BASF SE

Quarterly Report • Oct 30, 2007

Heading for Further Records: Increased Sales and Earnings in the 3rd Quarter of 2007 Interim Financial Statements

BASF Group Third-Quarter Results 2007

Overview

		3rd Quarter		January – September
Million €	2007	2006	Change in %	2007	2006	Change in %
Sales	13,963	13,299	5.0	43,251	38,136	13.4
Income from operations before depreciation and amortization (EBITDA)	2,355	2,368	(0.5)	7,691	7,143	7.7
Income from operations (EBIT) before special items	1,705	1,615	5.6	5,851	5,390	8.6
Income from operations (EBIT)	1,689	1,438	17.5	5,706	5,084	12.2
Financial result	(105)	(133)	21.1	(264)	(89)
Income before taxes and minority interests	1,584	1,305	21.4	5,442	4,995	8.9
Net income	1,213	613	97.9	3,272	2,483	31.8
Earnings per shares (€)	2.50	1.22	104.9	6.65	4.91	35.4
EBIT before special items in percent of sales	12.2	12.1	–	13.5	14.1	–
Cash provided by operating activities	1,556	1,355	14.8	4,299	3,563	20.7
Additions to long-term assets1	658	3,669	(82.1)	1,694	9,053	(81.3)
Excluding acquisitions	658	502	31.1	1,694	1,523	11.2
Amortization and depreciation2	666	930	(28.4)	1,985	2,059	(3.6)
Segment assets (end of period)3	36,945	38,994	(5.3)	–	–	–
Personnel costs	1,616	1,614	0.1	4,889	4,436	10.2
Number of employees (end of period)	95,126	95,518	(0.4)	–	–	–

¹ Property, plant and equipment and intangible assets; previous year's values adjusted following purchase price allocation for Engelhard Corp.

² Property, plant and equipment and intangible assets

³ Property, plant and equipment, intangible assets, inventories and business-related receivables

3rd Quarter 2007

changes compared with 3rd quarter 2006

sales

EBIT before special items

News from Our Innovation Centers

Non-flammable sofas with a Basotect core: Due to strict fire protection regulations, public buildings have up to now predominantly used chairs made of steel. Basotect, BASF's flame-resistant melamine resin foam, now improves both comfort and esthetics in such buildings.

Two properties are decisive for the use of Basotect® in non-flammable upholstered furniture: fire resistance and elasticity. Thanks to the high nitrogen content of the melamine resin, the foam is flame-resistant even without the addition of flame retardants. In tests on flammability in accordance with national and international regulations, the melamine resin foam achieved the highest classification possible for organic substances.

Static and dynamic tests have also been performed on Basotect in order to assess sitting comfort, elastic properties and plastic deformation. Once again, the product meets all requirements with regard to stability and durability. A filigree three-dimensional network structure results in a material, which, by nature brittle, becomes highly flexible. These features of the innovative material allow great processing and design freedom, with the result that this BASF foam is ideal for use in durable and comfortable upholstered furniture.

Thanks to the combination of fire resistance and durability, sofas fitted with Basotect are highly suitable for use in public buildings such as government offices, movie theaters and hospitals.

The first sofa with a core made of specialty foam will soon be launched under the name "Kite 560" by Walter Knoll, a manufacturer of upholstered furniture located in Herrenberg, Germany. It was designed by the British design team of PearsonLloyd, which has already received a number of design awards for its successful combination of safety and comfort.

Other areas of application of Basotect

• Due to its excellent sound-absorbing property, Basotect is used for soundproofing buildings. —
• The light variant of the product, Basotect UL (ultra light), is used for cabin insulation and seats in widebody aircrafts. —
• The BASF foam protects sensitive satellites while they are transported into space. —

Effective protection against malaria: Malaria is one of the most dangerous diseases worldwide. It is transmitted by mosquitoes, therefore putting at risk many millions of people who are not protected against these insects. BASF has now developed an effective means of protection: Interceptor, an insecticidal mosquito net with long-lasting impregnation.

Interceptor is an insecticidal mosquito net that protects people against mosquito-transmitted malaria infections. The most important customers for Interceptor nets are international aid organizations such as Unicef, national ministries of health and non-government organizations. Although Africa is the main market, Interceptor will also be offered in Asia and Latin America.

Between 300 and 500 million people around the globe are infected with malaria each year. Moreover, the disease, which is transmitted by the Anopheles genus of mosquito, kills more than a million people annually. Those most at risk are children and pregnant women in many areas of both Asia and Africa.

A few years ago, the World Health Organization (WHO) prompted the chemical industry to develop insecticidal mosquito nets. The main challenge in this undertaking was to develop a controlled-release system to ensure that the active substance would remain in the nets even after regular washing. At the same time, it was necessary to ensure that the active substance can reach the surface of the fibers so that it can perform its task of repelling or killing mosquitoes.

Researchers at BASF succeeded in integrating Fendona®, a fast-acting insecticide recommended by the WHO, into special binding polymers. The result was Fendozin®, a textile-finishing product with a long-lasting insecticide effect. Nets treated with this product bear the name Interceptor®. Interceptor is straightforward to use, while the textile-finishing product is invisible and odorless. The net remains effective even after twenty washes and has a lifetime of at least three years. As mosquitoes that come into contact with an Interceptor net are quickly paralyzed and in almost all cases killed, Interceptor efficiently protects people against possible infection.

Interceptor mosquito net protects people while they sleep

• The Fendozin textile-finishing product contains the fast-acting BASF insecticide Fendona. —
• Effectiveness is maintained even after 20 washes. —
• Key markets are Africa, Asia and Latin America. —

Contents

• 2 BASF Group Business Review
• 4 BASF Shares
• 5 Significant Events and Outlook
• 6 Chemicals
• 7 Plastics
• 8 Performance Products
• 9 Agricultural Products & Nutrition
• 10 Oil & Gas

• 11 Regions

• 12 Overview of Other Topics

• 13 Consolidated Statements of Income
• 14 Consolidated Balance Sheets
• 15 Consolidated Statements of Cash Flows
• 16 Consolidated Statements of Recognized Income and Expense
• 17 Consolidated Statements of Stockholders' Equity
• 18 Segment Reporting
• 20 Notes to the Interim Financial Statements

Front cover: Overview 3rd Quarter 2007 | News from Our Innovation Centers Back cover: Important Dates | Contacts

Cover photo: Rick Chen (right) and Jerry Xu, both production workers, at the BASF Electronic Materials plant in Shanghai, China.

3rd quarter 2007

changes compared with 3rd quarter 2006

earnings per share

cash provided by operating activities

BASF Group Business Review 3rd Quarter 2007

Sales

All segments contributed to the 5% increase in sales to €14 billion in the third quarter. Compared with the same quarter last year, sales volumes rose and sales prices were increased slightly. Disregarding currency effects, in particular those due to the depreciation of the U.S. dollar, sales increased by 8%.

Factors influencing sales

% of sales	3rd Quarter	Jan. – Sept.
Volumes	7	5
Prices	1	2
Acquisitions/divestitures	–	9
Currencies	(3)	(3)
	5	13

In the Chemicals segment, all divisions apart from Petrochemicals recorded a significant increase in sales. In the Petrochemicals division, business was negatively affected by scheduled plant turnarounds.

All divisions in the Plastics segment contributed to the increase in sales. The Polyurethanes division in particular benefited from a continued high level of global demand and recorded an increase in both sales volumes and prices.

Sales in the Performance Products segment increased slightly. In the Coatings division, the automotive coatings business in China and the architectural coatings business in South America developed very well, therefore contributing to the rise in volumes and sales. In the Performance Chemicals division, sales declined slightly as a result of currency effects and divestitures.

The highest percentage growth rate was recorded by the Agricultural Products & Nutrition segment. In the Agricultural Products division, this increase can be particularly attributed to a high level of demand in Europe and South America. Sales in the Fine Chemicals division remained at the same level as in the third quarter of 2006, with growth in individual vitamins balancing out the declines that resulted from the discontinuation of the lysine business and the progressing sale of the premix business.

In the Oil & Gas segment, sales rose as a result of higher volumes in natural gas trading. A decline in the exploration and production business, primarily based on volumes, was more than compensated for.

Third-quarter sales by segment

Million €

Chemicals	2007	3,597	+5%
	2006	3,442
Plastics	2007	3,361	+3%
	2006	3,256
Performance	2007	2,990	+1%
Products	2006	2,959
Agricultural Products	2007	1,039	+7%
& Nutrition	2006	973
Oil & Gas	2007	2,185	+3%
	2006	2,116

BASF Group 3rd Quarter 2007

• Sales up 5% —
• EBIT before special items up 6% —
• EBIT up 17% as a result of lower special charges —
• Earnings per share more than doubled —

Earnings

Compared with the third quarter of 2006, income from operations (EBIT) before special items increased by approximately 6% to €1,705 million.

Earnings increased in the Chemicals segment despite scheduled maintenance shutdowns in the Petrochemicals division. Significantly higher earnings were posted by the Inorganics, Catalysts and Intermediates divisions.

The Plastics segment was not able to equal the excellent earnings level achieved in the same quarter of the previous year. Above all, this was due to a decline in Performance Polymers, which can be attributed to negative currency effects and production outages.

In the Performance Products segment, EBIT before special items remained below the figure for the third quarter of 2006. EBIT increased due to lower special charges. A clear increase in earnings in the Construction Chemicals division was not able to offset declines in other divisions.

Both divisions in the Agricultural Products & Nutrition segment posted higher earnings compared to the same quarter of the previous year. In the Fine Chemicals division, restructuring measures proved particularly successful.

In the Oil & Gas segment, earnings fell as a result of a decrease in oil production and falling margins in natural gas trading.

Earnings of "Other" improved, in particular due to the allocation of charges for BASF's stock option program (BOP) to the segments. This expense was recorded under "Other" in the first half of the year. Foreign currency results that are not allocated to the segments improved and were positive.

Compared to the third quarter of 2006, EBIT climbed 17% to €1,689 million. Special items in income from operations include in particular special income from the sale of our interest in a cracker in Geismar, Louisiana in the Chemicals segment, as well as costs for environmental protection measures recorded under "Other".

The financial result improved, especially thanks to lower interest expenses, by €28 million to €(105) million.

Income before taxes and minority interests rose by 21% to €1,584 million.

The tax rate amounted to 21% compared to 49% in the same quarter of last year. As a result of the reduction of the tax rate to just under 29% as part of the German Corporate Tax Reform 2008, deferred tax assets and liabilities need to be reassessed. BASF predominantly has deferred tax liabilities in Germany. This has resulted in a non-recurring, non-cash income of €186 million. Foreign taxes for oil production that are noncompensable with German corporate income tax amounted to €329 million compared with €349 million in the same period of 2006.

Net income year on year rose by 98% to €1,213 million. Earnings per share were €2.50 as opposed to €1.22 in the third quarter of 2006.

Third-quarter EBIT before special items

Million €
Chemicals	2007		470	+6%
	2006		444
Plastics	2007		295	(7)%
	2006		316
Performance	2007		217	(9)%
Products	2006		239
Agricultural Products	2007		33	-
& Nutrition	2006		(46)
Oil & Gas	2007		657	(12)%
	2006		749

Special items

	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Full Year
Million €	2007	2006	2007	2006	2007	2006	2007	2006	2007	2006
– Income from operations	(106)	(16)	(23)	(113)	(16)	(177)		(201)		(507)
– Financial result	–	–	–	–	–	–		–		–
	(106)	(16)	(23)	(113)	(16)	(177)		(201)		(507)

BASF Shares

Overview BASF shares		3rd Quarter 2007	January – September 2007
Performance (with dividends reinvested)
BASF	%	(0.2)	35.8
DAX 30	%	(1.8)	19.2
DJ EURO STOXX 50	%	(2.2)	8.8
DJ Chemicals	%	7.3	27.8
MSCI World Chemicals	%	3.1	21.0

Share prices and trading (XETRA)

Average	€	94.96	86.91
High	€	99.45	99.45
Low	€	90.08	71.95
Close (as of September 28, 2007)	€	97.00	97.00
Average daily trade	Million shares	3.3	3.5
Market capitalization (as of September 28, 2007)	Billion €	47.6	47.6

Strong performance of BASF shares since the beginning of the year

Closing the third quarter at a value of €97, the BASF share price remained almost identical to the closing price of the previous quarter. Shares increased in value by around 36% over the first nine months of the year. As a result, our shares outperformed the German and European stock markets, for which the key indices DAX 30 and DJ EURO STOXX 50 rose by approximately 19% and 9% respectively in the same period. Between January and September, BASF shares also outperformed the global industry indices DJ Chemicals and MSCI World Chemicals, which increased by around 28% and 21% respectively.

BASF no longer listed on the NYSE

As of September 6, 2007, BASF American Depositary Receipts (ADR) are no longer traded on the New York Stock Exchange (NYSE). This delisting is helping to reduce both complexity and costs. BASF is continuing its ADR program in order to allow investors to keep their ADRs and trade them over-the-counter in the United States. BASF shares continue to be listed on the stock exchanges in Frankfurt, London and Zurich.

Further share buybacks

We bought back shares for €548 million in the third quarter of 2007 as part of our €3 billion buyback program. As a result, BASF repurchased 15 million shares for a total of €1.3 billion or an average price of €86.75 per share in the first nine months of the year. The total number of outstanding shares, following the deduction of 5.8 million shares that are earmarked for cancellation, is 484.7 million.

Inclusion in DJSI World sustainability index

In September, BASF was included in the Dow Jones Sustainability World Index for the seventh time in succession. Out of the 2,500 largest representatives of the Dow Jones Global Index, this important sustainability index lists the leading 10% from each industry with regard to sustainability.

Investor relations award

In September, BASF was ranked number one in the Thomson Extel survey for the best IR activities in the European chemical industry.

BASF Shares

• BASF shares increased in value by 36% over the first nine months of 2007 —
• Shares bought back for €548 million in the third quarter of 2007 —
• Up-to-date information on BASF shares at: corporate.basf.com/share —

Change in value of an investment in BASF shares January – September 2007 (with dividends reinvested; indexed)

Significant Events and Outlook

Significant events

Following on from BASF Aktiengesellschaft's filing on August 27 to delist from the New York Stock Exchange (NYSE), BASF American Depositary Receipts (ADR) were traded on the NYSE for the last time on September 5. The request for deregistration and the termination of reporting obligations under the U.S. Securities Exchange Act of 1934 was filed on September 6.

In the course of the transformation of BASF Aktiengesellschaft into a European Company (SE), negotiations on the content of the participation agreement were launched on September 6. A twelve-person commission of the special negotiating body of European employees is conducting negotiations with company representatives with regard to employee participation rights in the SE. The talks are scheduled to be concluded by the end of the year, while the transformation into an SE is to take effect at the beginning of 2008.

On October 25, BASF Aktiengesellschaft and the Russian company OAO Gazprom largely completed their asset swap by legally transferring their respective shareholdings. This will give BASF an interest of 35% in the economic rewards of the company OAO Severneftegazprom, which holds the license to the Yuzhno Russkoye natural gas field in Western Siberia. In return, OAO Gazprom has increased its shareholding in the joint natural gas trading company WINGAS GmbH to 50% less one share from previously 35%. The remaining part of the asset swap will shortly be put into effect.

Outlook

Our forecast for 2007 is now based on the following conditions:

• Global economic growth of 3.5% —
• An average oil price (Brent) of around \$70/barrel —
• An average dollar/euro exchange rate of \$1.35 per euro —

The statements on risks made in the Financial Report 2006 remain valid. Based on the information currently available, we do not perceive any significant individual risks either at the present time or in the foreseeable future. Neither does the total sum of individual risks pose a threat to the continued existence of the BASF Group. > Detailed information is available on pages 72 to 75 of the Financial Report 2006, "Risk Management System and Risks of Future Development".

We want to continue to grow faster than the market. We expect sales of close to €58 billion in 2007. Also in the fourth quarter, scheduled plant turnarounds, in particular in Petrochemicals, are set to reduce earnings. Nevertheless, we expect EBIT before special items in 2007 to exceed the previous year's record level.

Significant Events and Outlook

• BASF ADRs traded on the New York Stock Exchange for the last time on September 5 —
• Transformation of BASF into a European Company (SE) proceeding as planned —
• Third quarter confirms positive outlook for 2007: Increase in sales to nearly €58 billion, EBIT before special items expected to be above last year —

Chemicals

Segment data		3rd Quarter		January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	3,597	3,442	5	10,746	8,124	32
Thereof Inorganics	294	271	8	887	841	5
Catalysts	1,248	999	25	3,674	1,279	187
Petrochemicals	1,431	1,607	(11)	4,339	4,305	1
Intermediates	624	565	10	1,846	1,699	9
Sales including intersegmental transfers	4,768	4,605	4	14,377	11,393	26
EBITDA	673	599	12	2,213	1,460	52
EBIT before special items	470	444	6	1,700	1,112	53
EBIT before special items in percent of sales	13.1	12.9	–	15.8	13.7	–
EBIT	501	229	119	1,712	809	112
Assets	9,834	10,703	(8)	–	–	–
Research and development expenses	53	46	15	148	112	32
Additions to property, plant and equipment and intangible assets	188	139	35	499	3,312	(85)

We increased sales in the Chemicals segment through higher sales volumes and sales prices (volumes 5%, prices 3%, currencies –3%). Despite scheduled plant turnarounds, we increased earnings.

Inorganics

Strong demand resulted in higher volumes and sales, especially in Europe and Asia. Sales of inorganic specialties, glues and impregnating resins, and electronic chemicals grew particularly strongly. Increased volumes and improved margins for methane-based derivatives led to an increase in earnings.

Catalysts

Thanks to strong demand, we significantly increased sales. In particular, we recorded an increase in sales worldwide for materials services and emission-control catalysts for cars. Earnings increased significantly compared with the third quarter of 2006.

By the beginning of 2009, we intend to almost double our production capacity for automotive catalysts in Shanghai, China and triple capacity in Chennai, India.

Petrochemicals

As a result of cracker turnarounds in Antwerp, Belgium and in Port Arthur, Texas, sales and EBIT before special items were lower than in the same quarter of last year. EBIT in the third quarter included special income from the sale of our stake in an ethane cracker in Geismar, Louisiana, and reached the level of the third quarter of 2006.

Intermediates

We substantially increased sales in the Intermediates division. This was primarily the result of a higher growth rate in Asia, where demand for butanediol and derivatives developed very well. It was possible to increase sales prices in key product lines. Moreover, restructuring measures introduced over the past two years also contributed towards a significant improvement in earnings.

Chemicals

• Higher sales and earnings —
• Scheduled cracker turnarounds in Antwerp, Belgium and Port Arthur, Texas —
• Restructuring measures in the Intermediates division are proving effective —

Sales

q3 2007 compared with Q3 2006

EBIT

q3 2007 compared with Q3 2006

+5 % +6 %

Plastics

Segment data		3rd Quarter			January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	3,361	3,256	3	10,189	9,515	7
Thereof Styrenics	1,305	1,297	1	4,062	3,680	10
Performance Polymers	728	720	1	2,291	2,208	4
Polyurethanes	1,328	1,239	7	3,836	3,627	6
Sales including intersegmental transfers	3,521	3,408	3	10,648	9,914	7
EBITDA	423	438	(3)	1,366	1,336	2
EBIT before special items	295	316	(7)	982	963	2
EBIT before special items in percent of sales	8.8	9.7	–	9.6	10.1	–
EBIT	293	306	(4)	979	951	3
Assets	6,795	6,992	(3)	–	–	–
Research and development expenses	42	38	11	113	111	2
Additions to property, plant and equipment and intangible assets	124	103	20	344	437	(21)

Quarterly sales in the Plastics segment were higher than in the same period of 2006 thanks to higher volumes and prices (volumes 3%, prices 4%, currencies –4%). Earnings did not reach the excellent figure achieved in the third quarter of 2006, primarily due to a decline in earnings in the Performance Polymers division.

Styrenics

Price increases led to a slight increase in sales. Whereas sales increased in Europe, South America and Asia, the figure for North America decreased, primarily as a result of currency effects. In the face of a volatile market environment, this division's earnings were lower than in the same period of the previous year.

As announced mid-July, we are investigating strategic options for selected styrenics activities. Activities under consideration include the styrene monomer (SM), polystyrene (PS), styrene butadiene copolymer (SBS) and acrylo-nitrile butadiene styrene (ABS) businesses. In 2006, these activities generated sales of well over €3 billion.

Performance Polymers

A slight sales increase was recorded as a result of higher volumes, especially in the case of compounded polyamides and Ultradur®. Negative currency effects had a detrimental impact on sales and earnings growth. In addition, production outages impacted earnings, with the result that the figure was significantly below the record level achieved in the same quarter of the previous year.

A new production plant for polyamide 6 (nylon) at the Verbund site in Freeport, Texas replaces a plant in Enka, North Carolina and has an annual capacity of 120,000 metric tons.

Polyurethanes

Global demand for polyurethanes continued to rise. We particularly increased sales in the third quarter in Europe and Asia. Volumes also increased in North America. However, sales and earnings in this region were negatively impacted by the weakness of the U.S. dollar. Overall, the division's sales and earnings figures were higher than in the third quarter of 2006, thanks not only to increased volumes but also to price increases.

Plastics

• Increase in sales; earnings lower than excellent figure for the third quarter of 2006 —
• Production plant for polyamide 6 opened in Freeport, Texas —
• Strong growth in Polyurethanes —

Sales

q3 2007 compared with Q3 2006

EBIT

q3 2007 compared with Q3 2006

Performance Products

Segment data		3rd Quarter		January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	2,990	2,959	1	8,826	7,303	21
Thereof Construction Chemicals	555	549	1	1,571	569	176
Coatings	645	621	4	1,922	1,788	7
Functional Polymers	918	899	2	2,671	2,539	5
Performance Chemicals	872	890	(2)	2,662	2,407	11
Sales including intersegmental transfers	3,087	3,063	1	9,138	7,601	20
EBITDA	339	341	(1)	1,071	968	11
EBIT before special items	217	239	(9)	706	696	1
EBIT before special items in percent of sales	7.3	8.1	–	8.0	9.5	–
EBIT	206	180	14	676	636	6
Assets	9,810	10,175	(4)	–	–	–
Research and development expenses	79	84	(6)	236	203	16
Additions to property, plant and equipment and intangible assets	106	3,190	(97)	311	4,273	(93)

As a result of increased volumes, the segment recorded a slight increase in sales (volumes 5%, portfolio –1%, currencies –3%). Whereas EBIT before special items decreased, EBIT increased as a result of lower special charges.

Construction Chemicals

Sales increased slightly, as the construction boom in China and the Middle East enabled us to expand our business. In North America, despite negative currency effects, sales were at approximately the same level as in the third quarter of 2006. In Europe, growth was recorded in concrete admixtures, while demand in the area of housing construction declined slightly. Earnings were much higher than in the third quarter of 2006.

Coatings

We were able to increase both volumes and sales, particularly thanks to booming business with automotive coatings in China and architectural coatings in South America. Sales decreased in North America due to currency effects and, in the case of industrial coatings, as a result of a

decline in private housing construction. On account of higher raw material costs and negative currency effects, earnings were below the figure achieved in the same quarter of 2006.

Functional Polymers

Functional Polymers recorded a slight increase in sales, with a particular increase in volumes in Europe and Asia. As for acrylic monomers, margins declined only slightly compared to the preceding quarters. EBIT before special items did not reach the level of the same period last year. The new plant for superabsorbents with a capacity of 180,000 metric tons per year that is integrated into the Verbund site in Freeport, Texas replaces two plants in the region that have been shut down in the meantime.

Performance Chemicals

Sales have decreased slightly as a result of divestitures and currency effects. While we recorded continued strong demand in Europe and Asia, business in North America was negatively influenced by a decline in the construction and automotive industries. Earnings fell.

Performance Products

• Slight increase in sales; decline in EBIT before special items —
• Higher earnings in the Construction Chemicals division —
• Plant for superabsorbents opened in Freeport, Texas —

Sales

EBIT

q3 2007

compared with Q3 2006

+1 % –9 %

q3 2007 compared with Q3 2006

Agricultural Products & Nutrition

Overview Agricultural Products		3rd Quarter			January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	574	509	13	2,428	2,361	3
Sales including intersegmental transfers	577	511	13	2,437	2,374	3
EBITDA	40	(3)	-	592	547	8
EBIT before special items	(12)	(54)	78	448	324	38
EBIT before special items in percent of sales	(2.1)	(10.6)	–	18.5	13.7	–
EBIT	(12)	(55)	78	443	389	14
Assets	4,199	4,559	(8)	–	–	–
Research and development expenses	79	82	(4)	234	245	(4)
Additions to property, plant and equipment and intangible assets	20	1		55	53	4

We substantially increased sales in the Agricultural Products division. This is due to higher volumes and sales prices, in particular for fungicides for soybean cultivation in South America (volumes 10%, prices 4%, currencies –1%). Our plant health concept for increasing yield is being well received by our customers. For example, our

Headline® product containing F500® is being put to increasing use in corn farming in the United States. In Europe, business with herbicides for rapeseed cultivation developed well. Earnings were negative due to the seasonal nature of the business, yet we have clearly improved upon the third quarter of the previous year.

Overview Fine Chemicals		3rd Quarter		January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	465	464	–	1,415	1,377	3
Sales including intersegmental transfers	461	465	(1)	1,419	1,387	2
EBITDA	76	12		190	148	28
EBIT before special items	45	8	463	106	37	186
EBIT before special items in percent of sales	9.7	1.7	–	7.5	2.7	–
EBIT	48	(26)		106	47	126
Assets	1,489	1,705	(13)	–	–	–
Research and development expenses	15	21	(29)	48	54	(11)
Additions to property, plant and equipment and intangible assets	20	17	18	48	357	(87)

Despite the discontinuation of the lysine business in the middle of the year and the progressing sale of the premix business, sales in the Fine Chemicals division were on a par with the third quarter of 2006 (volumes 1%, prices 6%, portfolio –4%, currencies –3%). Higher sales were recorded for vitamins, especially Vitamin B2 . Our aroma

chemicals and sun care products business also developed very well. Earnings increased substantially. This was primarily due to reduced fixed costs as a result of restructuring the nutrition unit as well as higher sales prices for several vitamins.

Agricultural Products & Nutrition

• Agricultural Products: €42 million increase in earnings; plant health concept well received by customers —
• Fine Chemicals: €37 million increase in earnings; great improvement in the nutrition unit —

Sales Agricultural Products

q3 2007 compared with Q3 2006

+13% 0 %

Sales Fine Chemicals

q3 2007 compared with Q3 2006

Oil & Gas

Segment data		3rd Quarter		January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	2,185	2,116	3	7,424	7,582	(2)
Thereof Exploration and production	1,044	1,120	(7)	3,160	3,420	(8)
Natural gas trading	1,141	996	15	4,264	4,162	2
Sales including intersegmental transfers	2,470	2,341	6	8,273	8,371	(1)
EBITDA	779	894	(13)	2,584	2,820	(8)
Thereof Exploration and production	700	785	(11)	2,069	2,327	(11)
Natural gas trading	79	109	(28)	515	493	4
EBIT before special items	657	749	(12)	2,210	2,465	(10)
Thereof Exploration and production	617	672	(8)	1,803	2,076	(13)
Natural gas trading	40	77	(48)	407	389	5
EBIT before special items in percent of sales	30.1	35.4	–	29.8	32.5	–
Thereof Exploration and production	59.1	60.0	–	57.1	60.7	–
Natural gas trading	3.5	7.7	–	9.5	9.3	–
EBIT	657	754	(13)	2,210	2,470	(11)
Thereof Exploration and production	617	677	(9)	1,803	2,081	(13)
Natural gas trading	40	77	(48)	407	389	5
Assets	4,818	4,860	(1)	–	–	–
Thereof Exploration and production	2,165	2,253	(4)	–	–	–
Natural gas trading	2,653	2,607	2	–	–	–
Exploration expenses	31	48	(35)	131	108	21
Additions to property, plant and equipment and intangible assets	129	178	(28)	308	368	(16)

Higher volumes in the natural gas trading business led to a slight increase in sales in the segment (volumes 8%, prices/currencies –5%). As a result of a decrease in oil production and falling margins in natural gas trading, earnings were below the figure for the third quarter of 2006.

A decline in sales was recorded in the exploration and production business. Production was below the level of the third quarter of 2006. Increased natural gas production volumes were unable to compensate the lower oil production that resulted from farming out a concession in Dubai as well as from a lower production level in Argentina. The average price of Brent crude increased by

approximately \$5 per barrel to around \$75 per barrel. In euro terms, the oil price, at €54 per barrel, remained on a par with the price in the third quarter of 2006 due to the weaker U.S. dollar. The high level of earnings achieved in the same quarter of the previous year was not reached.

Volumes and sales in natural gas trading rose substantially. Margins decreased significantly as a result of a strong increase in the purchase prices for natural gas and a decline in oil price-indexed sales prices. Earnings were therefore lower than the excellent figure for the third quarter of 2006.

Oil & Gas

• Higher volumes in natural gas trading —
• Decline in oil production volumes —
• Slight increase in sales; earnings lower than excellent figure for the third quarter of 2006 —

Sales

q3 2007 compared with Q3 2006

EBIT

q3 2007 compared with Q3 2006

+3 % –12 %

Regions

Overview Regions

	Sales by location of company				Sales by location of customer			EBIT before special items
Million €	2007	2006	Change in %	2007	2006	Change in %	2007	2006	Change in %
3rd Quarter
Europe	7,900	7,426	6	7,410	6,922	7	1,208	1,242	(3)
Thereof Germany	5,539	5,297	5	2,680	2,374	13	930	985	(6)
North America (NAFTA)	3,041	3,206	(5)	3,008	3,263	(8)	198	175	13
Asia Pacific	2,236	1,987	13	2,440	2,145	14	218	125	74
South America, Africa, Middle East	786	680	16	1,105	969	14	81	73	11
	13,963	13,299	5	13,963	13,299	5	1,705	1,615	6
January – September
Europe	25,328	22,711	12	23,860	21,388	12	4,319	4,175	3
Thereof Germany	17,879	16,598	8	8,732	7,785	12	3,221	3,125	3
North America (NAFTA)	9,379	8,563	10	9,333	8,618	8	742	736	1
Asia Pacific	6,491	5,342	22	7,079	5,793	22	598	365	64
South America, Africa, Middle East	2,053	1,520	35	2,979	2,337	27	192	114	68
	43,251	38,136	13	43,251	38,136	13	5,851	5,390	9

Sales by location of company in Europe increased by 6%. EBIT before special items decreased by €34 million to €1,208 million. This was the result of plant turnarounds in the Petrochemicals and Performance Polymers divisions, as well as the lower contribution of the Oil & Gas segment.

Sales at companies in North America increased by 1% in dollar terms and decreased by 5% in euro terms. All segments posted lower sales in euro terms. EBIT before special items increased by €23 million to €198 million. Increased earnings, in particular in the Catalysts and Intermediates divisions, more than compensated for a decline resulting from scheduled maintenance shutdowns in Petrochemicals.

In Asia Pacific, we increased sales by 18% in local currency terms and by 13% in euro terms. EBIT before special items increased by €93 million to €218 million. The Chemicals segment contributed significantly to this increase. The Petrochemicals division succeeded in improving margins and sales prices for solvents and plasticizers. The Catalysts division benefited in particular from a high demand for emission-control catalysts for cars.

Sales in South America, Africa, Middle East rose by 17% in local currency terms and by 16% in euro terms. EBIT before special items increased by €8 million to €81 million. The Agricultural Products division greatly improved sales and earnings in South America, in particular thanks to good trade in fungicides for soybean cultivation. A decrease in production in the Oil & Gas segment negatively impacted earnings in the region. Catalysts recorded increased sales and earnings, especially in South Africa.

from the regions

• Europe: Plant turnarounds have negative impact on earnings —
• North America: Lower sales as a result of currency effects; increased earnings essentially due to the contribution of the Catalysts and Intermediates divisions —
• Asia Pacific: Significant increase in earnings, in particular in the Chemicals segment —
• South America, Africa, Middle East: Large increase in earnings in Agricultural Products —

Overview of Other Topics

Research and development

BASF, RWE Power and the Linde Group have agreed on the development of new processes for CO2 capture from combustion gases in coal-fired power plants. The cooperation will comprise the construction and operation of a pilot facility at the lignite-fired power plant of RWE Power AG in Niederaussem, Germany to test new technologies and solvents from BASF for the capture of CO2 – a process referred to as CO2 scrubbing. Linde will be responsible for the engineering and the construction of the pilot facility. BASF conducts worldwide research on products to save resources and energy, and is in particular contributing its wide-ranging expertise in CO2 capture technology to the cooperation.

BASF Corporation and CogniTek Management Systems Inc. announced their cooperation on August 2. The two companies intend to work together to examine whether the combined use of supercritical carbon dioxide and ionic liquids makes it possible to establish particularly efficient ways of using low temperature heat sources for power generation. The aim is to employ the unique properties of supercritical carbon dioxide and ionic liquids to transform low-quality heat with comparatively low temperatures, including solar, geothermal and combustion waste heat, into high-quality electric power. The result would be a combined power generation system with integral heating and cooling co-products capable of saving substantial amounts of energy.

BASF Plant Science and Crop Functional Genomics Center (CFGC), the leading South Korean consortium for crop research, signed a cooperation and licensing agreement in Seoul on October 4. The deal focuses on plant traits, which can increase yield and improve stress tolerance in major staple crops such as rice and corn. CFGC will contribute discovery work with genes that have already shown proven practical results, while BASF Plant Science will be responsible for the further analysis and development of the genes right through to the end product. CFGC will grant BASF Plant Science exclusive licensing rights to use the genes in important staple crops such as rice and corn outside of South Korea.

We spent a total of €346 million on research in the third quarter of 2007, compared to €327 million in the same period of the previous year.

Employees

Compared to the end of 2006, the number of BASF Group employees decreased by 121 to reach a figure of 95,126 on September 30, 2007. On this date, 64% of BASF Group employees worked in Europe, while 16% of employees can be attributed to North America, 14% to Asia Pacific, and 6% to South America, Africa, Middle East.

From January to September 2007, primarily as a result of acquisitions, personnel costs rose 10% compared to the same period of 2006 to reach €4,888 million.

Research and Development

• BASF, RWE and Linde are developing processes for CO2 capture in coal-fired power plants —
• Research agreement between BASF and CogniTek —
• Cooperation and licensing agreement between BASF Plant Science and Crop Functional Genomics Center —

Employees

Employees by region

	Sept. 30, 2007	Dec. 31, 2006	Change in %
Europe	61,211	61,444	–
North America (NAFTA)	15,229	15,513	(2)
Asia Pacific	13,003	12,788	2
South America, Africa, Middle East	5,683	5,502	3
	95,126	95,247	–

Interim Financial Statements

Consolidated Statements of Income

		3rd Quarter			January – September
Million €	2007		2006 Change in %	2007	2006	Change in %
Sales	13,963	13,299	5.0	43,251	38,136	13.4
Cost of sales	10,182	9,613	5.9	31,056	27,159	14.3
Gross profit on sales	3,781	3,686	2.6	12,195	10,977	11.1
Selling expenses	1,372	1,325	3.5	4,082	3,571	14.3
General and administrative expenses	260	238	9.2	782	631	23.9
Research and development expenses	346	327	5.8	1,028	910	13.0
Other operating income	197	169	16.6	536	587	(8.7)
Other operating expenses	311	527	(41.0)	1,133	1,368	(17.2)
Income from operations	1,689	1,438	17.5	5,706	5,084	12.2
Income from participations	19	19	–	90	64	40.6
Interest result	(121)	(141)	14.2	(358)	(244)	(46.7)
Other financial result	(3)	(11)	72.7	4	91	(95.6)
Financial result	(105)	(133)	21.1	(264)	(89)
Income before taxes and minority interests	1,584	1,305	21.4	5,442	4,995	8.9
Income taxes	325	645	(49.6)	1,971	2,364	(16.6)
Income before minority interests	1,259	660	90.8	3,471	2,631	31.9
Minority interests	46	47	(2.1)	199	148	34.5
Net income	1,213	613	97.9	3,272	2,483	31.8
Earnings per share (€)
Undiluted	2.50	1.22	104.9	6.65	4.91	35.4
Diluted	2.50	1.22	104.9	6.65	4.91	35.4

Consolidated Balance Sheets

Assets

Million €		Sept. 30, 2007 Sept. 30, 2006		Change in % Dec. 31, 2006	Change in %
Long-term assets
Intangible assets	8,278	9,626	(14.0)	8,922	(7.2)
Property, plant and equipment	14,571	15,133	(3.7)	14,902	(2.2)
Investments accounted for using the equity method	649	269	141.3	651	(0.3)
Other financial assets	1,404	1,247	12.6	1,190	18.0
Deferred taxes	452	1,087	(58.4)	622	(27.3)
Other long-term assets	1,355	616	120.0	612	121.4
	26,709	27,978	(4.5)	26,899	(0.7)
Short-term assets
Inventories	6,549	6,594	(0.7)	6,672	(1.8)
Accounts receivable, trade	8,246	7,833	5.3	8,223	0.3
Other receivables and miscellaneous short-term assets	2,284	2,463	(7.3)	2,607	(12.4)
Marketable securities	55	113	(51.3)	56	(1.8)
Cash and cash equivalents	1,460	759	92.4	834	75.1
	18,594	17,762	4.7	18,392	1.1
Total assets	45,303	45,740	(1.0)	45,291

Stockholders' equity and liabilities

Million €		Sept. 30, 2007 Sept. 30, 2006		Change in % Dec. 31, 2006	Change in %
Stockholders' equity
Subscribed capital	1,241	1,284	(3.3)	1,279	(3.0)
Capital surplus	3,180	3,135	1.4	3,141	1.2
Retained earnings	14,186	12,669	12.0	13,302	6.6
Other comprehensive income	308	354	(13.0)	325	(5.2)
Minority interests	615	520	18.3	531	15.8
	19,530	17,962	8.7	18,578	5.1
Long-term liabilities
Provisions for pensions and similar obligations	1,251	1,514	(17.4)	1,452	(13.8)
Other provisions	3,067	2,892	6.1	3,080	(0.4)
Deferred taxes	1,456	1,960	(25.7)	1,441	1.0
Financial indebtedness	7,000	5,906	18.5	5,788	20.9
Other long-term liabilities	989	967	2.3	972	1.7
	13,763	13,239	4.0	12,733	8.1
Short-term liabilities
Accounts payable, trade	3,574	3,591	(0.5)	4,755	(24.8)
Provisions	2,633	2,710	(2.8)	2,848	(7.5)
Tax liabilities	1,064	832	27.9	858	24.0
Financial indebtedness	2,947	5,058	(41.7)	3,695	(20.2)
Other short-term liabilities	1,792	2,348	(23.7)	1,824	(1.8)
	12,010	14,539	(17.4)	13,980	(14.1)
Total stockholders' equity and liabilities	45,303	45,740	(1.0)	45,291

Consolidated Statements of Cash Flows

	January – September
Million €	2007	2006
Net income	3,272	2,483
Depreciation and amortization of long-term assets	1,985	2,059
Changes in net working capital	(979)	(755)
Miscellaneous items	21	(224)
Cash provided by operating activities	4,299	3,563
Payments related to intangible assets and property, plant and equipment	(1,672)	(1,580)
Acquisitions/divestitures	37	(6,978)
Financial investments and other items	54	84
Cash used in investing activities	(1,581)	(8,474)
Proceeds from capital increases/repayments	(1,301)	(790)
Changes in financial liabilities	798	6,699
Dividends	(1,573)	(1,141)
Cash provided by/(used in) financing activities	(2,076)	4,768
Net changes in cash and cash equivalents	642	(143)
Cash and cash equivalents as of beginning of year and other changes	818	902
Cash and cash equivalents as shown on the balance sheet	1,460	759

Cash provided by operating activities

At €4,299 million, cash provided by operating activities from January to September 2007 was €736 million higher than in the same period of 2006. This can primarily be attributed to increased earnings.

Cash used in investing activities

A total of €1,581 million was used in investing activities over the first nine months of the year. Payments related to property, plant and equipment and intangible assets were again clearly below depreciation and amortization. The same period last year contained expenditures of approximately €7 billion for acquisitions.

Cash used in financing activities

Financing activities led to a cash outflow of €2,076 million. Dividends amounting to €1,484 million were paid out to shareholders of BASF Aktiengesellschaft, while minority shareholders in Group companies received €89 million. We spent €1,301 million on share buybacks in the first nine months of 2007, €548 million thereof in the third quarter.

Cash and cash equivalents amounted to €1,460 million as of September 30, 2007, compared with €834 million at the end of 2006. In the same period, financial indebtedness rose by €464 million to €9,947 million. Compared with the end of the previous year, net debt decreased by €162 million to €8,487 million. The equity ratio on September 30, 2007 stood at 43%. With an AA-/A-1+/outlook stable rating from Standard and Poor's and an Aa3/P-1/ outlook negative rating from Moody's, BASF has significantly stronger ratings than its competitors in the chemical industry.

Consolidated Statements of Recognized Income and Expense

Income and expense items		January – September
Million €	2007	2006
Net income before minority interests	3,471	2,631
Fair-value changes in available-for-sale securities	198	(4)
Cash-flow hedges	44	(20)
Change in foreign currency translation adjustments	(247)	(332)
Actuarial gains/losses from pensions and other obligations	752	109
Deferred taxes	(363)	(24)
Minority interests	(26)	(13)
Total income and expense recognized directly in equity	358	(284)
Total income and expense for the period	3,829	2,347
Thereof BASF	3,656	2,212
Thereof minority interests	173	135

Development of income and expense recognized directly in equity

	Retained earnings		Other comprehensive income		Total income and expense recognized directly in equity
Million €	Actuarial gains/ losses	Foreign currency translation adjustment	Fair value changes in available-for sale securities	Cash-flow hedges	Total of other comprehen sive income
As of January 1, 2007	(782)	26	341	(42)	325	(457)
Additions	752	–	198	–	198	950
Releases	–	(247)	–	44	(203)	(203)
Deferred taxes	(351)	4	(1)	(15)	(12)	(363)
As of September 30, 2007	(381)	(217)	538	(13)	308	(73)
As of January 1, 2006	(894)	475	258	(37)	696	(198)
Additions	109	–	30	(26)	4	113
Releases	–	(332)	(34)	6	(360)	(360)
Deferred taxes	(38)	6	1	7	14	(24)
As of September 30, 2006	(823)	149	255	(50)	354	(469)

Consolidated Statements of Stockholders' Equity

January – September 2007

Number of subscribed shares outstanding	Subscribed capital	Capital surplus	Retained earnings	Other com prehensive income	Minority interests	Stock­holders' equity
						18,578
						(1,301)
						–
–	–	–	(1,484)	–	(89)	(1,573)
–	–	–	3,272	–	199	3,471
–	–	–	401	(17)	(26)	358
–	–	(3)	–	–	–	(3)
484,685,000	1,241	3,180	14,186	308	615	19,530
	499,680,000 (14,995,000) –	1,279 (38) –	3,141 42 –	13,302 (1,305) –	325 – –	531 – –

January – September 2006

As of September 30, 2006	501,550,000	1,284	3,135	12,669	354	520	17,962
Changes in scope of consolidation and other changes	–	–	–	11	–	12	23
Income and expense recognized directly in equity	–	–	–	71	(342)	(13)	(284)
Net income	–	–	–	2,483	–	148	2,631
Dividends paid	–	–	–	(1,014)	–	(127)	(1,141)
Capital withdrawal by minority interests	–	–	–	–	–	18	18
Share buyback and cancellation of own shares including own shares intended to be cancelled	(12,829,000)	(33)	35	(810)	–	–	(808)
As of January 1, 2006	514,379,000	1,317	3,100	11,928	696	482	17,523
Million €	Number of subscribed shares outstanding	Subscribed capital	Capital surplus	Retained earnings	Other com prehensive income	Minority interests	Stock­holders' equity

Segment Reporting

3rd Quarter

	Sales				EBITDA			Income from operations (EBIT) before special items			Income from operations (EBIT)
			Change			Change			Change			Change
Million €	2007	2006	in %	2007	2006	in %	2007	2006	in %	2007	2006	in %
Chemicals	3,597	3,442	4.5	673	599	12.4	470	444	5.9	501	229	118.8
Plastics	3,361	3,256	3.2	423	438	(3.4)	295	316	(6.6)	293	306	(4.2)
Performance Products	2,990	2,959	1.0	339	341	(0.6)	217	239	(9.2)	206	180	14.4
Agricultural Products &
Nutrition	1,039	973	6.8	116	9		33	(46)		36	(81)
Thereof Agricultural
Products	574	509	12.8	40	(3)		(12)	(54)	77.8	(12)	(55)	78.2
Fine Chemicals	465	464	0.2	76	12		45	8	462.5	48	(26)
Oil & Gas	2,185	2,116	3.3	779	894	(12.9)	657	749	(12.3)	657	754	(12.9)
Other1	791	553	43.0	25	87	(71.3)	33	(87)		(4)	50
	13,963	13,299	5.0	2,355	2,368	(0.5)	1,705	1,615	5.6	1,689	1,438	17.5

3rd Quarter

	Research and development expenses				Assets2			Additions to fixed assets3			Amortization and depreciation4
			Change			Change			Change			Change
Million €	2007	2006	in %	2007	2006	in %	2007	2006	in %	2007	2006	in %
Chemicals	53	46	15.2	9,834	10,703	(8.1)	188	139	35.3	172	370	(53.5)
Plastics	42	38	10.5	6,795	6,992	(2.8)	124	103	20.4	130	132	(1.5)
Peformance Products	79	84	(6.0)	9,810	10,175	(3.6)	106	3,190	(96.7)	133	161	(17.4)
Agricultural Products & Nutrition	94	103	(8.7)	5,688	6,264	(9.2)	40	18	122.2	80	90	(11.1)
Thereof Agricultural Products	79	82	(3.7)	4,199	4,559	(7.9)	20	1		52	52	–
Fine Chemicals	15	21	(28.6)	1,489	1,705	(12.7)	20	17	17.6	28	38	(26.3)
Oil & Gas	1	–	–	4,818	4,860	(0.9)	129	178	(27.5)	122	140	(12.9)
Other1	77	56	37.5	8,358	6,746	23.9	71	41	73.2	29	37	(21.6)
	346	327	5.8	45,303	45,740	(1.0)	658	3,669	(82.1)	666	930	(28.4)

1 "Other" includes the fertilizers business and other businesses as well as expenses, income and assets not allocated to the segments. This item also includes foreign currency results from financial indebtedness that are not allocated to the segments, hedging of forecasted sales as well as from currency positions that are macrohedged [€22 million in the third quarter of 2007 (€(30) million in the third quarter 2006)].

2 The assets of "Other" include the assets of the fertilizers business and other businesses as well as assets that are not allocated to the segments (financial assets, cash and cash equivalents, receivables from financing activities, deferred taxes; September 30, 2007: €6,364 million, September 30, 2006: €4,827 million).

3 Property, plant and equipment and intangible assets; previous year's values adjusted following the purchase price allocation for Engelhard Corp.

4 Property, plant and equipment and intangible assets

Segment Reporting

January – September

	Sales				EBITDA			Income from operations (EBIT) before special items			Income from operations (EBIT)
			Change			Change			Change			Change
Million €	2007	2006	in %	2007	2006	in %	2007	2006	in %	2007	2006	in %
Chemicals	10,746	8,124	32.3	2,213	1,460	51.6	1,700	1,112	52.9	1,712	809	111.6
Plastics	10,189	9,515	7.1	1,366	1,336	2.2	982	963	2.0	979	951	2.9
Peformance Products	8,826	7,303	20.9	1,071	968	10.6	706	696	1.4	676	636	6.3
Agricultural Products & Nutrition	3,843	3,738	2.8	782	695	12.5	554	361	53.5	549	436	25.9
Thereof Agricultural Products	2,428	2,361	2.8	592	547	8.2	448	324	38.3	443	389	13.9
Fine Chemicals	1,415	1,377	2.8	190	148	28.4	106	37	186.5	106	47	125.5
Oil & Gas	7,424	7,582	(2.1)	2,584	2,820	(8.4)	2,210	2,465	(10.3)	2,210	2,470	(10.5)
Other1	2,223	1,874	18.6	(325)	(136)		(301)	(207)	(45.4)	(420)	(218)	(92.7)
	43,251	38,136	13.4	7,691	7,143	7.7	5,851	5,390	8.6	5,706	5,084	12.2

January – September

	Research and development expenses				Assets2			Additions to fixed assets3			Amortization and depreciation4
			Change			Change			Change			Change
Million €	2007	2006	in %	2007	2006	in %	2007	2006	in %	2007	2006	in %
Chemicals	148	112	32.1	9,834	10,703	(8.1)	499	3,312	(84.9)	501	651	(23.0)
Plastics	113	111	1.8	6,795	6,992	(2.8)	344	437	(21.3)	387	385	0.5
Peformance Products	236	203	16.3	9,810	10,175	(3.6)	311	4,273	(92.7)	395	332	19.0
Agricultural Products & Nutrition	282	299	(5.7)	5,688	6,264	(9.2)	103	410	(74.9)	233	259	(10.0)
Thereof Agricultural Products	234	245	(4.5)	4,199	4,559	(7.9)	55	53	3.8	149	158	(5.7)
Fine Chemicals	48	54	(11.1)	1,489	1,705	(12.7)	48	357	(86.6)	84	101	(16.8)
Oil & Gas	2	–	–	4,818	4,860	(0.9)	308	368	(16.3)	374	350	6.9
Other1	247	185	33.5	8,358	6,746	23.9	129	253	(49.0)	95	82	15.9
	1,028	910	13.0	45,303	45,740	(1.0)	1,694	9,053	(81.3)	1,985	2,059	(3.6)

1 "Other" includes the fertilizers business and other businesses as well as expenses, income and assets not allocated to the segments. This item also includes foreign currency results from financial indebtedness that are not allocated to the segments, hedging of forecasted sales as well as from currency positions that are macrohedged [€8 million in the first nine months of 2007 (€63 million in the first nine months of 2006)].

2 The assets of "Other" include the assets of the fertilizers business and other businesses as well as assets that are not allocated to the segments (financial assets, cash and cash equivalents, receivables from financing activities, deferred taxes; September 30, 2007: €6,364 million, September 30, 2006: €4,827 million).

3 Property, plant and equipment and intangible assets; previous year's values adjusted following the purchase price allocation for Engelhard Corp.

4 Property, plant and equipment and intangible assets

Notes to the Interim Financial Statements

1. Basis of presentation

The Consolidated Financial Statements of BASF Group for the year ended December 31, 2006 were prepared according to the International Financial Reporting Standards (IFRS) valid as of the balance sheet date. The current interim financial statements, as of September 30, 2007, were prepared using the same accounting policies. > The BASF Group's Financial Report for fiscal 2006 is available on the Internet at corporate.basf.com/financial-report.

The interim financial statements have not been audited.

2. Scope of consolidation

The Consolidated Financial Statements include BASF Aktiengesellschaft, the parent company, as well as all material subsidiaries on a fully consolidated basis. Material jointly operated companies are proportionally consolidated. The number of fully and proportionally consolidated companies has developed as follows:

Scope of consolidation

	2007	2006
As of January 1	328	180
Thereof proportionally consolidated	19	15
First-time consolidations	15	151
Thereof proportionally consolidated	–	4
Thereof changes in the consolidation method	–	–
Deconsolidations	36	3
Thereof proportionally consolidated	–	–
As of September 30/December 31	307	328
Thereof proportionally consolidated	19	19

Fifteen companies, thereof 12 companies due to changes in the structuring of participating interests and three companies due to their increased importance, have been included in the scope of consolidation since January 1, 2007.

As a result of being sold or merged with other BASF companies, 36 companies have been deconsolidated since the beginning of 2007. Mergers of Group companies from January to September 2007 were primarily associated with the integration of Engelhard Corp. and the construction chemicals business acquired in 2006.

3. Financial result

Financial result	3rd Quarter		January – September
	2007	2006	2007	2006
Income from investments accounted for using the equity method	1	5	43	22
Other income from participations	18	14	47	42
Income from participations	19	19	90	64
Interest expenses	152	165	455	374
Interest income	31	24	97	130
Interest result	(121)	(141)	(358)	(244)
Income from write-ups/write-downs and from the disposal of securities and receivables	1	1	1	85
Net financing income/(expense) from defined benefit plans and other long-term personnel provisions	8	12	25	41
Interest accrued on other interest-bearing liabilities	(8)	(14)	(27)	(44)
Construction interest	10	9	34	25
Other financial income/(expense)	(14)	(19)	(29)	(16)
Other financial result	(3)	(11)	4	91
Financial result	(105)	(133)	(264)	(89)

Compared to the same period of last year, interest

expenses in the first nine months of 2007 increased as a result of financing the acquisitions that were made in mid-2006.

Detailed information on financial indebtedness is provided in Note 12.

Income from investments accounted for using the equity method increased in the first three quarters of 2007 compared to the same period of 2006, primarily due to the shares in associated companies resulting from the ac-

In the first nine months of 2006, the financial results contained gains from from the disposal of securities.

quisition of Engelhard Corp.

4. income taxes

Income before taxes and minority interests is broken down into domestic and foreign income as follows:

Income before taxes and minority interests		3rd Quarter	January – September
Million €	2007	2006	2007	2006
Germany	284	420	1,398	1,637
Foreign oil production branches of German companies	490	500	1,344	1,422
Other foreign	810	385	2,700	1,936
	1,584	1,305	5,442	4,995

Income taxes are broken down into domestic and foreign income taxes as follows:

Income taxes		3rd Quarter		January – September
Million €	2007	2006	2007	2006
Germany	(189)	85	294	542
Foreign oil production branches of German companies	452	458	1,242	1,313
Thereof noncompensable	329	349	918	1,004
Other foreign	62	102	435	509
	325	645	1,971	2,364
Tax rate (%)	20.5	49.4	36.2	47.3

On July 6, 2007 the Business Tax Reform 2008 was approved by the Federal Council of Germany. Among other things, as of the beginning of 2008, this tax reform will reduce corporate income tax to 15% and trade income tax will be treated as a non-deductible business expense. Taking into account all changes, the average corporate tax rate will be reduced to just under 29%. The tax reform will therefore also affect the calculation of the deferred

taxes shown in the Consolidated Financial Statements. As the Business Tax Reform 2008 was passed in July 2007, it was possible to reduce the deferred tax liabilities in the financial statements for the third quarter of 2007. This resulted in a non-recurring, non-cash income of €186 million. Income and expense recognized directly in equity have led to a reduction in deferred tax assets and increase in deferred tax liabilities since December 31, 2006.

5. Minority interests

Minority interests		3rd Quarter	January – September
Million €	2007	2006	2007	2006
Minority interests in profits	50	46	211	158
Minority interests in losses	4	(1)	12	10
	46	47	199	148

Minority interests in profits were primarily related to the Group companies engaged in natural gas trading, as well as to the company operating the steam cracker in Port

Arthur, Texas. Minority interests in losses were mainly related to BASF Plant Science.

6. earnings per share

Earnings per share		3rd Quarter		January – September
		2007	2006	2007	2006
Net income	(Million €)	1,213	613	3,272	2,483
Number of outstanding shares (weighted average)	(Thousand)	485,608	502,780	491,803	505,814
Earnings per share	(€)	2.50	1.22	6.65	4.91

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 their effect on income.

In the first nine months of 2007 and in the corresponding period of 2006, the potentially dilutive instruments were antidilutive and should not be considered.

7. long-Term assets

Developments		January – September 2007
Million €	Intangible assets	Property, plant and equipment	Investments accounted for using the equity method and other financial assets
Acquisition costs
Balance as of January 1	10,623	46,631	2,127
Additions	92	1,668	291
Disposals	202	603	54
Exchange differences	(332)	(773)	(33)
Balance as of September 30	10,181	46,923	2,331
Amortization and depreciation
Balance as of January 1	1,702	31,729	286
Additions	409	1,583	1
Disposals	171	533	9
Exchange differences	(37)	(427)	–
Balance as of September 30	1,903	32,352	278
Net book value as of September 30	8,278	14,571	2,053

Additions to property, plant and equipment from January to September 2007 arose from a number of capital expenditure projects. The most important were as follows: at the site in Antwerp, Belgium, the expansion of the steam cracker, plants for acrylic acid, superabsorbents and polyisobutene, as well as MDI production capacity,

and the construction of an HPPO plant; in Geismar, Louisiana, the expansion of polyol production; in Port Arthur, Texas, investments to increase availability of the steam cracker; and in Freeport, Texas, the startup of plants for superabsorbents and polyamide 6. In Haiming, Germany, we have started up a natural gas compressor.

8. Inventories

Inventories

Million €	Sept. 30, 2007	Dec. 31, 2006
Raw materials and factory supplies	1,677	1,656
Work-in-process, finished goods and merchandise	4,787	4,962
Advance payments and services-in-process	85	54
	6,549	6,672

Work-in-process and finished goods and merchandise are combined into one item due to the production conditions in the chemical industry. Services-in-process relate primarily to inventory not invoiced at the balance sheet date. Inventories are valued using the weighted average cost method.

9. Stockholders' equity

Subscribed capital

Million €	Outstanding shares	Subscribed capital
Outstanding shares as of September 30, 2007	490,485.000	1,256
Repurchased shares intended to be cancelled	(5,800.000)	(15)
Outstanding shares as disclosed in the financial statements	484,685.000	1,241

The Board of Executive Directors received approval at the Annual Meeting on April 26, 2007 to buy back BASF shares to a maximum amount of 10% of subscribed capital by October 25, 2008. The shares will be purchased on the stock exchange or through a public purchase offer addressed to all shareholders. If BASF shares are purchased on a stock exchange, the price paid for the shares may not be higher than the highest market price on the buying day and may not be lower than 25% of that market price. In the case of a public purchase offer, the price offered by BASF may be a maximum of 10% higher than the highest market price on the third trading day prior to the publishing of the public purchase offer. This authorization supersedes the prior authorization to repurchase BASF shares granted by the Annual Meeting on May 4, 2006.

The Board of Executive Directors is authorized to cancel the repurchased shares without the approval of a further resolution at the Annual Meeting. A sale of treasury shares is only authorized after a corresponding resolution at the Annual Meeting, except when, with the approval of the Supervisory Board, the shares are used to acquire companies, parts of companies or participations in companies in return for shares.

In the first nine months of 2007, BASF acquired a total of 14,995,000 shares, or 3.00% of the issued shares, at an average purchase price of €86.75 per share. BASF spent a total of €1.3 billion on the share buyback program in the first three quarters of 2007.

On July 10, 2007, the Board of Executive Directors of BASF Aktiengesellschaft approved the cancellation of 10,605,000 BASF shares that have been bought back since the last cancellation in November 2006. The shares were cancelled by the end of July 2007. The total number of outstanding shares thus declined to 490,485,000.

As of September 30, 2007, a total of 5,800,000 shares of BASF stock were held by BASF Aktiengesellschaft. These shares were acquired for the purpose of cancellation. They were therefore not capitalized, but rather reduced equity.

Reserves

Million €	Sept. 30, 2007	Dec. 31, 2006
Legal reserves	349	311
Other retained earnings	13,837	12,991
	14,186	13,302

Changes in the scope of consolidation led to an increase in the legal reserves of €3.1 million in the first half of 2007. Transfers from other retained earnings increased legal reserves by €33.6 million. The offsetting of actuarial gains and losses resulted in an increase in retained earnings of €401.0 million.

10. Provisions for Pensions

The valuations using the projected unit credit method defined in IAS 19 were carried out under the following assumptions:

Assumptions used to determine the defined benefit obligation (weighted average)

		Germany	Foreign
%	Sept. 30, 2007		Dec. 31, 2006 Sept. 30, 2007	Dec. 31, 2006
Discount rate	5.00	4.50	5.81	5.31
Projected increase of wages and salaries	2.50	2.50	4.46	4.46
Projected pension increase	1.75	1.75	0.56	0.56

Assumptions used to determine expenses for pension benefits

(from January 1 through September 30 of the respective year; weighted average)

		Germany		Foreign
%	2007	2006	2007	2006
Discount rate	4.50	4.25	5.31	5.42
Projected increase of wages and salaries	2.50	2.50	4.46	4.48
Projected pension increase	1.75	1.50	0.56	0.49
Expected return on plan assets	4.93	4.92	7.35	7.71

The assumptions regarding the overall expected longterm rate of return are based on the desired portfolio structure and forecasts of expected individual asset class returns. The forecasts are based on long-term historical average returns and take into consideration the current yield level and the inflation trend. In the first six months of 2007, the interest rate was adjusted to take account of

developments in the capital markets. The resulting actuarial gains led to a significant increase in other long-term assets and to a decline in provisions for pensions and similar obligations.

The assumptions were not modified in the third quarter of 2007.

11. other provisions

Other provisions

Million €	Sept. 30, 2007	Sept. 30, 2006	Dec. 31, 2006
Other long-term provisions	3,067	2,892	3,080
Other short-term provisions	2,633	2,710	2,848
	5,700	5,602	5,928

In natural gas trading, provisions are established for outstanding invoices related to gas supplies that have not been priced as of the balance sheet date. These provisions declined over the first nine months of 2007. On the other hand, provisions for BASF's stock option program (BOP) increased in this period due to the rise in BASF's share price.

12. liabilities

Liabilities		Sept. 30, 2007		Sept. 30, 2006		Dec. 31, 2006
	Less than one	More than one	Less than one	More than one	Less than one	More than one
	year	year	year	year	year	year
Accounts payable, trade	3,574	–	3,591	–	4,755	-
Bonds and other liabilities to the capital market	2,570	6,389	4,523	4,985	3,219	5,000
Liabilities to credit institutions	377	611	535	921	476	788
Financial indebtedness	2,947	7,000	5,058	5,906	3,695	5,788
Tax liabilities	1,064	–	832	–	858	-
Advances received on orders	48	–	42	–	109	-
Liabilities on bills	43	5	70	2	47	3
Liabilities related to social security	130	28	98	1	136	18
Miscellaneous liabilities	1,357	779	1,894	773	1,405	755
Deferred income	214	177	244	191	127	196
Other liabilities	1,792	989	2,348	967	1,824	972

Financial indebtedness Carrying amounts based on

effective interest method

Million €	Nominal volume	Effective	interest rate Sept. 30, 2007 Sept. 30, 2006		Dec. 31, 2006
3.5% Euro Bond 2003/2010	1,000	3.63%	997	996	996
3.375% Euro Bond 2005/2012	1,400	3.42%	1,397	1,397	1,397
3-Month EURIBOR Bond 2006/2009	500	variable	500	500	500
4% Euro Bond 2006/2011	1,000	4.05%	998	998	998
4.5% Euro Bond 2006/2016	500	4.62%	496	495	495
5% Euro Bond 2007/2014	1,000	5.22%	996	–	–
Other bonds			575	599	614
Extendible floating rate US\$ notes		variable	952	–	–
Commercial paper			2,048	4,523	3,219
Bonds and other liabilities to the capital markets			8,959	9,508	8,219
Liabilities to credit institutions			988	1,456	1,264
			9,947	10,964	9,483

13. Related-party transactions

Material supply relationships exist for the supply of oil and gas between companies of the BASF Group and the proportionally consolidated joint venture companies Wintershall Erdgas Handelshaus GmbH &Co. KG, Berlin, and Wintershall Erdgas Handelshaus Zug AG, Zug, Switzerland. These transactions are conducted at arm's length prices and business terms. The unconsolidated portion of these supplies amounted to €464.9 million in the first three quarters of 2007 and €513.3 million in the same period of 2006.

Several members of the Supervisory Board and Board of Executive Directors also serve on the boards of executive directors or supervisory boards of companies with which BASF maintains business relations. These transactions are conducted at arm's length prices and business terms.

BASF has not issued loans to members of the Board of Executive Directors or the Supervisory Board.

This report contains forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, 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 in BASF's Form 20-F filed with the Securities and Exchange Commission. The Report on Form 20-F is available on the Internet at corporate.basf.com/20-F-Report. We do not assume any obligation to update the forward-looking statements contained in this report.

Annual Results 2007: February 21, 2008 Interim Report First Quarter 2008 and Annual Meeting: April 24, 2008 Interim Report First Half 2008: July 31, 2008 Interim Report Third Quarter 2008: October 30, 2008

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