched the level of the previous first quarter. Sales volumes rose, thanks in particular to increased demand in the Intermediates division as well as to higher volumes in the Petrochemicals division, especially in North America. Lower sales prices and negative currency effects countered this development (volumes 8%, prices – 6%, currencies –2%). Income from operations before special items declined slightly, primarily as a result of margin pressure.
Sales in the Petrochemicals division were slightly up compared with the first quarter of 2013. We significantly raised our sales volumes, thanks especially to higher volumes in North America. Detrimental to sales development were the lower sales prices in nearly all product lines as well as the weak U.S. dollar. Sustained high margins for steam cracker products, primarily in North America, were unable to compensate for lower margins in several product lines. Earnings therefore remained slightly below the level of the previous first quarter.
In the Monomers division, there was a slight drop in sales compared with the strong first quarter of 2013 due to sharply declining prices – resulting in part from lower raw material costs – and negative currency effects. These were only partly offset by higher sales volumes. Lower margins, particularly for isocyanates in Asia and for ammonia in Europe, led to a considerable decline in earnings. Earnings were additionally dampened by expenses for the new TDI complex in Ludwigshafen as well as for the MDI plant in Chongqing, China.
Despite negative currency effects, we slightly increased sales in the Intermediates division in the first quarter of 2014. This was largely the result of increased sales volumes for amines and polyalcohols. Earnings were considerably above the level of the previous first quarter. Besides higher sales volumes, improved margins also contributed to this development.
Sales Change compared with 1st quarter 2013
EBIT before special items (Change compared with 1st quarter 2013) Million €
0% 601 (–49)
| 1st Quarter | |||||
|---|---|---|---|---|---|
| 2014 | 2013 | Change in % | |||
| Sales to third parties Thereof Dispersions & Pigments Care Chemicals Nutrition & Health Paper Chemicals |
3,880 | 0 | |||
| 951 | 935 | 2 | |||
| 1,264 | 1,275 | (1) | |||
| 495 | 493 | 0 | |||
| 344 | 362 | (5) | |||
| Performance Chemicals | 818 | 815 | 0 | ||
| Income from operations before depreciation and amortization (EBITDA) | 611 | 568 | 8 | ||
| Income from operations (EBIT) before special items | 427 | 379 | 13 | ||
| Income from operations (EBIT) | 414 | 367 | 13 | ||
| Assets (as of March 31) | 13,975 | 14,537 | (4) | ||
| Research expenses | 85 | 92 | (8) | ||
| Additions to property, plant and equipment and intangible assets | 159 | 837 | (81) | ||
Sales in the Performance Products segment matched the level of the previous first quarter. Higher sales volumes were able to compensate for negative currency effects and slightly reduced prices (volumes 5%, prices –1%, currencies –4%). We considerably increased income from operations before special items, supported by our strict fixed cost management.
Sales rose slightly in the Dispersions & Pigments division because of strong volumes growth. Besides marginally lower prices, sales growth was mainly dampened by negative currency effects. We were able to raise sales volumes in all business areas. Demand continued to recover in Europe, especially from the construction and coatings industries. In the United States, however, extreme weather conditions reduced demand from the construction sector. Earnings improved slightly as a result of higher volumes.
In the Care Chemicals division, sales decreased slightly, predominantly on account of currency effects. We were able to raise our sales volumes, especially in ingredients for personal care products. Volumes declined in the hygiene business, however; in the previous first quarter, we had particularly benefited from temporarily low capacities on the market. We were able to considerably increase our earnings, thanks especially to the higher volumes.
Sales Change compared with 1st quarter 2013
EBIT before special items (Change compared with 1st quarter 2013) Million €
0% 427 (+48)
Sales in the Nutrition & Health division matched the level of the first quarter of 2013. While we were able to raise sales volumes in the human nutrition, pharmaceutical and aroma chemicals businesses, volumes declined in the animal nutrition business. We observed ongoing pressure on vitamin prices as a result of intense competition. Negative currency effects dampened sales in all business areas. The inclusion of Pronova BioPharma, acquired in the previous first quarter, had a positive impact on sales and earnings. Earnings grew considerably overall.
The Paper Chemicals division saw a slight drop in sales, mostly as a result of negative currency effects and lower prices affected by raw material costs. Despite the ongoing decline in demand for chemicals for graphic paper production, volumes overall were at the previous first-quarter level. This was attributable to higher sales volumes of kaolin minerals. An unfavorable product mix led to a considerable earnings decline.
Sales in the Performance Chemicals segment matched the level of the previous first quarter. We were able to raise sales volumes in all business areas. Negative currency effects were the main factors counteracting this development, alongside slightly reduced prices. We significantly increased volumes, especially in plastic additives, fuel and lubricant additives, and water treatment, oilfield and mining chemicals. Thanks to the higher volumes, our strict fixed cost management and slightly reduced raw material costs, earnings considerably surpassed the level of the first quarter of 2013.
| 1st Quarter | |||||
|---|---|---|---|---|---|
| 2014 | 2013 | Change in % | |||
| Sales to third parties | 4,236 | 4,181 | 1 | ||
| Thereof Catalysts | 1,458 | 1,453 | 0 | ||
| Construction Chemicals | 443 | 458 | (3) | ||
| Coatings | 721 | 698 | 3 | ||
| Performance Materials | 1,614 | 1,572 | 3 | ||
| Income from operations before depreciation and amortization (EBITDA) | 424 | 352 | 20 | ||
| Income from operations (EBIT) before special items | 311 | 239 | 30 | ||
| Income from operations (EBIT) | 311 | 240 | 30 | ||
| Assets (as of March 31) | 12,405 | 12,639 | (2) | ||
| Research expenses | 87 | 87 | – | ||
| Additions to property, plant and equipment and intangible assets | 110 | 118 | (7) | ||
In the Functional Materials & Solutions segment, sales slightly exceeded the level of the previous first quarter (volumes 7%, prices –1%, currencies –5%). We were able to increase volumes in all divisions, thanks primarily to strong demand from the automotive industry. Currency effects in particular reduced sales growth. In the Construction Chemicals division, sales development was additionally slowed by portfolio measures. We were able to considerably improve income from operations before special items. All divisions contributed to this.
Sales in the Catalysts division matched the level of the first quarter of 2013. Negative currency effects and lower prices were offset by higher sales volumes. While demand rose for refinery and mobile emissions catalysts, our business development with chemical catalysts was weaker than in the first quarter of 2013. Sales in precious metal trading rose to €626 million (first quarter of 2013: €622 million) as a result of increased volumes. Earnings improved considerably, boosted by the increase in sales volumes as well as by higher margins for refinery and mobile emissions catalysts.
In the Construction Chemicals division, sales decreased slightly year-on-year due to negative currency effects and portfolio measures. We increased sales volumes and prices. In Europe, higher demand was able to almost fully offset the sales decline from divestitures. In North America and Asia, sales were particularly impacted by negative currency effects. The reduction in fixed costs resulting from our efficiency programs led to considerable earnings growth.
Sales Change compared with 1st quarter 2013
EBIT before special items (Change compared with 1st quarter 2013) Million €
1% 311 (+72)
Sales in the Coatings division were slightly up compared with the first quarter of 2013, boosted by volumes and prices. The sales increase was weakened by negative currency effects. We raised our volumes for automotive OEM coatings in all regions; Asia and Europe posted the strongest growth. We were able to increase our sales volumes in the automotive refinish coatings business area, especially in Asia, and implement higher prices; yet sales declined slightly on account of negative currency effects. In the decorative paints business, negative currency effects in Brazil led to a slight drop in sales in spite of higher volumes. Earnings grew considerably overall due to the higher sales volumes and lower fixed costs.
We slightly increased sales in the Performance Materials division despite negative currency effects. This was owing to higher sales volumes, particularly in the engineering plastics, Cellasto® and TPU businesses, as well as of products for the European construction industry. Prices remained stable overall. Fixed costs were higher than in the previous first quarter as a result of the startup of new production facilities for Ultrason® and Neopor®. Nevertheless, earnings grew considerably thanks to the higher level of sales volumes.
Segment data Agricultural Solutions (million €)
| 1st Quarter | |||||
|---|---|---|---|---|---|
| 2014 | 2013 | Change in % | |||
| Sales to third parties | 1,653 | 1,556 | 6 | ||
| Income from operations before depreciation and amortization (EBITDA) | 552 | 532 | 4 | ||
| Income from operations (EBIT) before special items | 510 | 498 | 2 | ||
| Income from operations (EBIT) | 510 | 492 | 4 | ||
| Assets (as of March 31) | 7,841 | 7,651 | 2 | ||
| Research expenses | 112 | 100 | 12 | ||
| Additions to property, plant and equipment and intangible assets | 63 | 59 | 7 | ||
We had a successful start to 2014 in the Agricultural Solutions segment. Sales grew considerably, especially in the Northern Hemisphere. We raised volumes and prices, especially in fungicides and herbicides. Negative currency effects put a strain on sales growth (volumes 9%, prices 3%, currencies –6%).
In Europe, sales were considerably higher than in the same quarter of the previous year. The mild, moist weather conditions in the winter months led to a sharp increase in demand, particularly for cereal fungicides. Our business was very successful, especially in Germany and broad areas of Eastern Europe. We were able to more than compensate for negative currency effects with price increases.
Despite negative currency effects, sales in North America grew slightly through higher sales volumes and prices. Our innovative herbicides and fungicides were primarily responsible for this sales increase.
Sales grew slightly in Asia despite highly negative currency effects. We observed increased demand in China, Japan and India in particular. Our business with fungicides was especially positive.
In South America, sales were considerably below the level of the previous first quarter mostly on account of currency effects. Sales declined in Brazil, mainly due to unfavorable weather conditions.
We slightly improved income from operations before special items thanks to higher volumes and prices, despite negative currency effects and increased spending on research and development.
Sales Change compared with 1st quarter 2013
EBIT before special items (Change compared with 1st quarter 2013) Million €
| 1st Quarter | |||
|---|---|---|---|
| 2014 | 2013 | Change in % | |
| Sales to third parties | 4,276 | 4,660 | (8) |
| Thereof Exploration & Production | 792 | 789 | 0 |
| Natural Gas Trading | 3,484 | 3,871 | (10) |
| Income from operations before depreciation and amortization (EBITDA) | 763 | 734 | 4 |
| Thereof Exploration & Production | 687 | 529 | 30 |
| Natural Gas Trading | 76 | 205 | (63) |
| Income from operations (EBIT) before special items | 494 | 630 | (22) |
| Thereof Exploration & Production | 429 | 468 | (8) |
| Natural Gas Trading | 65 | 162 | (60) |
| Income from operations (EBIT) | 625 | 630 | (1) |
| Thereof Exploration & Production | 560 | 468 | 20 |
| Natural Gas Trading | 65 | 162 | (60) |
| Assets (as of March 31) | 11,971 | 10,974 | 9 |
| Thereof Exploration & Production | 7,447 | 5,707 | 30 |
| Natural Gas Trading | 4,524 | 5,267 | (14) |
| Exploration expenses | 24 | 28 | (14) |
| Additions to property, plant and equipment and intangible assets | 269 | 195 | 38 |
| Net income | 442 | 397 | 11 |
In the Oil & Gas segment, sales were considerably below the level of the previous first quarter (volumes –7%, prices/currencies –4%, portfolio 3%). This was attributable to decreased sales in the Natural Gas Trading business sector. Income from operations before special items decreased considerably as a result of a decline in Natural Gas Trading and lower earnings in Libya. Net income, however, rose considerably. This increase was attributable to €132 million in special income from the divestiture of our shares in non-BASF-operated fields in the British North Sea.
Sales matched the level of the first quarter of 2013 in the Exploration & Production business sector, despite lower prices for crude oil. Unlike in the same period of the previous year, no offshore lifting took place in Libya in the first quarter of 2014. Additional volumes from Norway were mostly able to offset this. The average price for Brent crude oil was \$108 per barrel, compared with \$113 per barrel (–4%) in the first quarter of 2013. The weaker U.S. dollar led to a 7% decrease in the price of oil to €79 per barrel in euro terms. Earnings dropped slightly. The contribution from Libya fell as a result of the lack of offshore lifting and due to the continued suspension of onshore production. The additional activities in Norway were only partly able to offset this.
Sales decreased considerably in the Natural Gas Trading business sector. Sales volumes for gas were significantly below the level of the first quarter of 2013. This was due to aboveaverage high temperatures in Europe in the winter months, which increased pressure on trading margins. Earnings fell considerably as a result.
Sales Change compared with 1st quarter 2013
EBIT before special items (Change compared with 1st quarter 2013) Million €
–8% 494 (–136)
| Sales Location of company |
Sales Location of customer |
EBIT before special items |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
|
| 1st Quarter | |||||||||
| Europe | 11,901 | 12,238 | (3) | 11,427 | 11,656 | (2) | 1,458 | 1,477 | (1) |
| Thereof Germany | 8,919 | 8,928 | 0 | 3,874 | 4,238 | (9) | 664 | 763 | (13) |
| North America | 3,900 | 3,721 | 5 | 3,840 | 3,650 | 5 | 491 | 454 | 8 |
| Asia Pacific | 2,848 | 2,824 | 1 | 3,037 | 3,019 | 1 | 174 | 245 | (29) |
| South America, Africa, Middle East | 863 | 955 | (10) | 1,208 | 1,413 | (15) | 17 | 38 | (55) |
| 19,512 | 19,738 | (1) | 19,512 | 19,738 | (1) | 2,140 | 2,214 | (3) |
Sales at companies located in Europe decreased year-on-year by 3%. The considerably lower level of sales in the Oil & Gas segment was responsible for this. In the Natural Gas Trading business sector, above-average temperatures in the winter months led to a mostly volumes and price-related decline in sales. On the other hand, weather conditions were favorable for our business with crop protection products; sales rose considerably in the Agricultural Solutions segment. Income from operations before special items fell by €19 million to €1,458 million due to the considerably lower contribution from the Oil & Gas segment.
In North America, sales grew as a result of significantly higher volumes, rising by 9% in U.S. dollars and by 5% in euro terms. We posted an especially sharp increase in sales volumes in the Petrochemicals and Catalysts divisions. Besides currency effects, lower prices also reduced sales growth in the region. At €491 million, earnings surpassed the level of the first quarter of 2013 by €37 million thanks primarily to higher contributions from the Petrochemicals division and the Agricultural Solutions segment.
Sales in the Asia Pacific region rose by 7% in local-currency terms and by 1% in euro terms. We raised sales volumes in all segments. Negative currency effects and declining prices weakened sales growth. At €174 million, earnings were €71 million below the same quarter of 2013. This was largely on account of a considerably smaller contribution from the Chemicals segment as well as currency losses reported in Other. By contrast, the Functional Materials & Solutions segment was able to considerably improve earnings.
Sales in the South America, Africa, Middle East region grew by 10% in local-currency terms but declined by 10% in euro terms. Higher prices and improved sales volumes were only able to partly offset highly negative currency effects. Sales decreased considerably in the Agricultural Solutions segment. Here, negative currency effects as well as declining volumes and sales prices put a strain on sales development. Despite a considerably higher contribution from the Oil & Gas segment in Argentina, earnings for the region amounted to €17 million, down by €21 million compared with the level of the previous first quarter. This was due to the currency losses reported in Other.
With Zetag® ULTRA, we have introduced a new range of cationic powder flocculants to the global market. Flocculants serve to separate solids and liquids in industrial and municipal wastewater treatment. Compared with conventional flocculants, Zetag® ULTRA's higher-performing bridging capabilities enable increased dewatering, allowing wastewater treatment facilities to operate more effectively and efficiently.
We have also launched new Joncryl® emulsions for waterbased inks and overprint varnishes, expanding our portfolio by two water-based styrene acrylic emulsions: Joncryl® 8053 and Joncryl® 633-E. Their high efficiency allows inks and overprint varnishes to be produced at lower cost with the same high quality and performance.
In Mumbai, India, we opened a new global center for research and development focusing on organic synthesis, process development, formulation research, discovery chemistry for modern agricultural solutions, and molecular modeling. The new research facilities will accommodate more than 60 scientists in the first phase.
A further step toward increasing the globalization of our R&D activities is the Network for Advanced Materials Open Research, an initiative we established together with seven leading universities and research institutes in China, Japan and South Korea. The aim is to develop new materials together for a wide range of applications. The initial focus is on products for the automotive, construction, and detergent and cleaners industries as well as the water and wind energy industries.
Compared with the end of 2013, the number of BASF Group employees rose by 99 to a total of 112,305 as of March 31, 2014. On this date, 63.2% of BASF Group employees were employed in Europe while North America accounted for 15.1% of employees, Asia Pacific for 15.0% and South America, Africa, Middle East for 6.7%.
Compared with the same quarter of the previous year, personnel expenses in the first quarter of 2014 rose by 2.0% to €2,324 million. This was largely attributable to higher expenses for the long-term incentive program as well as to the increased number of employees.
| March 31, 2014 | Dec. 31, 2013 | |
|---|---|---|
| Europe | 70,936 | 70,977 |
| Thereof Germany | 52,462 | 52,523 |
| North America | 16,915 | 16,996 |
| Asia Pacific | 16,896 | 16,708 |
| South America, Africa, Middle East | 7,558 | 7,525 |
| 112,305 | 112,206 |
The first quarter of 2014 saw positive development, especially in our chemicals business1. However, overall sales and income from operations before special items were slightly below the previous first-quarter levels. This was attributable to lower contributions from the Oil & Gas segment and negative currency effects.
For 2014, we anticipate somewhat faster growth in the global economy than in 2013. We expect to perform well in a market environment that remains volatile and challenging. We therefore stand by our outlook for 2014 despite unfavorable currency developments and aim to slightly increase income from operations before special items. Sales are likely to decrease slightly as a result of the divestiture of the gas trading and storage business planned for the middle of 2014.
In 2014, opportunities may arise for us from stronger growth in the global economy and our customer industries.
We also see opportunities in implementing our "We create chemistry" strategy and further improving our operational excellence, as well as in strengthening research and development. We will continue to concentrate on expanding our business in growth markets as well as on innovations, portfolio optimization, restructuring and increasing efficiency. For example, our excellence program, STEP, serves to strengthen our competitiveness and profitability. Starting at the end of 2015, STEP is expected to contribute around €1 billion to earnings each year. STEP comprises more than 100 individual projects that will lower fixed costs and raise contribution margins, and is running right on schedule.
However, there are also risks to the development of our business. A renewed intensification of the sovereign debt crisis in Europe, an escalation of the conflict in the Ukraine, and the deceleration of growth in China would all have a negative impact on global economic growth. A weaker U.S. dollar would be detrimental to our earnings. Rising raw material costs could furthermore lead to lower margins.
The statements on opportunities and risks made in the BASF Report 2013 remain valid.
For more information, see the Opportunities and Risks Report in the BASF Report 2013 on pages 106–114
Our expectations for the global economic environment in 2014 remain unchanged:
The upturn in growth expected for the global economy and key customer industries in 2014 will presumably have a positive effect on our business. We aim to increase our sales volumes excluding the effects of acquisitions and divestitures. Nonetheless, sales are likely to decline slightly compared with 2013, due to the divestiture of the gas trading and storage business planned for the middle of 2014. We expect a slight rise in income from operations before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments. We will likely considerably increase income from operations. The special income arising from the planned divestiture of our gas trading and storage business should make a significant contribution here. We aim to considerably improve income from operations after cost of capital and therefore earn a high premium on our cost of capital once again.
Statement of income (million €)
| Explanations in Note | 1st Quarter | ||
|---|---|---|---|
| 2014 | 2013 | Change in % | |
| Sales revenue | 19,512 | 19,738 | (1.1) |
| Cost of sales | (14,667) | (14,872) | 1.4 |
| Gross profit on sales | 4,845 | 4,866 | (0.4) |
| Selling expenses | (1,770) | (1,806) | 2.0 |
| General and administrative expenses | (306) | (329) | 7.0 |
| Research expenses | (442) | (429) | (3.0) |
| Other operating income [5] |
401 | 340 | 17.9 |
| Other operating expenses [5] |
(573) | (560) | (2.3) |
| Income from companies accounted for using the equity method [6] |
94 | 87 | 8.0 |
| Income from operations | 2,249 | 2,169 | 3.7 |
| Income from shareholdings | 6 | 6 | – |
| Expenses from shareholdings | (1) | (15) | 93.3 |
| Interest income | 34 | 26 | 30.8 |
| Interest expense | (158) | (154) | (2.6) |
| Other financial result | (64) | 11 | |
| Financial result [7] |
(183) | (126) | (45.2) |
| Income before taxes and minority interests | 2,066 | 2,043 | 1.1 |
| Income taxes [8] |
(525) | (499) | (5.2) |
| Income before minority interests | 1,541 | 1,544 | (0.2) |
| Minority interests [9] |
(64) | (98) | 34.7 |
| Net income | 1,477 | 1,446 | 2.1 |
| Earnings per share (€) [10] |
|||
| Undiluted | 1.61 | 1.57 | 2.5 |
| Diluted | 1.61 | 1.57 | 2.5 |
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Income before minority interests Foreign currency translation adjustment |
1,541 | 1,544 |
| Remeasurement of defined benefit plans | (1,006) | 394 |
| Remeasurement due to acquisition of majority of shares | – | – |
| Deferred taxes for items that will not be reclassified to the statement of income | 307 | (94) |
| Income and expense recognized directly in equity that will not be reclassified to the statement of income at a later date |
(699) | 300 |
| (133) | 263 | |
| Fair value changes in available-for-sale securities | (5) | – |
| Cash flow hedges | (79) | (7) |
| Deferred taxes for items that will be reclassified to the statement of income | 21 | 3 |
| Income and expense recognized directly in equity that will be reclassified to the statement of income at a later date |
(196) | 259 |
| Minority interests | (25) | 14 |
| Total income and expense recognized directly in equity | (920) | 573 |
| Income before minority interests and income and expense recognized directly in equity | 621 | 2,117 |
| Thereof attributable to shareholders of BASF SE | 582 | 2,005 |
| Thereof attributable to minority interests | 39 | 112 |
| Other comprehensive income | ||||||
|---|---|---|---|---|---|---|
| Remeasurements of defined benefit plans |
Foreign currency translation adjustment |
Fair value changes in available-for-sale |
securities Cash flow hedges | Revaluation due to acquisition of majority of shares |
Total income and expense recognized directly in equity |
|
| As of January 1, 2014 | (2,444) | (917) | 15 | (54) | – | (3,400) |
| Additions | (1,006) | (133) | – | (79) | – | (1,218) |
| Releases | – | – | (5) | – | – | (5) |
| Deferred taxes | 307 | 2 | 19 | – | 328 | |
| As of March 31, 2014 | (3,143) | (1,048) | 10 | (114) | – | (4,295) |
| As of January 1, 2013 | (3,571) | 165 | 17 | (73) | 1 | (3,461) |
| Additions | – | – | – | – | – | – |
| Releases | 394 | 263 | – | (7) | – | 650 |
| Deferred taxes | (94) | (4) | (1) | 8 | – | (91) |
| As of March 31, 2013 | (3,271) | 424 | 16 | (72) | 1 | (2,902) |
| Explanations in Note | March 31, 2014 | March 31, 2013 | Change in % | Dec. 31, 2013 | Change in % |
|---|---|---|---|---|---|
| Intangible assets [11] |
12,120 | 12,675 | (4.4) | 12,235 | (0.9) |
| Property, plant and equipment [11] |
18,343 | 17,289 | 6.1 | 18,254 | 0.5 |
| Investments accounted for using the equity method [11] |
4,153 | 3,457 | 20.1 | 4,137 | 0.4 |
| Other financial assets [11] |
665 | 624 | 6.6 | 630 | 5.6 |
| Deferred tax assets | 1,306 | 1,569 | (16.8) | 992 | 31.7 |
| Other receivables and miscellaneous assets | 869 | 874 | (0.6) | 876 | (0.8) |
| Noncurrent assets | 37,456 | 36,488 | 2.7 | 37,124 | 0.9 |
| Inventories [12] |
9,851 | 9,888 | (0.4) | 9,592 | 2.7 |
| Accounts receivable, trade [12] |
10,784 | 11,051 | (2.4) | 9,376 | 15.0 |
| Other receivables and miscellaneous assets [12] |
3,979 | 3,738 | 6.4 | 3,630 | 9.6 |
| Marketable securities [12] |
16 | 16 | – | 17 | (5.9) |
| Cash and cash equivalents [12] |
3,107 | 2,433 | 27.7 | 1,815 | 71.2 |
| Assets of disposal groups | 2,747 | 3,125 | (12.1) | 2,828 | (2.9) |
| Current assets | 30,484 | 30,251 | 0.8 | 27,258 | 11.8 |
| Total assets | 67,940 | 66,739 | 1.8 | 64,382 | 5.5 |
| Explanations in Note | March 31, 2014 | March 31, 2013 | Change in % | Dec. 31, 2013 | Change in % |
|---|---|---|---|---|---|
| Subscribed capital [13] |
1,176 | 1,176 | – | 1,176 | – |
| Capital surplus [13] |
3,165 | 3,188 | (0.7) | 3,165 | – |
| Retained earnings [13] |
27,647 | 25,158 | 9.9 | 26,170 | 5.6 |
| Other comprehensive income | (4,295) | (2,902) | (48.0) | (3,400) | (26.3) |
| Equity of shareholders of BASF SE | 27,693 | 26,620 | 4.0 | 27,111 | 2.1 |
| Minority interests | 693 | 1,056 | (34.4) | 678 | 2.2 |
| Equity | 28,386 | 27,676 | 2.6 | 27,789 | 2.1 |
| Provisions for pensions and similar obligations [14] |
4,698 | 5,094 | (7.8) | 3,709 | 26.7 |
| Other provisions [15] |
2,916 | 2,967 | (1.7) | 2,924 | (0.3) |
| Deferred tax liabilities | 2,670 | 2,493 | 7.1 | 2,849 | (6.3) |
| Financial indebtedness [16] |
12,707 | 9,907 | 28.3 | 11,151 | 14.0 |
| Other liabilities [16] |
1,263 | 1,014 | 24.6 | 1,157 | 9.2 |
| Noncurrent liabilities | 24,254 | 21,475 | 12.9 | 21,790 | 11.3 |
| Accounts payable, trade | 4,519 | 4,558 | (0.9) | 4,505 | 0.3 |
| Provisions [15] |
2,851 | 2,918 | (2.3) | 2,616 | 9.0 |
| Tax liabilities | 1,347 | 1,118 | 20.5 | 954 | 41.2 |
| Financial indebtedness [16] |
2,345 | 3,378 | (30.6) | 3,256 | (28.0) |
| Other liabilities [16] |
2,209 | 3,144 | (29.7) | 2,182 | 1.2 |
| Liabilities of disposal groups | 2,029 | 2,472 | (17.9) | 1,290 | 57.3 |
| Current liabilities | 15,300 | 17,588 | (13.0) | 14,803 | 3.4 |
| Total equity and liabilities | 67,940 | 66,739 | 1.8 | 64,382 | 5.5 |
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Net income | 1,477 | 1,446 |
| Depreciation and amortization of intangible assets, property, plant and equipment and financial assets | 701 | 693 |
| Changes in net working capital | (1,052) | (713) |
| Miscellaneous items | 578 | 615 |
| Cash provided by operating activities | 1,704 | 2,041 |
| Payments related to property, plant and equipment and intangible assets | (936) | (831) |
| Acquisitions/divestitures | 263 | (514) |
| Financial investments and other items | (97) | (292) |
| Cash used in investing activities | (770) | (1,637) |
| Capital increases/repayments, share repurchases | – | – |
| Changes in financial liabilities | 413 | 429 |
| Dividends | (24) | (66) |
| Cash provided by financing activities | 389 | 363 |
| Net changes in cash and cash equivalents | 1,323 | 767 |
| Cash and cash equivalents as of beginning of year and other changes | 1,784 | 1,666 |
| Cash and cash equivalents at end of quarter | 3,107 | 2,433 |
Cash provided by operating activities amounted to €1,704 million in the first quarter of 2014, down by €337 million year-onyear. The outflow in net working capital was particularly due to increased trade accounts receivable. The cash inflow from miscellaneous items arose predominantly from the higher liabilities of the natural gas trading disposal group.
Investing activities led to a cash outflow of €770 million, compared with €1,637 million in the same quarter of 2013. At €936 million, payments related to property, plant and equipment and intangible assets were higher than the level of the previous first quarter. In the first quarter of 2014, proceeds of €263 million came from the divestiture of shares in non-BASF-operated oil and gas fields in the British North Sea to the MOL Group. Payments for acquisitions in the first quarter of 2013 had been primarily related to the acquisition of Pronova BioPharma ASA, headquartered in Lysaker, Norway.
Financing activities led to a cash inflow of €389 million, compared with €363 million in the previous first quarter. The cash inflow resulting from the change in financial liabilities amounted to €413 million, mainly due to the issuance of several bonds with a nominal value of €1,550 million. Partly counterbalancing this was the scaling back of BASF SE's U.S. dollar commercial paper program. Payments of €24 million were made to minority shareholders of Group companies, in the form of dividends.
Cash and cash equivalents amounted to €3,107 million as of March 31, 2014, compared with €1,815 million at the end of 2013. Net debt was reduced to €11,945 million as of the end of the first quarter of 2014, compared with €12,592 million as of December 31, 2013.
1st Quarter 2014 (million €)
| Number of subscribed shares outstanding |
Subscribed capital |
Capital surplus |
Retained earnings |
Other com prehensive income1 |
Equity of shareholders of BASF SE |
Minority interests |
Equity | |
|---|---|---|---|---|---|---|---|---|
| As of January 1, 2014 | 918,478,694 | 1,176 | 3,165 | 26,170 | (3,400) | 27,111 | 678 | 27,789 |
| Effects of acquisitions achieved in stages |
– | – | – | – | – | – | – | – |
| Dividends paid | – | – | – | – | – | – | (24) 2 | (24) |
| Net income | – | – | – | 1,477 | – | 1,477 | 64 | 1,541 |
| Change in income and expense recognized directly in equity |
– | – | – | – | (895) | (895) | (25) | (920) |
| Changes in scope of consolidation and other changes |
– | – | – | – | – | – | – | – |
| As of March 31, 2014 | 918,478,694 | 1,176 | 3,165 | 27,647 | (4,295) | 27,693 | 693 | 28,386 |
| As of January 1, 2013 | 918,478,694 | 1,176 | 3,188 | 23,708 | (3,461) | 24,611 | 1,010 | 25,621 |
|---|---|---|---|---|---|---|---|---|
| Effects of acquisitions achieved in stages |
– | – | – | – | – | – | – | – |
| Dividends paid | – | – | – | – | – | – | (66) 2 | (66) |
| Net income | – | – | – | 1,446 | – | 1,446 | 98 | 1,544 |
| Change in income and expense recognized directly in equity |
– | – | – | – | 559 | 559 | 14 | 573 |
| Changes in scope of consolidation and other changes |
– | – | – | 4 | – | 4 | – | 4 |
| As of March 31, 2013 | 918,478,694 | 1,176 | 3,188 | 25,158 | (2,902) | 26,620 | 1,056 | 27,676 |
1 Detailed information can be found in the table "Development of income and expense recognized directly in equity of shareholders of BASF SE" on page 16.
2 Including profit and loss transfers
| Sales | EBITDA | Income from operations (EBIT) before special items |
Income from operations (EBIT) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
|
| Chemicals | 4,398 | 4,396 | 0.0 | 782 | 841 | (7.0) | 601 | 650 | (7.5) | 600 | 650 | (7.7) |
| Performance Products | 3,872 | 3,880 | (0.2) | 611 | 568 | 7.6 | 427 | 379 | 12.7 | 414 | 367 | 12.8 |
| Functional Materials & Solutions |
4,236 | 4,181 | 1.3 | 424 | 352 | 20.5 | 311 | 239 | 30.1 | 311 | 240 | 29.6 |
| Agricultural Solutions | 1,653 | 1,556 | 6.2 | 552 | 532 | 3.8 | 510 | 498 | 2.4 | 510 | 492 | 3.7 |
| Oil & Gas | 4,276 | 4,660 | (8.2) | 763 | 734 | 4.0 | 494 | 630 | (21.6) | 625 | 630 | (0.8) |
| Other | 1,077 | 1,065 | 1.1 | (182) | (173) | (5.2) | (203) | (182) | (11.5) | (211) | (210) | (0.5) |
| 19,512 | 19,738 | (1.1) | 2,950 | 2,854 | 3.4 | 2,140 | 2,214 | (3.3) | 2,249 | 2,169 | 3.7 |
| Research expenses | Assets | Additions to noncurrent assets1 |
Amortization and depreciation2 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
2014 | 2013 | Change in % |
|
| Chemicals | 44 | 42 | 4.8 | 11,237 | 10,646 | 5.6 | 272 | 324 | (16.0) | 182 | 191 | (4.7) |
| Performance Products | 85 | 92 | (7.6) | 13,975 | 14,537 | (3.9) | 159 | 837 | (81.0) | 197 | 201 | (2.0) |
| Functional Materials & Solutions |
87 | 87 | – | 12,405 | 12,639 | (1.9) | 110 | 118 | (6.8) | 113 | 112 | 0.9 |
| Agricultural Solutions | 112 | 100 | 12.0 | 7,841 | 7,651 | 2.5 | 63 | 59 | 6.8 | 42 | 40 | 5.0 |
| Oil & Gas | 12 | 9 | 33.3 | 11,971 | 10,974 | 9.1 | 269 | 195 | 37.9 | 138 | 104 | 32.7 |
| Other | 102 | 99 | 3.0 | 10,511 | 10,292 | 2.1 | 36 | 33 | 9.1 | 29 | 37 | (21.6) |
| 442 | 429 | 3.0 | 67,940 | 66,739 | 1.8 | 909 | 1,566 | (42.0) | 701 | 685 | 2.3 |
1 Investments in intangible assets and property, plant and equipment (including acquisitions)
2 Depreciation and amortization of intangible assets and property, plant and equipment
| 1st Quarter | |||
|---|---|---|---|
| 2014 | 2013 | Change in % | |
| Sales | 1,077 | 1,065 | 1.1 |
| EBIT before special items | (203) | (182) | (11.5) |
| Thereof Group corporate costs | (49) | (56) | 12.5 |
| Corporate research | (98) | (97) | (1.0) |
| Currency results, hedges and other valuation effects | (95) | 56 | |
| Other business | 50 | 59 | (15.3) |
| Special items | (8) | (28) | 71.4 |
| EBIT | (211) | (210) | (0.5) |
3 Further information on Other can be found in the Notes to the Interim Financial Statements on pages 22 and 23.
The Consolidated Financial Statements of the BASF Group for the year ending December 31, 2013, were prepared according to the International Financial Reporting Standards (IFRS) valid as of the balance sheet date. The Interim Financial Statements as of March 31, 2014, have been prepared in line with the rules of International Accounting Standard 34 in abbreviated form and using the same accounting policies. The Interim Financial Statements and Interim Management's Report have been neither audited nor subject to an auditor's review.
The BASF Report 2013 containing the Consolidated Financial Statements as of December 31, 2013, can be found online at: basf.com/report
| Closing rates | Average rates 1st quarter |
||||
|---|---|---|---|---|---|
| 1 € equals | Mar. 31, 2014 |
Dec. 31, 2013 |
2014 | 2013 | |
| Brazil (BRL) | 3.13 | 3.26 | 3.24 | 2.64 | |
| China (CNY) | 8.58 | 8.35 | 8.36 | 8.22 | |
| Great Britain (GBP) | 0.83 | 0.83 | 0.83 | 0.85 | |
| Japan (JPY) | 142.42 | 144.72 | 140.80 | 121.80 | |
| Malaysia (MYR) | 4.50 | 4.52 | 4.52 | 4.07 | |
| Mexico (MXN) | 18.01 | 18.07 | 18.13 | 16.70 | |
| Russian Federation (RUB) | 48.78 | 45.32 | 48.04 | 40.15 | |
| Switzerland (CHF) | 1.22 | 1.23 | 1.22 | 1.23 | |
| South Korea (KRW) | 1,465.98 | 1,450.93 | 1,465.34 | 1,433.09 | |
| United States (USD) | 1.38 | 1.38 | 1.37 | 1.32 |
In addition to BASF SE, all material subsidiaries are included in the BASF Group Financial Statements on a fully consolidated basis. Joint arrangements that are classified as joint operations according to IFRS 11 are proportionally consolidated. Changes in the number of fully and proportionally consolidated companies are shown in the table.
Since the beginning of 2014, five companies have been deconsolidated because of mergers with other BASF companies or on account of divestitures. One subsidiary was included in the scope of consolidation for the first time due to increased significance.
The decrease in the number of companies accounted for using the equity method resulted from the sale of one company.
| 2014 | 2013 | |
|---|---|---|
| As of January 1 | 309 | 312 |
| Thereof proportionally consolidated | 8 | 8 |
| First-time consolidations | 1 | 6 |
| Thereof proportionally consolidated | – | – |
| Deconsolidations | 5 | 2 |
| Thereof proportionally consolidated | – | – |
| As of March 31 | 305 | 316 |
| Thereof proportionally consolidated | 8 | 8 |
| 2014 | 2013 | |
|---|---|---|
| As of January 1 | 34 | 32 |
| As of March 31 | 33 | 32 |
BASF did not make any material acquisitions in the first quarter of 2014.
On March 25, 2014, BASF concluded the sale of selected oil and gas investments in the North Sea to the Hungarian MOL Group, as agreed upon on December 12, 2013. MOL acquired 14 licenses, including for the non-BASF-operated Broom field (29%) as well as for the Catcher (20%), Cladhan (33.5%) and Scolty/Crathes (50%) developments. The transaction also included the sale of BASF's shares in the infrastructure of the Sullom Voe Terminal and in the Brent Pipeline System. The transaction was financially retroactive to January 1, 2013. The purchase price agreed upon was \$375 million; less adjustments, the total purchase price amounted to €264 million.
BASF's business is conducted by 14 operating divisions aggregated into five segments for reporting purposes. The divisions are allocated to the segments based on their business models.
The Chemicals segment comprises the classical chemicals business with basic chemicals and intermediates. It forms the core of BASF's Production Verbund and is the starting point for a majority of the value chains. In addition to supplying the chemical industry and other sectors, the segment ensures that other BASF divisions are supplied with chemicals for producing downstream products. Chemicals comprises the Petrochemicals, Monomers and Intermediates divisions.
The Performance Products segment consists of the Dispersions & Pigments, Care Chemicals, Nutrition & Health, Paper Chemicals and Performance Chemicals divisions. Customized products allow customers to make their production processes more efficient or to give their products improved application properties.
The Functional Materials & Solutions segment bundles system solutions, services and innovative products for specific sectors and customers, in particular for the automotive, electronic, chemical and construction industries. It comprises the Catalysts, Construction Chemicals, Coatings and Performance Materials divisions.
Agricultural Solutions is made up of the Crop Protection division, whose products secure yields and guard crops against fungal infections, insects and weeds, in addition to serving as biological and chemical seed treatments. Plant biotechnology research is not assigned to this segment; it is reported in Other.
The Oil & Gas segment is composed of the Oil & Gas division with its Exploration & Production and Natural Gas Trading business sectors.
Activities not assigned to a particular division are reported in Other. These include the sale of raw materials, engineering and other services, rental income and leases.
With cross-divisional corporate research, BASF is developing growth fields and ensuring its long-term competence with regard to technology and methods. This includes plant biotechnology research. Corporate research costs are not allocated to the segments, but rather are also reported under Other, as are corporate costs, which comprise expenses for steering the BASF Group.
Earnings from currency conversion that are not allocated to the segments are also reported under Other, as are earnings from the hedging of raw material prices and foreign currency exchange risks. Furthermore, revenues and expenses from the long-term incentive (LTI) program are reported here.
Transfers between the segments are generally executed at adjusted market-based prices which take into account the higher cost effectiveness and lower risk of Group-internal transactions.
Assets, as well as their depreciation and amortization, are allocated to the segments based on economic control. Assets used by more than one segment are allocated based on the percentage of usage.
Sales in Other grew by €12 million compared with the first quarter of 2013. This was mainly the result of higher volumes in raw materials trading. In Other, income from operations in the first quarter of 2014 matched the previous first quarter's level. Lower miscellaneous expenses compensated for currency losses and additions to provisions for the LTI program.
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Assets of businesses included under Other | 2,663 | 3,315 |
| Financial assets | 665 | 624 |
| Deferred tax assets | 1,306 | 1,569 |
| Cash and cash equivalents / marketable securities | 3,123 | 2,449 |
| Defined benefit assets | 46 | 74 |
| Miscellaneous receivables / prepaid expenses | 2,708 | 2,261 |
| Assets of Other | 10,511 | 10,292 |
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Income from operations | 625 | 630 |
| Income from shareholdings | – | (9) |
| Other income | (47) | 30 |
| Income before taxes and minority interests | 578 | 651 |
| Income taxes | (133) | (196) |
| Income before minority interests | 445 | 455 |
| Minority interests | (3) | (58) |
| Net income | 442 | 397 |
In the reconciliation reporting for Oil & Gas, the income from operations of the Oil & Gas segment is reconciled to the contribution of the companies in this segment to the net income of the BASF Group. Special income from the divestiture of investments in North Sea oil and gas fields to the MOL Group as well as additional activities in Norway raised income from operations. The contribution from Libya fell due to the continued suspension of onshore production and the lack of offshore lifting as compared with the first quarter of 2013. Lower contributions from the natural gas trading business additionally dampened earnings development.
The Oil & Gas segment's other income relates to income and expenses not included in the segment's income from operations, the interest result and the other financial result. The yearon-year decrease came from currency results not allocated to the segment.
The tax rate decreased compared with the first quarter of 2013 mainly as a result of the tax-free income from the divestiture of investments in North Sea oil and gas fields to the MOL Group.
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Income on the reversal of provisions | 21 | 48 |
| Revenue from miscellaneous revenue-generating activities | 34 | 43 |
| Income from foreign currency and hedging transactions | 134 | 55 |
| Income from the translation of financial statements in foreign currencies | 6 | 38 |
| Gains on the disposal of fixed assets and divestitures | 137 | 9 |
| Income on the reversal of valuation allowances for business-related receivables | 8 | 15 |
| Miscellaneous income | 61 | 132 |
| Other operating income | 401 | 340 |
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Expenses from the measurement of LTI options as well as other personnel obligations | 68 | 88 |
| Restructuring measures | 10 | 33 |
| Environmental protection and safety measures, costs of demolition and removal, and project expenses related to capital expenditures that are not subject to mandatory capitalization |
60 | 44 |
| Amortization, depreciation and impairments of intangible assets and property, plant and equipment | 2 | 8 |
| Costs from miscellaneous revenue-generating activities | 28 | 43 |
| Expenses from foreign currency and hedging transactions | 144 | 77 |
| Losses from the translation of financial statements in foreign currencies | 47 | 18 |
| Losses from the disposal of fixed assets and divestitures | 5 | 5 |
| Oil and gas exploration expenses | 24 | 28 |
| Expenses from the addition of valuation allowances for business-related receivables | 15 | 16 |
| Expenses from the use of inventories measured at market value and the derecognition of obsolete inventory | 34 | 31 |
| Miscellaneous expenses | 136 | 169 |
| Other operating expenses | 573 | 560 |
Income from the reversal of provisions decreased primarily on account of the LTI program: While the same period of the previous year had included gains for the reversal of provisions, the first quarter of 2014 included expenses from additions to provisions. These were reported under other operating expenses.
Income and expenses from foreign currency and hedging transactions rose compared with the previous first quarter. This was largely due to higher income from hedging for raw material price risks and to higher expenses, especially from commodity derivatives and foreign currency transactions.
The increase in gains from the disposal of fixed assets and divestitures arose from the disposal gains related to the sale of investments to the Hungarian MOL Group.
The decline in income reported in miscellaneous was mostly attributable to the final compensation payment for the fertilizer business in the previous first quarter.
Expenses for other personnel obligations declined primarily as a result of lower additions to provisions for variable compensation compared with the previous first quarter.
The rise in losses from the translation of financial statements in foreign currencies resulted from the appreciation of the euro relative to certain currencies.
A large portion of income from companies accounted for using the equity method came from the Oil & Gas segment, especially from GASCADE Gastransport GmbH and Nord Stream AG. Wintershall AG posted negative earnings in the first quarter of 2014. This was due to strikes at export terminals in Libya, which have resulted in the suspension of all onshore crude oil and associated gas production in Libya since July 2013.
Since the creation of the natural gas trading disposal group in November 2012, the equity-accounted carrying amounts of companies in this group remain unchanged and are only tested for impairment.
The share in Styrolution Holding GmbH contributed significantly to income.
| Million € | 1st Quarter | |
|---|---|---|
| 2014 | 2013 | |
| Dividends and similar income | 3 | 2 |
| Income from the disposal of shareholdings | – | – |
| Income from profit transfer agreements | 2 | 3 |
| Income from tax allocation to participating interests | 1 | 1 |
| Income from other shareholdings | 6 | 6 |
| Losses from loss transfer agreements | (1) | (10) |
| Write-downs on / losses from the sale of shareholdings | – | (5) |
| Expenses from other shareholdings | (1) | (15) |
| Interest income from cash and cash equivalents | 24 | 24 |
| Interest and dividend income from securities and loans | 10 | 2 |
| Interest income | 34 | 26 |
| Interest expenses | (158) | (154) |
| Net interest income from overfunded pension plans and similar obligations | – | – |
| Net interest income from other long-term employee obligations | – | – |
| Income from the capitalization of construction interest | 34 | 20 |
| Miscellaneous financial income | – | 55 |
| Other financial income | 34 | 75 |
| Write-downs of / losses from the disposal of securities and loans | (1) | (1) |
| Net interest expense from underfunded pension plans and similar obligations | (37) | (48) |
| Net interest expense from other long-term employee obligations | (3) | (2) |
| Unwinding of the discount on other noncurrent liabilities | (18) | (13) |
| Miscellaneous financial expenses | (39) | – |
| Other financial expenses | (98) | (64) |
| Financial result | (183) | (126) |
Income from shareholdings increased year-on-year due to the lack of expenses from loss transfer agreements for NEL Gastransport GmbH. As an associated company, NEL Gastransport GmbH has been accounted for in the Consolidated Financial Statements using the equity method since the second quarter of 2013.
The interest result improved slightly compared with the previous first quarter. This increase was mainly attributable to higher interest income from loans to companies accounted for using the equity method.
Net interest expense from underfunded pension plans and similar obligations declined compared with the previous year, mainly as a result of the lower defined benefit obligation as of December 31, 2013.
Miscellaneous financial expenses in the first quarter of 2014 include expenses from the market valuation of options for the disposal of BASF's share in Styrolution amounting to €42 million. In the previous first quarter, the valuation had resulted in financial gains of €55 million.
Income before taxes and minority interests (million €)
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Germany | 553 | 677 |
| Foreign | 1,513 | 1,366 |
| Income before taxes and minority interests | 2,066 | 2,043 |
| 1st Quarter | ||
|---|---|---|
| 2014 | 2013 | |
| Germany million € |
191 | 179 |
| Foreign million € |
334 | 320 |
| Income taxes million € |
525 | 499 |
| Tax rate % |
25.4 | 24.4 |
The slightly higher tax rate resulted from the higher portion of earnings from foreign companies. The tax-free special income from the sale of investments in North Sea oil and gas fields to the MOL Group compensated for this.
| Million € | 1st Quarter | |
|---|---|---|
| 2014 | 2013 | |
| Minority interests in profits | 78 | 98 |
| Minority interests in losses | (14) | – |
| Minority interests | 64 | 98 |
In the natural gas trading business, the weather-related sales decline and continuing margin pressure led to minority interests in losses in the first quarter of 2014, mainly at WINGAS GmbH, after minority interests in profits in the same period of the previous year. By contrast, minority interests in profits were higher at BASF Total Petrochemicals LLC in Port Arthur, Texas.
| 1st Quarter | |||
|---|---|---|---|
| 2014 | 2013 | ||
| Net income | million € | 1,477 | 1,446 |
| Number of outstanding shares (weighted average) | in thousands | 918,479 | 918,479 |
| Earnings per share | € | 1.61 | 1.57 |
The calculation of earnings per share is based on the weighted average number of common shares outstanding. The calculation of diluted earnings per common share reflects all possible outstanding common shares and the resulting effect on income of the BASF employee incentive share program "plus."
In the first quarter of 2014, and in the corresponding period of 2013, there was no dilutive effect; undiluted earnings per share were the same as the diluted value per share.
| 1st Quarter 2014 | |||||
|---|---|---|---|---|---|
| Intangible assets |
Property, plant and equipment |
Investments accounted for using the equity method |
Other financial assets |
||
| Acquisition costs | |||||
| Balance as of January 1 | 15,286 | 54,466 | 4,137 | 824 | |
| Additions | 24 | 885 | – | 34 | |
| Disposals | (188) | (657) | – | (1) | |
| Transfers | 102 | (2) | 45 | 2 | |
| Exchange differences | (43) | (44) | (29) | – | |
| Balance as of March 31 | 15,181 | 54,648 | 4,153 | 859 | |
| Amortization and depreciation | |||||
| Balance as of January 1 | 3,051 | 36,212 | – | 194 | |
| Additions | 146 | 555 | – | – | |
| Disposals | (117) | (449) | – | – | |
| Transfers | – | 1 | – | – | |
| Exchange differences | (19) | (14) | – | – | |
| Balance as of March 31 | 3,061 | 36,305 | – | 194 | |
| Net carrying amount as of March 31 | 12,120 | 18,343 | 4,153 | 665 |
| 1st Quarter 2013 | |||||
|---|---|---|---|---|---|
| Intangible assets |
Property, plant and equipment |
Investments accounted for using the equity method |
Other financial assets |
||
| Acquisition costs | |||||
| Balance as of January 1 | 14,876 | 53,919 | 3,459 | 792 | |
| Additions | 482 | 1,084 | – | 26 | |
| Disposals | (108) | (201) | – | (5) | |
| Transfers | 58 | (2) | (18) | 2 | |
| Exchange differences | 169 | 376 | 16 | 1 | |
| Balance as of March 31 | 15,477 | 55,176 | 3,457 | 816 | |
| Amortization and depreciation | |||||
| Balance as of January 1 | 2,683 | 37,309 | – | 178 | |
| Additions | 153 | 532 | – | 8 | |
| Disposals | (108) | (167) | – | – | |
| Transfers | 53 | (1) | – | 6 | |
| Exchange differences | 21 | 214 | – | – | |
| Balance as of March 31 | 2,802 | 37,887 | – | 192 | |
| Net carrying amount as of March 31 | 12,675 | 17,289 | 3,457 | 624 |
Significant investments in the first quarter of 2014 were particularly related to the construction of the TDI plant in Ludwigshafen, Germany, the acrylic acid production complex in Camaçari, Brazil, the MDI plant in Chonqing, China, and oil and gas production facilities and wells in Europe and South America. Investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Antwerp, Belgium; Geismar, Louisiana; and Freeport, Texas.
Disposals of property, plant and equipment were largely attributable to the sale of selected oil and gas investments in the North Sea to the Hungarian MOL Group.
Disposals of intangible assets were also related to the sale of selected oil and gas investments in the North Sea to the Hungarian MOL Group as well as to the derecognition of fully amortized technologies.
| Million € | March 31, 2014 | March 31, 2013 | December 31, 2013 |
|---|---|---|---|
| Raw materials and factory supplies | 2,667 | 2,660 | 2,560 |
| Work-in-process, finished goods and merchandise | 7,057 | 7,095 | 6,923 |
| Advance payments and services-in-process | 127 | 133 | 109 |
| Inventories | 9,851 | 9,888 | 9,592 |
| Accounts receivable, trade | 10,784 | 11,051 | 9,376 |
| Other receivables and miscellaneous current assets | 3,979 | 3,738 | 3,630 |
| Marketable securities | 16 | 16 | 17 |
| Cash and cash equivalents | 3,107 | 2,433 | 1,815 |
| Assets of disposal groups | 2,747 | 3,125 | 2,828 |
| Other current assets | 9,849 | 9,312 | 8,290 |
| Current assets | 30,484 | 30,251 | 27,258 |
Work-in-process, finished goods and merchandise are combined into one item due to the production conditions in the chemical industry. Services-in-process primarily relate to services not invoiced as of the balance sheet date. Inventories are valued using the weighted average cost method.
Trade accounts receivable increased in comparison with yearend 2013 primarily as a result of seasonal effects in the Agricultural Solutions segment.
At the Annual Shareholders' Meeting of April 30, 2009, shareholders authorized the Board of Executive Directors, with the approval of the Supervisory Board, to increase the subscribed capital by issuing new shares in an amount of up to €500 million against cash through April 30, 2014. The Board of Executive Directors is empowered, following the approval of the Supervisory Board, to decide on the exclusion of shareholders' subscription rights for these new shares in certain predefined cases covered by the enabling resolution. Until now, this option has not been exercised and no new shares have been issued.
Transfers from other retained earnings increased legal reserves by €15 million in the first quarter of 2014.
| Mar. 31, 2014 Dec. 31, 2013 | ||
|---|---|---|
| Legal reserves | 503 | 488 |
| Other retained earnings | 27,144 | 25,682 |
| Retained earnings | 27,647 | 26,170 |
| Germany | United States | Switzerland | United Kingdom | |||||
|---|---|---|---|---|---|---|---|---|
| Mar. 31, 2014 Dec. 31, 2013 | Mar. 31, 2014 Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 Dec. 31, 2013 | ||||
| Discount rate | 3.50 | 3.90 | 4.30 | 4.80 | 1.80 | 2.40 | 4.30 | 4.40 |
| Projected pension increase | 2.00 | 2.00 | – | – | – | – | 3.10 | 3.10 |
Assumptions used to determine expenses for pension benefits (from January 1 through March 31 of the respective year in %)
| Germany | United States Switzerland |
United Kingdom | ||||||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| Discount rate | 3.90 | 3.50 | 4.80 | 3.75 | 2.40 | 2.00 | 4.40 | 4.40 |
| Projected pension increase | 2.00 | 2.00 | – | – | – | – | 3.10 | 2.70 |
The assumptions used to determine the defined benefit obligation as of December 31, 2013, are used in the 2014 reporting year to determine the expenses for pension plans.
Since the first-time application of IAS 19 (revised), the standardized return on plan assets is ascertained by multiplying plan assets at the beginning of the year with the discount rate used for existing obligations at the beginning of the year. This takes into account benefit and contribution payments made during the year.
The discount rate reduction in most of the significant currency zones due to the development of the capital markets in the first quarter of 2014 was primarily responsible for actuarial losses in pension obligations. Including the deviation between the actual and standardized return on plan assets as well as the change in the asset ceiling, a negative remeasurement occurred in the amount of €1,006 million. This was recognized in other comprehensive income (OCI), taking into account deferred taxes of €307 million. This valuation effect was also the main reason for the €989 million increase in pension provisions.
| Jan. 1, 2014 | Additions | Unwinding of discount |
Utilization | Reversals | Other changes |
March 31, 2014 |
|
|---|---|---|---|---|---|---|---|
| Restoration obligations | 996 | – | 10 | (7) | – | (15) | 984 |
| Environmental protection and remediation costs | 601 | 35 | 2 | (21) | (1) | 2 | 618 |
| Employee obligations | 1,866 | 391 | 1 | (368) | (6) | 31 | 1,915 |
| Sales and purchase risks | 612 | 324 | – | (91) | (7) | 2 | 840 |
| Restructuring measures | 228 | 7 | – | (29) | (3) | – | 203 |
| Litigation, damage claims, guarantees and similar obligations |
105 | 2 | – | (10) | (6) | 3 | 94 |
| Other | 1,132 | 59 | – | (57) | (21) | – | 1,113 |
| Total | 5,540 | 818 | 13 | (583) | (44) | 23 | 5,767 |
On March 31, 2014, other provisions had increased by €227 million compared with the end of 2013. Provisions for environmental protection measures and remediation rose, especially on account of obligations for the return of emissions certificates to the respective national trading offices. In provisions for employee obligations, proportional additions for variable compensation components in the current business year were nearly offset by utilizations for the previous year. The bulk of the payout for variable compensation for 2013 will take place in the second quarter of 2014. Provisions for rebates in the Agricultural Solutions segment increased considerably for seasonal reasons. Other provisions included long-term tax provisions, as well as further present obligations and accruals.
| March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||
|---|---|---|---|---|---|---|---|
| Current | Noncurrent | Current | Noncurrent | Current | Noncurrent | ||
| Accounts payable, trade | 4,519 | – | 4,505 | – | 4,558 | – | |
| Bonds and other liabilities to the capital market | 1,467 | 11,656 | 2,493 | 10,102 | 1,955 | 8,846 | |
| Liabilities to credit institutions | 878 | 1,051 | 763 | 1,049 | 1,423 | 1,061 | |
| Financial indebtedness | 2,345 | 12,707 | 3,256 | 11,151 | 3,378 | 9,907 | |
| Tax liabilities | 1,347 | – | 954 | – | 1,118 | – | |
| Advances received on orders | 170 | – | 284 | – | 172 | – | |
| Negative fair values from derivatives and liabilities for precious metal obligations |
196 | 249 | 125 | 193 | 407 | 180 | |
| Liabilities related to social security | 136 | 36 | 125 | 35 | 150 | 24 | |
| Miscellaneous liabilities | 1,507 | 791 | 1,528 | 760 | 2,331 | 630 | |
| Deferred income | 200 | 187 | 120 | 169 | 84 | 180 | |
| Other liabilities | 2,209 | 1,263 | 2,182 | 1,157 | 3,144 | 1,014 |
| interest method | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Currency | Nominal value (million, in issuing currency) |
Effective interest rate |
Mar. 31, 2014 Dec. 31, 2013 | Mar. 31, 2013 | |||||
| BASF SE | |||||||||
| Commercial paper | USD | 300 | 218 | 1,232 | 507 | ||||
| 4.5% | Bond 2006/2016 | EUR | 500 | 4.62% | 499 | 499 | 498 | ||
| variable | Bond 2013/2016 | EUR | 200 | variable | 200 | 200 | – | ||
| 4.25% | Bond 2009/2016 | EUR | 200 | 4.40% | 199 | 199 | 199 | ||
| variable | Bond 2014/2017 | EUR | 300 | variable | 300 | – | – | ||
| 5.875% | Bond 2009/2017 | GBP | 400 | 6.04% | 481 | 478 | 470 | ||
| 4.625% | Bond 2009/2017 | EUR | 300 | 4.69% | 299 | 299 | 299 | ||
| variable | Bond 2013/2018 | EUR | 300 | variable | 300 | 300 | 300 | ||
| 1.5% | Bond 2012/2018 | EUR | 1,000 | 1.51% | 1,000 | 1,000 | 745 | ||
| 1.375% | Bond 2014/2019 | EUR | 750 | 1.44% | 748 | – | – | ||
| variable | Bond 2013/2020 | EUR | 300 | variable | 300 | 300 | – | ||
| 1.875% | Bond 2013/2021 | EUR | 700 | 1.94% | 697 | 697 | 494 | ||
| 2% | Bond 2012/2022 | EUR | 1,000 | 2.16% | 987 | 987 | 986 | ||
| 2.5% | Bond 2014/2024 | EUR | 500 | 2.60% | 496 | – | – | ||
| 3.675% | Bond 2013/2025 | NOK | 1,450 | 3.70% | 175 | 173 | – | ||
| 3% | Bond 2013/2033 | EUR | 500 | 3.15% | 489 | 489 | 197 | ||
| 2.875% | Bond 2013/2033 | EUR | 200 | 3.09% | 198 | 198 | – | ||
| 3.25% | Bond 2013/2043 | EUR | 200 | 3.27% | 199 | 199 | 199 | ||
| 3.89% | U.S. Private Placement Series A 2013/2025 | USD | 250 | 3.92% | 181 | 181 | – | ||
| 4.09% | U.S. Private Placement Series B 2013/2028 | USD | 700 | 4.11% | 506 | 506 | – | ||
| 4.43% | U.S. Private Placement Series C 2013/2034 | USD | 300 | 4.45% | 217 | 217 | – | ||
| BASF Finance Europe N.V. | |||||||||
| 6% | Bond 2008/2013 | EUR | 1,250 | 6.15% | – | – | 1,249 | ||
| 5% | Bond 2007/2014 | EUR | 1,250 | 5.04% | 1,250 | 1,250 | 1,250 | ||
| 3.625% | Bond 2008/2015 | CHF | 200 | 3.77% | 164 | 163 | 164 | ||
| 5.125% | Bond 2009/2015 | EUR | 2,000 | 5.07% | 2,001 | 2,001 | 2,003 | ||
| 4.5% | Bond 2009/2016 | EUR | 150 | 4.56% | 150 | 150 | 150 | ||
| Ciba Specialty Chemicals Finance Luxembourg S.A. | |||||||||
| 4.875% | Bond 2003/2018 | EUR | 477 | 4.88% | 430 | 428 | 420 | ||
| Other bonds | 439 | 449 | 671 | ||||||
| Bonds and other liabilities to the capital market | 13,123 | 12,595 | 10,801 | ||||||
| Liabilities to credit institutions | 1,929 | 1,812 | 2,484 | ||||||
| Financial indebtedness | 15,052 | 14,407 | 13,285 |
The BASF Group maintains relationships with several related parties over which it exercises material or significant influence, or which are controlled by the Group but are not consolidated due to their minor significance. The following table shows the scope of the Group's transactions with related parties.
| 1st Quarter 2014 |
1st Quarter 2013 |
|
|---|---|---|
| Nonconsolidated subsidiaries | 167 | 199 |
| Joint operations | 104 | 109 |
| Joint ventures | 165 | 158 |
| Associated companies and other shareholdings |
679 | 764 |
A significant portion of joint venture sales were related to Wintershall Erdgas Handelshaus GmbH & Co. KG, Berlin; these amounted to €81 million in the first quarter of 2014 compared with €60 million in the previous first quarter.
Substantial sales to associated companies and other shareholdings are attributable to the Styrolution Group. Sales to Styrolution Group companies amounted to €500 million in the first quarter of 2014 compared with €620 million in the first quarter of 2013.
There were no reportable related-party transactions with members of the Board of Executive Directors or the Supervisory Board and their related parties during the reporting period.
| Accounts receivable, trade | |||||
|---|---|---|---|---|---|
| March 31, 2014 | March 31, 2013 | Dec. 31, 2013 | |||
| Nonconsolidated subsidiaries | 196 | 207 | 154 | ||
| Joint operations | 40 | 38 | 35 | ||
| Joint ventures | 160 | 113 | 117 | ||
| Associated companies and other shareholdings | 344 | 306 | 397 |
| Accounts payable, trade | |||||
|---|---|---|---|---|---|
| March 31, 2014 | March 31, 2013 | Dec. 31, 2013 | |||
| Nonconsolidated subsidiaries | 52 | 47 | 70 | ||
| Joint operations | 61 | 55 | 57 | ||
| Joint ventures | 540 | 510 | 293 | ||
| Associated companies and other shareholdings | 69 | 51 | 101 |
| 1st Quarter | |||
|---|---|---|---|
| 2014 | 2013 | ||
| Income before taxes and minority interests | million € | 2,066 | 2,043 |
| Special items | million € | (67) | (10) |
| Amortization of intangible assets | million € | 146 | 153 |
| Amortization of intangible assets contained in special items | million € | – | – |
| Adjusted income before taxes and minority interests | million € | 2,145 | 2,186 |
| Adjusted income taxes | million € | (575) | (557) |
| Adjusted income before minority interests | million € | 1,570 | 1,629 |
| Adjusted minority interests | million € | (65) | (99) |
| Adjusted net income | million € | 1,505 | 1,530 |
| Weighted average number of outstanding shares | in thousands | 918,479 | 918,479 |
| Adjusted earnings per share | € | 1.64 | 1.67 |
The earnings per share figure adjusted for special items and amortization of intangible assets has become internationally established as a key figure that can be compared over the course of time and is particularly suitable for forecasts of future earnings.
Special items are primarily the result of the integration of acquired businesses, restructuring measures, impairment losses, and gains or losses resulting from divestitures and the sale of investments. These involve expenses and income that do not arise in conjunction with ordinary business activities.
Intangible assets primarily result from the purchase price allocation following acquisitions. The amortization of intangible assets is therefore of a temporary nature.
The calculation of earnings per share in accordance with the International Financial Reporting Standards (IFRS) is presented in the Notes on page 26. Adjusted income before taxes and minority interests, adjusted net income and adjusted earnings per share are key ratios that are not defined under IFRS. They should not be viewed in isolation, but rather treated as supplementary information.
This report contains forward-looking statements. These statements are based on current estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed from pages 106 to 114 in the BASF Report 2013. The BASF Report can be found online at: basf.com/report. We do not assume any obligation to update the forward-looking statements contained in this report.
Interim Report 1st Half 2014
Oct. 24, 2014
Interim Report 3rd Quarter 2014
Full-Year Results 2014
April 30, 2015
• By phone: +49 621 60-99001
General inquiries Phone: +49 621 60-0, Fax: +49 621 60-42525
Corporate Media Relations Jennifer Moore-Braun, Phone: +49 621 60-99123, Fax: +49 621 60-92693
Investor Relations Magdalena Moll, Phone: +49 621 60-48230, Fax: +49 621 60-22500
Internet
BASF SE, 67056 Ludwigshafen, Germany
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