Quarterly Report • Oct 28, 2010
Quarterly Report
Open in ViewerOpens in native device viewer
| Million € | 3rd Quarter | January – September | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | |
| Sales | 15,781 | 12,798 | 23.3 | 47,449 | 37,519 | 26.5 |
| Income from operations before depreciation and amortization (EBITDA) | 2,934 | 1,993 | 47.2 | 8,428 | 5,156 | 63.5 |
| Income from operations (EBIT) before special items | 2,213 | 1,248 | 77.3 | 6,373 | 3,373 | 88.9 |
| Income from operations (EBIT) | 2,155 | 971 | 121.9 | 6,074 | 2,671 | 127.4 |
| Financial result | (105) | (173) | 39.3 | (278) | (434) | 35.9 |
| Income before taxes and minority interests | 2,050 | 798 | 156.9 | 5,796 | 2,237 | 159.1 |
| Net income | 1,245 | 237 | 425.3 | 3,457 | 955 | 262.0 |
| Earnings per share (€) | 1.35 | 0.26 | 419.2 | 3.76 | 1.04 | 261.5 |
| Adjusted earnings per share (€)1 | 1.52 | 0.61 | 149.2 | 4.34 | 1.95 | 122.6 |
| EBITDA as a percentage of sales | 18.6 | 15.6 | – | 17.8 | 13.7 | – |
| Cash provided by operating activities | 2,586 | 1,312 | 97.1 | 5,307 | 4,959 | 7.0 |
| Additions to long-term assets2 | 637 | 363 | 75.5 | 1,511 | 5,278 | (71.4) |
| Excluding acquisitions | 637 | 520 | 22.5 | 1,511 | 1,780 | (15.1) |
| Research expenses | 357 | 343 | 4.1 | 1,083 | 1,020 | 6.2 |
| Amortization and depreciation2 | 779 | 1,022 | (23.8) | 2,354 | 2,485 | (5.3) |
| Segment assets (September 30)3 | 43,291 | 40,934 | 5.8 | – | – | – |
| Personnel costs | 1,913 | 1,825 | 4.8 | 6,029 | 5,160 | 16.8 |
| Number of employees (September 30) | 103,800 | 105,858 | (1.9) | – | – | – |
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 Market1 | 3 |
| Significant Events | 4 |
| Outlook | 5 |
| Chemicals | 6 |
| Plastics | 7 |
| Performance Products | 8 |
| Functional Solutions | 10 |
| Agricultural Solutions | 11 |
| Oil & Gas | 12 |
| Regional Results | 13 |
| Overview of Other Topics | 14 |
| Consolidated Statements of Income | 15 |
|---|---|
| Consolidated Balance Sheets | 16 |
| Consolidated Statements of Cash Flows | 17 |
| Consolidated Statements of Recognized Income | |
| and Expense | 18 |
| Consolidated Statements of Stockholders' Equity | 19 |
| Segment Reporting | 20 |
| Notes to the Interim Financial Statements | 22 |
| Calculation of Adjusted Earnings per Share | 33 |
1 This section is not part of the interim management's analysis.
Change compared with 3rd quarter 2009 Sales EBIT before special items 3rdQuarter 2010 +23% +77%
Cover photo: Delivery processes are monitored online and shipments are checked on site – BASF employee Andreas Nirmaier conducts an inspection at the Ludwigshafen site's northern harbor.
Page 6
In the Chemicals segment, we supply products to customers in the chemical, electronics, construction, textile, automotive, pharmaceutical and agricultural industries as well as many others. Furthermore, we ensure that other BASF segments are supplied with chemicals for the production of higher value products. Our portfolio ranges from basic chemicals, glues and electronic chemicals for the semiconductor and solar cell industries, to solvents and plasticizers, as well as starting materials for products such as detergents, plastics, textile fibers, paints and coatings and pharmaceuticals.
The Plastics segment includes a broad range of products, system solutions and services. We offer a number of engineering plastics for the automotive and electric industries as well as for use in household appliances and sports and leisure products. Our styrenic foams are used as insulating materials in the construction industry and in packaging. Our polyurethanes are extremely versatile: as soft foams, for example, they improve car seats and mattresses, and as rigid foams they serve as highly efficient insulation in refrigerators.
Our Performance Products lend stability and color to countless everyday items and help to improve their application profile. Our product portfolio includes vitamins and food additives as well as ingredients for pharmaceuticals and for hygiene, home and personal care items. Other Performance Products improve processes in the paper industry, oil 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.
Page 10
In the Functional Solutions segment, we bundle system solutions and innovative products for specific customers and industries, in particular for the automotive and construction sectors. Our portfolio comprises automotive and industrial catalysts, automotive and industrial coatings, as well as concrete admixtures and construction systems such as tile adhesives and architectural coatings.
Our crop protection products guard against fungal diseases, insects and weeds and they increase quality and secure crop yields. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, healthier nutrition and for use as renewable raw materials.
Oil & Gas Page 12
As the largest German producer of oil and gas, we focus our exploration and production on oil and gas-rich regions in Europe, North Africa, South America, Russia and the Caspian Sea region. Together with our Russian partner Gazprom, we are active in the trading, transport and storage of natural gas in Europe.
Effective and environmentally compatible protection against bark beetles
Bark beetles: They are just a few millimeters long but can cause enormous damage. The tiny beetles bore into tree bark or wood to lay their eggs, thereby harming their host. The beetles often appear en masse, threatening entire forests. The damage is immense for both nature and the forestry sector – the affected wood usually can no longer be used to build houses or furniture. BASF's solution: Complion™.
Complion is a forest protection system based on the use of insecticidal nets for wood. The nets are treated with an insecticide that is targeted to control the harmful beetle. The Complion system can be used to protect living trees as well as stored timber against various types of insects that breed in bark and wood.
To offer long-lasting, rain-resistant protection, the insecticide must be released in a controlled manner. BASF experts have achieved this by combining their expertise in textile finishing and crop protection. In a unique textile finishing process, the insecticide and a polymer binder are applied directly to the fibers of the net. The polymer ensures that only a small amount of active substance is continuously available on the net – just enough to actively control the bark beetle.
The nets are finely meshed, tear-resistant and contain a UV stabilizer that prevents them from becoming brittle in the sun. Furthermore, they remain effective for an entire season and can be reused numerous times in this period.
Impressive forest protection: Complion won the innovation prize at Interforst 2010, awarded by the independent and international Kuratorium für Waldarbeiten und Forsttechnik e.V. (Curatorium for Forestry and Forest Technology).
The culprit: a European spruce bark beetle (Ips typographus) from the bark beetle family (Scolytidae).
Complion insecticidal nets protect timber being temporarily stored in the forest against bark beetles and other insects that breed in bark and wood.
3rd Quarter 2010
Our business continued to develop positively in the third quarter of 2010. There was barely any sign of the usual seasonal slowdown. Nearly every business benefited from the strong demand for chemical products and our plants had good capacity utilization rates. Growth impetus came from all regions. Compared with the same quarter of 2009, sales rose by 23% to €15.8 billion. Income from operations before special items increased by 77% to reach €2,213 million. We maintained the high earnings level of the second quarter of 2010.
In almost all segments, sales volumes increased compared with the same quarter of the previous year – only the Oil & Gas segment posted a decline in volumes in oil production and natural gas trading. In the Agricultural Solutions segment, prices fell below the level of the third quarter of 2009 as a result of intense competition. In contrast, the other segments experienced rising prices, especially the Chemicals segment. The weaker euro had a positive impact on sales in all businesses.
| 3rd Quarter | Jan. – Sept. | |
|---|---|---|
| Volumes | 5 | 14 |
| Prices | 10 | 6 |
| Portfolio measures | – | 2 |
| Currencies | 8 | 4 |
| 23 | 26 |
In the Chemicals segment, sales growth was driven by rising sales volumes, higher prices and positive currency effects. As in the previous quarter, there were delivery bottlenecks for some products in the Petrochemicals and Intermediates divisions in the third quarter of 2010. Earnings were significantly higher than in the third quarter of 2009 as a result of improved margins for several basic products as well as good capacity utilization. We nearly reached the very good sales level of the second quarter of 2010.
Demand in the Plastics segment remained strong in the third quarter of 2010 and sales were well above the level of the same quarter of the previous year. Although business with customers in the automotive and construction industries usually slows in the summer months, there was barely any slowdown in the third quarter of 2010. We significantly improved earnings thanks to high capacity utilization rates. Sales and earnings in the segment grew again compared with the second quarter of 2010.
| Chemicals | 2010 | 2,874 | 44% | |
|---|---|---|---|---|
| 2009 | 2,000 | |||
| Plastics | 2010 | 2,598 | 32% | |
| 2009 | 1,967 | |||
| Performance | 2010 | 3,206 | 21% | |
| Products | 2009 | 2,651 | ||
| Functional | 2010 | 2,591 | 37% | |
| Solutions | 2009 | 1,888 | ||
| Agricultural | 2010 | 832 | 34% | |
| Solutions | 2009 | 623 | ||
| Oil & Gas | 2010 | 2,228 | (7%) | |
| 2009 | 2,389 | |||
| Other | 2010 | 1,452 | 13% | |
| 2009 | 1,280 |
We posted higher sales volumes in the Performance Products segment. Positive currency effects and higher prices further boosted sales growth in the segment. In a favorable business environment, earnings increased despite high one-time charges in the Performance Chemicals division. This was due largely to higher volumes as well as our successful measures to integrate Ciba and restructure the combined businesses.
In the Functional Solutions segment, demand from the automotive industry improved in all regions compared with the third quarter of 2009. Sales growth also resulted from positive currency effects and higher precious metals prices. The business environment in the construction industry only improved slightly compared with the third quarter of 2009. Although there were varying trends in our customer industries, earnings increased, primarily thanks to higher volumes.
Despite the typical seasonal slowdown, business in the Agricultural Solutions segment in the third quarter was pleasing. Higher sales volumes and positive currency effects contributed to a rise in sales in all regions. In South America, we had a very successful start to the new growing season and experienced particularly strong demand for our soybean fungicides. Thanks to higher volumes, earnings significantly surpassed the level of the previous third quarter.
In the Oil & Gas segment, sales decreased in comparison with the third quarter of 2009. As a result of the OPEC production restrictions in Libya, oil production volumes declined. Natural gas trading volumes were also lower. These developments were only partially offset by higher oil prices. In the Exploration & Production business sector, earnings increased thanks to higher prices. In contrast, lower sales volumes in the Natural Gas Trading business sector led to a decrease in earnings. Overall, the segment's earnings were slightly above the level of the third quarter of 2009.
Sales in Other grew substantially, mainly resulting from higher prices in the Styrenics business. Styrenics improved its earnings. In addition, earnings growth in Other was driven by gains from hedges against foreign currency risks. Income was generated by the reversal of provisions for the BASF Option program.
In the third quarter of 2010, special items amounted to €58 million. As a result of the Ciba integration, special items in the previous third quarter stood at €277 million.
| Chemicals | 2010 | 617 | +253 | |
|---|---|---|---|---|
| 2009 | 364 | |||
| Plastics | 2010 | 371 | +155 | |
| 2009 | 216 | |||
| Performance | 2010 | 370 | +84 | |
| Products | 2009 | 286 | ||
| Functional | 2010 | 158 | +52 | |
| Solutions | 2009 | 106 | ||
| Agricultural | 2010 | 66 | +45 | |
| Solutions | 2009 | 21 | ||
| Oil & Gas | 2010 | 573 | +23 | |
| 2009 | 550 | |||
| Other | 2010 | 58 | +353 | |
| 2009 | (295) | |||
Compared with the same period of the previous year, EBIT grew by €1,184 million to €2,155 million. EBITDA rose by €941 million to €2,934 million. The EBITDA margin increased to 18.6% (third quarter of 2009: 15.6%).
The financial result was minus €105 million, an improvement of €68 million compared with the same period of the previous year. This was primarily attributable to higher earnings from companies accounted for using the equity method.
Income before taxes and minority interests increased by €1,252 million to €2,050 million. At 33.4%, the tax rate was lower than in the third quarter of 2009. This was mainly due to the lower earnings contribution from the highly-taxed Oil & Gas segment.
Net income increased by €1,008 million to €1,245 million. Earnings per share were €1.35 in the third quarter of 2010, compared with €0.26 in the same period of 2009. Adjusted for special items and amortization of intangible assets, earnings per share amounted to €1.52 (third quarter of 2009: €0.61).
Information on the calculation of adjusted earnings per share can be found on page 33
| 2010 | 2009 | |
|---|---|---|
| 1st quarter | (114) | (57) |
| 2nd quarter | (127) | (368) |
| 3rd quarter | (58) | (277) |
| 4th quarter | (473) | |
| Full Year | (1,175) |
| 2010 | 2009 | |
|---|---|---|
| 1st quarter | 1.32 | 0.55 |
| 2nd quarter | 1.50 | 0.79 |
| 3rd quarter | 1.52 | 0.61 |
| 4th quarter | 1.06 | |
| Full Year | 3.01 | |
| 3rd Quarter 2010 | Jan. – Sept. 2010 | |
|---|---|---|
| Performance (with dividends reinvested) | ||
| BASF % |
2.5 | 10.6 |
| DAX 30 % |
4.4 | 4.6 |
| DJ EURO STOXX 50 % |
7.1 | (4.9) |
| DJ Chemicals % |
22.6 | 11.5 |
| MSCI World Chemicals % |
15.1 | 3.6 |
| Share prices and trading (XETRA) | ||
| Average € |
44.62 | 44.02 |
| High € |
46.92 | 48.55 |
| Low € |
41.35 | 39.43 |
| Close (end of period) € |
46.26 | 46.26 |
| Average daily trade Million shares |
3.4 | 4.5 |
| Outstanding shares (end of period) Million shares |
918.5 | 918.5 |
| Market capitalization (end of period) Billion € |
42.5 | 42.5 |
At €46.26, BASF's share price at the end of the third quarter of 2010 was approximately 2.5% higher than the closing price at the end of the previous quarter. Over the same period, the benchmark indices DAX 30 and DJ EURO STOXX 50 gained 4.4% and 7.1%, respectively. At the end of the third quarter, the global industry indices DJ Chemicals and MSCI World Chemicals had risen 22.6% and 15.1%, respectively, compared with their value in the second quarter. In the first nine months of the year, the BASF share rose by 10.6%, clearly outperforming the benchmark German and European indices.
For up-to-date information on BASF shares, visit basf.com/share
With an "A/A-1 outlook stable" rating from rating agency Standard & Poor's and "A1/P-1 review for downgrade" from Moody's, BASF continues to have good credit ratings, also compared with its competitors in the chemical industry.
At the beginning of August, BASF shares were converted from bearer shares to registered shares, enabling better and more direct communication with shareholders. This will also simplify the registration process and issuing of proxies for the Annual Meeting.
In September, BASF was included in the Dow Jones Sustainability World Index (DJSI World) for the tenth time in succession. We received particular recognition for our Risk & Crisis Management, Environmental Policy and Reporting, and our Climate Strategy. BASF was also once again represented in the prestigious Carbon Disclosure Leadership Index (CDLI), scoring top marks in the Materials sector for the second year in a row. We were also named to the new Carbon Performance Leadership Index (CPLI).
Change in value of an investment in BASF shares (January – September 2010) (with dividends reinvested; indexed)
In preparation for the integration of the Cognis activities, BASF established a new division in the Performance Products segment. At the beginning of August, the Care Chemicals division was split into two divisions: The new division Nutrition & Health, which is reported for the first time in the third quarter of 2010, includes the businesses with Nutrition Ingredients, Pharma Ingredients & Services as well as Aroma Chemicals. The Care Chemicals division now comprises the businesses with Personal Care, Hygiene, Home Care and Industrial Formulators.
In August, BASF launched the international research network electrochemistry and batteries. Working together with leading global academic research experts, the network aims to address fundamental questions relating to materials, components and systems for electromobility and electricity storage. One main focus of these activities will be on developing new materials and functional components for future battery types such as lithium sulfur and lithium air batteries. The research network is a long-term project and will be expanded by including more international partners in the coming years.
BASF is combining the majority of its styrenics activities in a newly established company called STYROLUTION. To this end, BASF plans to carve out its businesses in styrene monomers, polystyrene, acrylonitrile butadiene styrene, styrene butadiene copolymers and other styrene-based copolymers and establish separate companies. STYROLUTION will be a leading supplier of styrenics with production sites in Germany, Belgium, South Korea, India and Mexico. The carve-out is to be completed by January 1, 2011.
In order to better serve the fast-growing markets in South China, BASF is building a dispersions plant in Huizhou. With an annual capacity of 100,000 tons, the new plant will produce XSB dispersions and acrylic dispersions. XSB dispersions are used as coating binders for paper while acrylic dispersions are used in the production of paints and coatings, printing and packaging, construction materials and adhesives. Production is scheduled to begin in the first quarter of 2012. In addition, BASF is establishing world-scale production of water treatment and paper chemicals in Nanjing, China. Both the water treatment and papermaking industries are growing at a fast pace in Asia, particularly in China.
Demand for chemical products continued to be high in the third quarter of 2010. For the chemicals industry, growth impetus came from all regions. In this favorable economic environment, our business performed better than we had anticipated. We also expect good business development in the fourth quarter and have therefore raised our outlook for the current year.
We aim to reach record levels in sales and earnings in 2010. We expect to earn a high premium on our cost of capital and therefore to increase our dividend. Nevertheless, the positive economic development of the past months will not necessarily continue at the same pace in 2011.
Despite the economic upturn, risks still remain for a sustained recovery. The high debt level of many countries is threatening the stability of the financial and banking system. The need to trim government spending around the world will have an impact on demand, as will the winding down of national stimulus programs and the end of inventory restocking. Additional risks are primarily associated with
We see opportunities in consistently implementing our strategy and further improving our operational excellence. We will continue to focus on portfolio improvements, restructuring and increasing efficiency as well as on product innovations and expanding our business in growth markets. We will therefore further strengthen our research and development activities.
The statements on opportunities and risks made in the BASF Report 2009 remain valid.
Current information can be found in the BASF Report 2009, in the Risk Report on pages 103–111
We still expect the following global economic conditions in 2010:
We anticipate our sales growth in 2010 will outpace global chemical production. Overall, we aim for sales of around €63 billion and income from operations before special items of more than €8 billion. We expect to earn a high premium on our cost of capital.
| 3rd Quarter | January – September | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | ||
| Sales to third parties | 2,874 | 2,000 | 44 | 8,432 | 5,365 | 57 | |
| Thereof Inorganics | 322 | 262 | 23 | 929 | 720 | 29 | |
| Petrochemicals | 1,909 | 1,238 | 54 | 5,629 | 3,275 | 72 | |
| Intermediates | 643 | 500 | 29 | 1,874 | 1,370 | 37 | |
| Income from operations before depreciation and amortization (EBITDA) | 787 | 527 | 49 | 2,272 | 1,184 | 92 | |
| Income from operations (EBIT) before special items | 617 | 364 | 70 | 1,765 | 706 | 150 | |
| Income from operations (EBIT) | 619 | 364 | 70 | 1,767 | 705 | 151 | |
| Assets | 6,281 | 5,918 | 6 | – | – | – | |
| Research expenses | 35 | 32 | 9 | 97 | 98 | (1) | |
| Additions to property, plant and equipment and intangible assets | 137 | 117 | 17 | 339 | 330 | 3 | |
In the Chemicals segment we increased sales volumes significantly compared with the same quarter of the previous year. Sales grew thanks to improved demand for our products as well as price increases and positive currency effects in all divisions (volumes 10%, prices 25%, currencies 9%). Income from operations before special items significantly exceeded the level of the same quarter of the previous year, mainly as a result of good capacity utilization rates and higher margins for many basic products. Our business experienced very little seasonal slowdown. We nearly matched the very high level of sales posted in the second quarter of 2010.
In the Inorganics division, sales were higher year-on-year as a result of increased volumes and prices. The business environment improved, particularly in the electronic chemicals and inorganic salts businesses. Thanks to the positive volume trend, earnings increased substantially compared with the third quarter of 2009. Higher margins for basic products such as ammonia bolstered earnings growth.
The Petrochemicals division continued to benefit from high demand. Product supplies were tight in some markets, such as acrylic acid, solvents and plasticizers. In contrast, the availability of cracker products such as ethylene and propylene improved over the course of the third quarter, particularly in Asia and North America. The strong sales growth resulted primarily from price increases attributable to higher raw materials costs. Thanks to generally favorable market conditions and good capacity utilization, earnings rose sharply in comparison with the same quarter of 2009.
Sales in the Intermediates division grew compared with the previous third quarter thanks to a marked increase in volumes and higher prices. We were unable to fully keep up with demand from our customer industries in the third quarter of 2010. This affected the butanediol value-adding chain as well as some polyalcohols and several amines. As a result of the favorable sales volume trend, earnings clearly surpassed the level of the third quarter of 2009.
Chemicals 3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
+44% +253
| 3rd Quarter | January – September | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | ||
| Sales to third parties | 2,598 | 1,967 | 32 | 7,379 | 5,180 | 42 | |
| Thereof Performance Polymers | 1,140 | 843 | 35 | 3,301 | 2,190 | 51 | |
| Polyurethanes | 1,458 | 1,124 | 30 | 4,078 | 2,990 | 36 | |
| Income from operations before depreciation and amortization (EBITDA) | 479 | 333 | 44 | 1,321 | 658 | 101 | |
| Income from operations (EBIT) before special items | 371 | 216 | 72 | 999 | 325 | 207 | |
| Income from operations (EBIT) | 371 | 216 | 72 | 998 | 325 | 207 | |
| Assets | 5,112 | 4,592 | 11 | – | – | – | |
| Research expenses | 34 | 29 | 17 | 106 | 93 | 14 | |
| Additions to property, plant and equipment and intangible assets | 57 | 58 | (2) | 153 | 185 | (17) | |
We experienced strong demand for our products in the Plastics segment in the third quarter of 2010. Sales were considerably higher than in the same quarter of the previous year. As a result of increased raw materials costs, we were able to raise prices, particularly in the Performance Polymers division. The weaker euro also contributed to sales growth (volumes 14%, prices 7%, currencies 11%). Although business with customers in the automotive and construction industries usually slows in the summer months, there was barely any weakening in the third quarter of 2010. Capacity utilization at our plants was good and income from operations before special items grew substantially in comparison with the weak third quarter of 2009. We exceeded the high sales and earnings level of the second quarter of 2010.
All businesses within the Performance Polymers division developed positively; sales volumes rose considerably. Price increases as a result of higher raw materials costs and positive currency effects also helped to boost sales growth. For certain products such as engineering plastics, demand exceeded the available volumes. This was attributable to both an ongoing shortage of polyamide intermediates and the strong demand from our customers. Earnings significantly improved yearon-year, mainly as a result of high capacity utilization at our plants and a favorable business environment for polyamide monomers.
Sales in the Polyurethanes division increased sharply thanks to higher volumes and currency effects. Sales volumes grew in all businesses while prices stayed generally stable. In particular, our businesses with the automotive and construction industries developed favorably. Margins for the basic products MDI and TDI stabilized in the course of the third quarter. The significant earnings growth year-on-year was primarily a result of strong demand.
3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
+32% +155
Innovative and high-growth specialties
| 3rd Quarter | January – September | |||||||
|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | |||
| Sales to third parties | 3,206 | 2,651 | 21 | 9,228 | 6,771 | 36 | ||
| Thereof Dispersions & Pigments | 887 | 700 | 27 | 2,467 | 1,819 | 36 | ||
| Care Chemicals | 682 | 546 | 25 | 1,992 | 1,529 | 30 | ||
| Nutrition & Health | 357 | 350 | 2 | 1,098 | 990 | 11 | ||
| Paper Chemicals | 448 | 392 | 14 | 1,308 | 930 | 41 | ||
| Performance Chemicals | 832 | 663 | 25 | 2,363 | 1,503 | 57 | ||
| Income from operations before depreciation and amortization (EBITDA) | 578 | 481 | 20 | 1,749 | 703 | 149 | ||
| Income from operations (EBIT) before special items | 370 | 286 | 29 | 1,260 | 489 | 158 | ||
| Income from operations (EBIT) | 377 | 125 | 202 | 1,168 | 34 | |||
| Assets | 9,743 | 9,521 | 2 | – | – | – | ||
| Research expenses | 70 | 73 | (4) | 216 | 199 | 9 | ||
| Additions to property, plant and equipment and intangible assets | 76 | (151)1 | 191 | 3,702 | (95) |
1 Negative value results from a revaluation following the completion of the purchase price allocation for Ciba; adjusted for this effect, investments amounted to €62 million.
Nearly all divisions in the Performance Products segment reported higher sales and volumes. Sales growth was also bolstered by positive currency effects and higher prices (volumes 7%, prices 7%, currencies 7%). In the third quarter of 2010, there was some weakening of the additional demand that had arisen from inventory restocking in some customer industries. Nevertheless, the business environment remained strong. Income from operations before special items increased substantially despite high one-time charges in the Performance Chemicals division. This was due mainly to higher sales volumes as well as our successful measures to integrate Ciba and restructure the combined businesses.
Sales increased in all businesses in the Dispersions & Pigments division. Both sales volumes and sales prices were above the level of the third quarter of 2009 while margins remained stable. There continued to be limited availability of some raw materials and finished products. Our earnings increased considerably compared with the weak third quarter of 2009.
Sales were high in the Care Chemicals division as demand remained strong. As a result of the limited availability of important raw materials, there were some delivery bottlenecks, particularly for hygiene products and products for detergents and cleaners. Nevertheless, sales volumes in these businesses grew substantially compared with the same quarter of the previous year. In a favorable market environment, our sales prices rose and we benefited from a stronger U.S. dollar. As a result of the positive sales trend, earnings significantly surpassed the level of the third quarter of 2009.
Performance Products 3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
+21% +84
Sales in the Nutrition & Health division were slightly above the level of the third quarter of 2009. Minor declines in volumes were more than offset by positive currency effects. We were able to keep our sales prices nearly stable despite increasing competitive pressure. As a result of a rise in fixed costs, earnings did not reach the high level of the previous third quarter.
The business environment for the Paper Chemicals division improved year-on-year, with demand increasing especially from Asia. We were mostly able to pass on higher raw materials costs to our customers. Moreover, positive currency effects helped boost sales. Higher volumes, in particular, led to an improvement in earnings. With the divestiture of our starch activities in Europe, we are taking a further step in the successful restructuring of our business. At the same time, we are further strengthening our position in the fast-growing Asian market with investments in Huizhou, in South China, as well as at our Nanjing site.
In the Performance Chemicals segment, demand from the automotive and plastics processing industries increased substantially year-on-year. The stronger U.S. dollar also had a positive impact on sales. In the plastic additives business in particular, we were unable to keep up with customer demand because there was a shortage of important raw materials and capacities were already fully utilized. Third-quarter earnings were below the previous year's level owing to one-time expenses for valuation adjustments on receivables related to long-term supply agreements.
In June 2010, BASF reached an agreement with the owners of Cognis Holding Luxembourg S.à r.l. to acquire the specialty chemicals company Cognis. Cognis is a leading supplier of innovative system solutions and products based on renewable raw materials for the cosmetics, detergents and cleaners industries as well as the health and nutrition market. In order to prepare for the integration of Cognis businesses in the Performance Products segment, the Care Chemicals division was split into two divisions in August. The new division Nutrition & Health comprises products and solutions for the nutrition and health market as well as for the fragrances and flavors industry. The Care Chemicals division comprises products and solutions for cleaning, care, cosmetics and hygiene. BASF expects the antitrust authorities to approve the acquisition in November 2010. Once approval has been granted, we will begin working out the details of the integration plans.
| 3rd Quarter | January – September | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | ||
| 2,591 | 1,888 | 37 | 7,134 | 5,211 | 37 | ||
| 1,347 | 788 | 71 | 3,636 | 2,116 | 72 | ||
| 599 | 543 | 10 | 1,607 | 1,527 | 5 | ||
| 645 | 557 | 16 | 1,891 | 1,568 | 21 | ||
| 260 | 176 | 48 | 728 | 352 | 107 | ||
| 158 | 106 | 49 | 434 | 108 | 302 | ||
| 159 | 86 | 85 | 434 | 70 | |||
| 9,171 | 8,087 | 13 | – | – | – | ||
| 47 | 38 | 24 | 132 | 124 | 6 | ||
| 43 | 37 | 16 | 111 | 113 | (2) | ||
| Income from operations before depreciation and amortization (EBITDA) |
In comparison with the weak third quarter of 2009, the business environment in the automotive industry improved in all regions. We therefore increased sales volumes in the Functional Solutions segment substantially. Sales growth was also driven by higher precious metals prices and positive currency effects (volumes 15%, prices 9%, portfolio 1%, currencies 12%). In contrast, demand from the construction industry remained at the level of the third quarter of 2009. Despite the varying developments in our customer industries, income from operations before special items grew year-on-year.
The Catalysts division posted a considerable sales increase compared with the same quarter of the previous year, due mainly to higher sales volumes of mobile emissions catalysts. Demand for chemical catalysts also increased noticeably. In addition, precious metal trading contributed €672 million to the division's sales (third quarter of 2009: €351 million). Earnings were higher year-on-year thanks to stronger demand and the larger contribution from precious metals trading.
In a difficult business environment, we were able to increase sales volumes slightly thanks to strong growth in Asia and other emerging markets. The Central, Northern and Eastern European markets proved to be robust. In North America, construction activity stabilized at a low level. Positive currency effects supported sales growth. We continued to successfully implement our measures to improve efficiency. Earnings matched the level of the previous third quarter.
Sales in the Coatings division grew thanks to higher volumes and currency effects. Sales volumes of automotive OEM and refinish coatings increased sharply compared with the same quarter of the previous year. In the architectural coatings business, the positive business trend seen in the preceding quarters continued. Thanks to higher volumes, earnings improved despite the negative impact of increased raw materials costs.
3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
+37% +52
Innovations for the health of crops
| 3rd Quarter | January – September | |||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | |
| Sales to third parties | 832 | 623 | 34 | 3,188 | 2,943 | 8 |
| Income from operations before depreciation and amortization (EBITDA) | 111 | 70 | 59 | 850 | 873 | (3) |
| Income from operations (EBIT) before special items | 66 | 21 | 214 | 707 | 732 | (3) |
| Income from operations (EBIT) | 66 | 21 | 214 | 707 | 727 | (3) |
| Assets | 4,683 | 4,617 | 1 | – | – | – |
| Research expenses | 98 | 86 | 14 | 284 | 253 | 12 |
| Additions to property, plant and equipment and intangible assets | 36 | 47 | (23) | 87 | 158 | (45) |
In the Agricultural Solutions segment, sales in the seasonally slower third quarter were well above the level of the same period of 2009. The strong growth in volumes in all regions, especially Europe and South America, contributed to the increase in sales. Prices declined as a result of intense competition but this was more than offset by positive currency effects. We posted higher sales in all indications, particularly of fungicides and herbicides (volumes 29%, prices –6%, currencies 11%).
In Europe, the fall season started successfully. In the northern hemisphere, lower crop yields led to higher market prices, particularly for grains and canola (oil-seed rape). In addition, favorable weather conditions in Central Europe had a positive effect on demand for herbicides. Sales exceeded the level of the previous third quarter in all indications.
Sales in North America topped the level of the third quarter of 2009, mainly as a result of higher sales volumes. After distributors reduced their large inventories in the first half of the year, we experienced stronger demand for fungicides in the United States and Canada. Moreover, sales were boosted by positive currency effects.
In South America, we had a very good start to the new growing season. As a result of favorable weather conditions, business with soybean fungicides was good. Thanks to the expansion of production capacity for F 500® in Schwarzheide, Germany, we were able to fully satisfy the increased demand. There was also strong demand for Standak® Top, our seed treatment product that was recently launched in the Brazilian market.
In Asia, sales increased considerably, particularly in the growth markets China and India. Our business with soybean herbicides in India developed successfully. Furthermore, positive currency effects bolstered sales growth.
Income from operations before special items improved significantly compared with the same period of 2009 thanks to higher volumes.
Agricultural Solutions 3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
+34% +45
Exploration and production of crude oil and natural gas; Trading, transportation and storage of natural gas
| 3rd Quarter | January – September | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | ||
| Sales to third parties | 2,228 | 2,389 | (7) | 7,827 | 8,735 | (10) | |
| Thereof Exploration & Production | 881 | 891 | (1) | 2,760 | 2,874 | (4) | |
| Natural Gas Trading | 1,347 | 1,498 | (10) | 5,067 | 5,861 | (14) | |
| Income from operations before depreciation and amortization (EBITDA) | 684 | 667 | 3 | 2,093 | 2,131 | (2) | |
| Thereof Exploration & Production | 581 | 551 | 5 | 1,680 | 1,651 | 2 | |
| Natural Gas Trading | 103 | 116 | (11) | 413 | 480 | (14) | |
| Income from operations (EBIT) before special items | 573 | 550 | 4 | 1,717 | 1,781 | (4) | |
| Thereof Exploration & Production | 503 | 467 | 8 | 1,407 | 1,407 | – | |
| Natural Gas Trading | 70 | 83 | (16) | 310 | 374 | (17) | |
| Income from operations (EBIT) | 550 | 4 | 1,717 | 1,781 | (4) | ||
| Thereof Exploration & Production | 503 | 467 | 8 | 1,407 | 1,407 | – | |
| Natural Gas Trading | 70 | 83 | (16) | 310 | 374 | (17) | |
| Assets | 8,301 | 8,199 | 1 | – | – | – | |
| Thereof Exploration & Production | 4,927 | 4,994 | (1) | – | – | – | |
| Natural Gas Trading | 3,374 | 3,205 | 5 | – | – | – | |
| Exploration expenses | 33 | 25 | 32 | 121 | 76 | 59 | |
| Additions to property, plant and equipment and intangible assets | 251 | 224 | 12 | 554 | 686 | (19) | |
| Income taxes on oil-producing operations non-compensable with German corporate income tax |
224 | 244 | (8) | 660 | 624 | 6 | |
| Net income | 272 | 186 | 46 | 693 | 580 | 19 | |
In the Oil & Gas segment, sales decreased in comparison with the third quarter of 2009. Declining volumes in oil production and natural gas trading were only partially offset by higher prices for crude oil (volumes –23%, prices/currencies 16%). Income from operations before special items rose slightly compared with the third quarter of 2009.
Volumes and sales in the Exploration & Production business sector were lower due primarily to ongoing OPEC production restrictions in Libya. Natural gas production volumes were below the previous year's level as a result of natural production declines in Germany and the Netherlands. An increase in crude oil prices, however, limited the decline in sales. The average price for Brent crude oil was \$77 per barrel, compared with \$68 per barrel (+13%) in the third quarter of 2009. In euro terms, oil prices climbed more significantly to €60 per barrel (+25%). Earnings grew as a result of higher prices.
Sales volumes in Natural Gas Trading declined sharply in comparison with the exceptionally strong third quarter of 2009. This led to a decrease in sales despite higher natural gas prices. The lower volumes were reflected in earnings, which did not match the level of the same quarter of the previous year.
3rd Quarter 2010 (change compared with 3rd quarter 2009)
Sales EBIT
before special items (million €)
–7% +23
3rd Quarter 2010
| Sales Location of company |
Sales Location of customer |
EBIT before special items |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
||
| 3rd Quarter | ||||||||||
| Europe | 8,320 | 7,344 | 13 | 7,872 | 6,959 | 13 | 1,608 | 822 | 96 | |
| Thereof Germany | 6,002 | 5,077 | 18 | 2,698 | 2,446 | 10 | 1,087 | 576 | 89 | |
| North America | 3,316 | 2,309 | 44 | 3,150 | 2,275 | 38 | 238 | 109 | 118 | |
| Asia Pacific | 3,047 | 2,276 | 34 | 3,251 | 2,429 | 34 | 307 | 206 | 49 | |
| South America, Africa, Middle East | 1,098 | 869 | 26 | 1,508 | 1,135 | 33 | 60 | 111 | (46) | |
| 15,781 | 12,798 | 23 | 15,781 | 12,798 | 23 | 2,213 | 1,248 | 77 | ||
| January – September | ||||||||||
| Europe | 26,020 | 22,647 | 15 | 24,574 | 21,351 | 15 | 4,243 | 2,315 | 83 | |
| Thereof Germany | 18,724 | 16,173 | 16 | 8,959 | 8,035 | 11 | 2,996 | 1,449 | 107 | |
| North America | 10,120 | 7,047 | 44 | 9,860 | 7,083 | 39 | 1,030 | 372 | 177 | |
| Asia Pacific | 8,607 | 5,751 | 50 | 9,210 | 6,258 | 47 | 910 | 452 | 101 | |
| South America, Africa, Middle East | 2,702 | 2,074 | 30 | 3,805 | 2,827 | 35 | 190 | 234 | (19) | |
| 47,449 | 37,519 | 26 | 47,449 | 37,519 | 26 | 6,373 | 3,373 | 89 |
Sales by companies in Europe were 13% higher than in the third quarter of 2009. Nearly all segments posted sales growth but due to a decrease in volumes in oil production and natural gas trading, sales in the Oil & Gas segment did not match the level of the previous third quarter. Income from operations before special items rose by €786 million to €1,608 million. In a generally favorable business environment, each of our segments increased its earnings compared with the third quarter of 2009.
In North America, sales grew by 30% in U.S. dollars and 44% in euro terms. Earnings rose by €129 million to €238 million. Sales and earnings in the chemicals business2 grew sharply compared with the previous third quarter as a result of higher volumes and prices. In the Agricultural Solutions segment, we increased sales volumes and sales but declining prices led to a slight reduction in earnings.
Sales in the Asia Pacific region grew by 19% in local-currency terms and by 34% in euro terms. Higher sales volumes in the chemicals business contributed to sales growth. Earnings in the region also improved by €101 million to reach €307 million. In the Chemicals segment, earnings grew significantly thanks to an increase in volumes as well as higher margins for some basic products.
In South America, Africa, Middle East, sales were up yearon-year by 10% in local-currency terms and by 26% in euro terms. Agricultural Solutions in South America made a significant contribution to this growth; we had a successful start to the new growing season in this market. Third-quarter earnings in the region were below the previous year's level owing to onetime expenses for valuation adjustments on receivables related to long-term supply agreements.
1 The regional classification of some of Central American countries has been changed, the previous year's figures have been adjusted.
2 Our chemicals business includes the Chemicals, Plastics, Performance Products and Functional Solutions segments.
BASF, RWE and Linde achieved a breakthrough with their new technology to capture carbon dioxide (CO2 ) from flue gas. Since 2009, the partners have been testing the technology in a pilot plant at RWE's Niederaussem power station. The results of the test are now available: Compared to conventional carbon capture processes, this innovative technology using new chemical solvents can reduce energy input by about 20%. The new solvents also feature clearly superior oxygen stability, which reduces solvent consumption significantly. Now the partners are working on solutions for demonstration and large-scale power plants. The first demonstration plants are scheduled to come on stream in 2015, and CO2 capture is expected to be used commercially in coal-fired power stations by 2020.
For the first time, baseclick GmbH, a start-up company spun off from BASF SE and Ludwig-Maximilians-Universität Munich, has made its newly developed process for labeling nucleic acids (DNA and RNA) available to customers. Furthermore, the European Patent Office granted the basic patent for click chemistry on nucleic acids to baseclick GmbH effective September 1, 2010. The baseclick technology allows users to label multiple dye molecules on DNA strands in a sequencespecific manner. This process is more efficient, more cost effective and simpler than conventional technologies. Labeling with multiple dye molecules used to be highly complicated and was not available commercially. The attachment of multiple dyes enables more complex analyses to be carried out in a single operation. Applications include analyses for pathogens like HIV, hepatitis, or even tumor cells.
BASF has created an advanced copper plating chemistry for current and future generation chip technologies. With the help of this chemical additive, even the smallest chip structure – which can be 1,000 times smaller than the width of a human hair – can be efficiently filled with copper in an electrochemical process. The chemicals improve the reliability of onchip copper wiring as well as the performance of the chips. This innovative chemical solution is the result of a joint development program with IBM, which was started in June 2007. The related technology, chemicals and materials were commercialized in the third quarter.
Scientists and technologists at the BASF subsidiary hte AG have been nominated for the "Deutscher Zukunftspreis", the German President's prize for technology and innovation. They are one of three teams that have made it into the final round of the competition. The scientists were nominated for developing a process that enables the search for new and more effective catalysts to be carried out up to 100 times faster than was possible just a few years ago. As reagents which accelerate chemical reactions, catalysts help to save energy, make the use of fossil raw materials more efficient and tap regenerative energy sources. The winner will be announced in Berlin on December 1, 2010.
Compared with the end of 2009, the number of BASF Group employees decreased by 979 to a total of 103,800 as of September 30, 2010. This was due to restructuring in the course of the Ciba integration. At the end of the third quarter, 64.4% of employees were employed in Europe while 15% were employed in North America, 14.3% in Asia Pacific and 6.3% in South America, Africa, Middle East.
From January to September 2010, personnel costs were €6,029 million, an increase of 16.8% compared with the first nine months of the previous year. This was a result of the Ciba acquisition as well as higher provisions for the BASF option program and performance-related salary components.
| Sept. 30, 2010 |
Dec. 31, 2009 |
Change in % |
|
|---|---|---|---|
| Europe | 66,839 | 67,621 | (1) |
| North America | 15,594 | 16,027 | (3) |
| Asia Pacific | 14,865 | 14,817 | |
| South America, Africa, Middle East | 6,502 | 6,314 | 3 |
| 103,800 | 104,779 | (1) |
1 The regional classification of some Central American countries has been changed, the previous year's figures have been adjusted.
| 3rd Quarter | January – September | ||||||
|---|---|---|---|---|---|---|---|
| Further information in Note | 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
|
| Sales | 15,781 | 12,798 | 23.3 | 47,449 | 37,519 | 26.5 | |
| Cost of sales | 11,229 | 9,127 | 23.0 | 33,571 | 27,208 | 23.4 | |
| Gross profit on sales | 4,552 | 3,671 | 24.0 | 13,878 | 10,311 | 34.6 | |
| Selling expenses | 1,691 | 1,456 | 16.1 | 4,865 | 4,210 | 15.6 | |
| General and administrative expenses | 280 | 297 | (5.7) | 825 | 843 | (2.1) | |
| Research expenses | 357 | 343 | 4.1 | 1,083 | 1,020 | 6.2 | |
| Other operating income (5) |
194 | 175 | 10.9 | 696 | 718 | (3.1) | |
| Other operating expenses (5) |
263 | 779 | (66.2) | 1,727 | 2,285 | (24.4) | |
| Income from operations | 2,155 | 971 | 121.9 | 6,074 | 2,671 | 127.4 | |
| Income from companies accounted for using the equity method | 58 | 33 | 75.8 | 162 | 49 | 230.6 | |
| Other income from participations | 22 | 8 | 175.0 | 73 | 81 | (9.9) | |
| Other expenses from participations | 3 | 4 | (25.0) | 12 | 8 | 50.0 | |
| Interest income | 30 | 30 | – | 87 | 88 | (1.1) | |
| Interest expense | 194 | 199 | (2.5) | 567 | 538 | 5.4 | |
| Other financial result | (18) | (41) | 56.1 | (21) | (106) | 80.2 | |
| Financial result (6) |
(105) | (173) | 39.3 | (278) | (434) | 35.9 | |
| Income before taxes and minority interests | 2,050 | 798 | 156.9 | 5,796 | 2,237 | 159.1 | |
| Income taxes (7) |
684 | 482 | 41.9 | 1,940 | 1,113 | 74.3 | |
| Income before minority interests | 1,366 | 316 | 332.3 | 3,856 | 1,124 | 243.1 | |
| Minority interests (8) |
121 | 79 | 53.2 | 399 | 169 | 136.1 | |
| Net income | 1,245 | 237 | 425.3 | 3,457 | 955 | 262.0 | |
| Earnings per share (€) (9) |
|||||||
| Undiluted (9) |
1.35 | 0.26 | 419.2 | 3.76 | 1.04 | 261.5 | |
| Diluted (9) |
1.35 | 0.26 | 419.2 | 3.76 | 1.04 | 261.5 | |
| Further information in Note | Sept. 30, 2010 |
Sept. 30, 2009 |
Change in % |
Dec. 31, 2009 |
Change in % |
|---|---|---|---|---|---|
| Intangible assets (10) |
10,470 | 10,841 | (3.4) | 10,449 | 0.2 |
| Property, plant and equipment (10) |
16,243 | 16,388 | (0.9) | 16,285 | (0.3) |
| Investments accounted for using the equity method (10) |
1,214 | 1,292 | (6.0) | 1,340 | (9.4) |
| Other financial assets (10) |
1,696 | 1,612 | 5.2 | 1,619 | 4.8 |
| Deferred tax assets | 1,300 | 1,214 | 7.1 | 1,042 | 24.8 |
| Other receivables and miscellaneous short-term assets | 494 | 1,028 | (51.9) | 946 | (47.8) |
| Long-term assets | 31,417 | 32,375 | (3.0) | 31,681 | (0.8) |
| Inventories (11) |
7,962 | 6,559 | 21.4 | 6,776 | 17.5 |
| Accounts receivable, trade (11) |
9,005 | 7,737 | 16.4 | 7,738 | 16.4 |
| Other receivables and miscellaneous short-term assets (11) |
4,009 | 2,800 | 43.2 | 3,223 | 24.4 |
| Marketable securities (11) |
16 | 167 | (90.4) | 15 | 6.7 |
| Cash and cash equivalents (11) |
2,282 | 2,931 | (22.1) | 1,835 | 24.4 |
| Short-term assets | 23,274 | 20,194 | 15.3 | 19,587 | 18.8 |
| Total assets | 54,691 | 52,569 | 4.0 | 51,268 | 6.7 |
| Further information in Note | Sept. 30, 2010 |
Sept. 30, 2009 |
Change in % |
Dec. 31, 2009 |
Change in % |
|---|---|---|---|---|---|
| Subscribed capital (12) |
1,176 | 1,176 | – | 1,176 | – |
| Capital surplus (12) |
3,229 | 3,247 | (0.6) | 3,229 | – |
| Retained earnings (12) |
13,692 | 12,744 | 7.4 | 12,916 | 6.0 |
| Other comprehensive income | 729 | (71) | 156 | 367.3 | |
| Equity of shareholders of BASF SE | 18,826 | 17,096 | 10.1 | 17,477 | 7.7 |
| Minority interests | 1,256 | 1,083 | 16.0 | 1,132 | 11.0 |
| Stockholders' equity | 20,082 | 18,179 | 10.5 | 18,609 | 7.9 |
| Provisions for pensions and similar obligations (13) |
3,552 | 2,194 | 61.9 | 2,255 | 57.5 |
| Other provisions (14) |
3,398 | 3,252 | 4.5 | 3,289 | 3.3 |
| Deferred tax liabilities | 2,164 | 2,289 | (5.5) | 2,093 | 3.4 |
| Financial indebtedness (15) |
11,616 | 12,441 | (6.6) | 12,444 | (6.7) |
| Other long-term liabilities (15) |
887 | 1,080 | (17.9) | 898 | (1.2) |
| Long-term liabilities | 21,617 | 21,256 | 1.7 | 20,979 | 3.0 |
| Accounts payable, trade | 4,157 | 3,196 | 30.1 | 2,786 | 49.2 |
| Provisions (14) |
3,215 | 3,020 | 6.5 | 3,276 | (1.9) |
| Tax liabilities | 1,155 | 1,007 | 14.7 | 1,003 | 15.2 |
| Financial indebtedness (15) |
2,081 | 3,361 | (38.1) | 2,375 | (12.4) |
| Other short-term liabilities (15) |
2,384 | 2,550 | (6.5) | 2,240 | 6.4 |
| Short-term liabilities | 12,992 | 13,134 | (1.1) | 11,680 | 11.2 |
| Total stockholders' equity and liabilities | 54,691 | 52,569 | 4.0 | 51,268 | 6.7 |
| 2010 Net income 3,457 Depreciation and amortization of intangible assets, property, plant and equipment and financial assets 2,360 |
2009 955 2,503 |
|---|---|
| Changes in net working capital (783) |
1,558 |
| Miscellaneous items 273 |
(57) |
| Cash provided by operating activities 5,307 |
4,959 |
| Payments related to property, plant and equipment and intangible assets (1,518) |
(1,828) |
| Acquisitions/divestitures 30 |
(1,463) |
| Financial investments and other items 313 |
(127) |
| Cash used in investing activities (1,175) |
(3,418) |
| Capital increases/repayments, share repurchases – |
(134) |
| Changes in financial liabilities (2,003) |
789 |
| Dividends (1,811) |
(2,027) |
| Cash used in financing activities (3,814) |
(1,372) |
| Net changes in cash and cash equivalents 318 |
169 |
| Cash and cash equivalents as of beginning of year and other changes 1,964 |
2,762 |
| Cash and cash equivalents at end of period 2,282 |
2,931 |
From January to September 2010, cash provided by operating activities amounted to €5,307 million. Particularly in the first quarter and to a moderate degree in the second quarter, the significant upturn in business led to an increase in net working capital. In the third quarter, net working capital was significantly decreased as a result of a reduction in trade accounts receivable.
In the first three quarters, €1,175 million were used in investing activities. This compared with €3,418 million in the same period of the previous year, which was particularly affected by the acquisition of Ciba. Payments for property, plant and equipment and intangible assets were clearly below depreciation and amortization.
Cash used in financing activities amounted to €3,814 million. Dividends of €1,561 million were paid to shareholders of BASF SE and €250 million to minority shareholders in Group companies.
The outflow for the repayment of financial liabilities was €2,003 million. In connection with hedging activities for the financing of our North American business, we exchange euro for U.S. dollars at banks. The regular renewal of these hedging transactions can result in inflows or outflows in euro depending on the development of the U.S. dollar exchange rate. Since 2010, these payments have been reported as changes in financial liabilities under cash used in financing activities; previously they were reported under cash provided by operating activities. In line with this change in presentation, the figures from the previous year have been adjusted accordingly.
Cash and cash equivalents amounted to €2,282 million as of September 30, 2010, compared with €1,835 million at the end of 2009. Net debt was reduced to €11,415 million at the end of the third quarter, compared with €12,984 million as of December 31, 2009.
| January – September | ||
|---|---|---|
| 2010 | 2009 | |
| Income before minority interests | 3,856 | 1,124 |
| Actuarial gains/losses from pensions and other obligations; asset ceiling | (1,627) | 389 |
| Foreign currency translation adjustment | 508 | (34) |
| Fair value changes in available-for-sale securities | 78 | (55) |
| Cash flow hedges | (3) | 173 |
| Hedges of net investments in foreign operations | (4) | – |
| Revaluation due to acquisition of majority of shares | (2) | (1) |
| Deferred taxes | 497 | (80) |
| Minority interests | 28 | 13 |
| Total income and expense recognized in equity | (525) | 405 |
| Total income and expense for the period | 3,331 | 1,529 |
| Thereof BASF | 2,904 | 1,347 |
| Thereof minority interests | 427 | 182 |
| Retained earnings Other comprehensive income |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Actuarial gains/ losses; asset ceiling |
Foreign currency translation adjustment |
Fair value changes in available-for sale securities |
Cash flow hedges |
Hedges of net investments in foreign operations |
Revalua tion due to acquisition of majority of shares |
Total of other comprehen sive income |
||||
| As of January 1, 2010 |
(1,425) | (555) | 698 | 5 | – | 8 | 156 | (1,269) | ||
| Additions | – | 508 | 78 | – | – | – | 586 | 586 | ||
| Releases | (1,627) | – | – | (3) | (4) | (2) | (9) | (1,636) | ||
| Deferred taxes | 501 | (7) | 3 | – | – | (4) | 497 | |||
| As of Sept. 30, 2010 | (2,551) | (54) | 776 | 5 | (4) | 6 | 729 | (1,822) | ||
| As of January 1, 2009 |
(1,511) | (637) | 668 | (137) | – | 10 | (96) | (1,607) | ||
| Additions | 389 | – | – | 173 | – | – | 173 | 562 | ||
| Releases | – | (34) | (55) | – | – | (1) | (90) | (90) | ||
| Deferred taxes | (22) | (58) | – | – | (58) | (80) | ||||
| As of Sept. 30, 2009 | (1,144) | (671) | 613 | (22) | – | 9 | (71) | (1,215) |
| Number of subscribed shares out standing |
Subscribed capital |
Capital surplus |
Retained earnings |
Other com prehensive income1 |
Equity of sharehol ders of BASF SE |
Minority interests |
Stockhol ders' equity |
|
|---|---|---|---|---|---|---|---|---|
| As of January 1, 2010 | 918,478,694 | 1,176 | 3,229 | 12,916 | 156 | 17,477 | 1,132 | 18,609 |
| Effect of change of control | – | – | – | – | – | – | (53) | (53) |
| Dividends paid | – | – | – | (1,561) | – | (1,561) | (250)2 | (1,811) |
| Net income | – | – | – | 3,457 | – | 3,457 | 399 | 3,856 |
| Change in income and expense recognized directly in equity |
– | – | – | (1,126) | 573 | (553) | 28 | (525) |
| Changes in scope of consolidation and other changes |
– | – | – | 6 | – | 6 | – | 6 |
| As of September 30, 2010 | 918,478,694 | 1,176 | 3,229 | 13,692 | 729 | 18,826 | 1,256 | 20,082 |
| As of January 1, 2009 | 918,478,694 | 1,176 | 3,241 | 13,250 | (96) | 17,571 | 1,151 | 18,722 |
|---|---|---|---|---|---|---|---|---|
| Share buyback and cancellation of own shares including own shares intended to be cancelled |
– | – | 6 | (6) | – | – | – | – |
| Effect of acquisitions achieved in stages |
– | – | – | (26) | – | (26) | – | (26) |
| Capital withdrawal/contribution | – | – | – | – | – | – | (39) | (39) |
| Dividends paid | – | – | – | (1,791) | – | (1,791) | (236)2 | (2,027) |
| Net income | – | – | – | 955 | – | 955 | 169 | 1,124 |
| Change in income and expense recognized directly in equity |
– | – | – | 367 | 25 | 392 | 13 | 405 |
| Changes in scope of consolidation and other changes |
– | – | – | (5) | – | (5) | 25 | 20 |
| As of September 30, 2009 | 918,478,694 | 1,176 | 3,247 | 12,744 | (71) | 17,096 | 1,083 | 18,179 |
1 Details are provided in the "Consolidated Statements of Recognized Income and Expense" on page 18.
2 Including profit and loss transfers
| Sales | EBITDA | Income from operations (EBIT) before special items |
Income from operations (EBIT) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
|
| Chemicals | 2,874 | 2,000 | 43.7 | 787 | 527 | 49.3 | 617 | 364 | 69.5 | 619 | 364 | 70.1 |
| Plastics | 2,598 | 1,967 | 32.1 | 479 | 333 | 43.8 | 371 | 216 | 71.8 | 371 | 216 | 71.8 |
| Performance Products | 3,206 | 2,651 | 20.9 | 578 | 481 | 20.2 | 370 | 286 | 29.4 | 377 | 125 | 201.6 |
| Functional Solutions | 2,591 | 1,888 | 37.2 | 260 | 176 | 47.7 | 158 | 106 | 49.1 | 159 | 86 | 84.9 |
| Agricultural Solutions | 832 | 623 | 33.5 | 111 | 70 | 58.6 | 66 | 21 | 214.3 | 66 | 21 | 214.3 |
| Oil & Gas | 2,228 | 2,389 | (6.7) | 684 | 667 | 2.5 | 573 | 550 | 4.2 | 573 | 550 | 4.2 |
| Other | 1,452 | 1,280 | 13.4 | 35 | (261) | 58 | (295) | (10) | (391) | 97.4 | ||
| 15,781 | 12,798 | 23.3 | 2,934 | 1,993 | 47.2 | 2,213 | 1,248 | 77.3 | 2,155 | 971 | 121.9 |
| Research expenses | Assets | Additions to long-term assets1 |
Amortization and depreciation2 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
|
| Chemicals | 35 | 32 | 9.4 | 6,281 | 5,918 | 6.1 | 137 | 117 | 17.1 | 168 | 163 | 3.1 |
| Plastics | 34 | 29 | 17.2 | 5,112 | 4,592 | 11.3 | 57 | 58 | (1.7) | 108 | 117 | (7.7) |
| Performance Products | 70 | 73 | (4.1) | 9,743 | 9,521 | 2.3 | 76 | (151)3 | 201 | 356 | (43.5) | |
| Functional Solutions | 47 | 38 | 23.7 | 9,171 | 8,087 | 13.4 | 43 | 37 | 16.2 | 101 | 90 | 12.2 |
| Agricultural Solutions | 98 | 86 | 14.0 | 4,683 | 4,617 | 1.4 | 36 | 47 | (23.4) | 45 | 49 | (8.2) |
| Oil & Gas | 3 | 3 | – | 8,301 | 8,199 | 1.2 | 251 | 224 | 12.1 | 111 | 117 | (5.1) |
| Other | 70 | 82 | (14.6) | 11,400 | 11,635 | (2.0) | 37 | 31 | 19.4 | 45 | 130 | (65.4) |
| 357 | 343 | 4.1 | 54,691 | 52,569 | 4.0 | 637 | 363 | 75.5 | 779 | 1,022 | (23.8) |
1 Investment in intangible assets and property, plant and equipment
2 Depreciation and amortization of intangible assets and property, plant and equipment
3 Negative value results from a revaluation following the completion of the purchase price allocation for Ciba; adjusted for this effect, investments amounted to €62 million.
| Sales | EBITDA | Income from operations (EBIT) before special items |
Income from operations (EBIT) |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
|
| Chemicals | 8,432 | 5,365 | 57.2 | 2,272 | 1,184 | 91.9 | 1,765 | 706 | 150.0 | 1,767 | 705 | 150.6 |
| Plastics | 7,379 | 5,180 | 42.5 | 1,321 | 658 | 100.8 | 999 | 325 | 207.4 | 998 | 325 | 207.1 |
| Performance Products | 9,228 | 6,771 | 36.3 | 1,749 | 703 | 148.8 | 1,260 | 489 | 157.7 | 1,168 | 34 | |
| Functional Solutions | 7,134 | 5,211 | 36.9 | 728 | 352 | 106.8 | 434 | 108 | 301.9 | 434 | 70 | |
| Agricultural Solutions | 3,188 | 2,943 | 8.3 | 850 | 873 | (2.6) | 707 | 732 | (3.4) | 707 | 727 | (2.8) |
| Oil & Gas | 7,827 | 8,735 | (10.4) | 2,093 | 2,131 | (1.8) | 1,717 | 1,781 | (3.6) | 1,717 | 1,781 | (3.6) |
| Other | 4,261 | 3,314 | 28.6 | (585) | (745) | 21.5 | (509) | (768) | 33.7 | (717) | (971) | 26.2 |
| 47,449 | 37,519 | 26.5 | 8,428 | 5,156 | 63.5 | 6,373 | 3,373 | 88.9 | 6,074 | 2,671 | 127.4 |
| Research expenses | Assets | Additions to long-term assets1 |
Amortization and depreciation2 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
2010 | 2009 | Change in % |
|
| Chemicals | 97 | 98 | (1.0) | 6,281 | 5,918 | 6.1 | 339 | 330 | 2.7 | 505 | 479 | 5.4 |
| Plastics | 106 | 93 | 14.0 | 5,112 | 4,592 | 11.3 | 153 | 185 | (17.3) | 323 | 333 | (3.0) |
| Performance Products | 216 | 199 | 8.5 | 9,743 | 9,521 | 2.3 | 191 | 3,702 | (94.8) | 581 | 669 | (13.2) |
| Functional Solutions | 132 | 124 | 6.5 | 9,171 | 8,087 | 13.4 | 111 | 113 | (1.8) | 294 | 282 | 4.3 |
| Agricultural Solutions | 284 | 253 | 12.3 | 4,683 | 4,617 | 1.4 | 87 | 158 | (44.9) | 143 | 146 | (2.1) |
| Oil & Gas | 8 | 8 | – | 8,301 | 8,199 | 1.2 | 554 | 686 | (19.2) | 376 | 350 | 7.4 |
| Other | 240 | 245 | (2.0) | 11,400 | 11,635 | (2.0) | 76 | 104 | (26.9) | 132 | 226 | (41.6) |
| 1,083 | 1,020 | 6.2 | 54,691 | 52,569 | 4.0 | 1,511 | 5,278 | (71.4) | 2,354 | 2,485 | (5.3) |
1 Investments in intangible assets and property, plant and equipment
2 Depreciation and amortization of intangible assets and property, plant and equipment
| 3rd Quarter | January - September | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | Change in % | 2010 | 2009 | Change in % | ||
| Sales | 1,452 | 1,280 | 13.4 | 4,261 | 3,314 | 28.6 | |
| Thereof Styrenics | 815 | 696 | 17.1 | 2,544 | 1,817 | 40.0 | |
| Thereof Other business included under Other | 637 | 584 | 9.1 | 1,717 | 1,497 | 14.7 | |
| EBIT before special items | 58 | (295) | (509) | (768) | 33.7 | ||
| Thereof Group corporate costs | (54) | (54) | – | (160) | (164) | 2.4 | |
| Corporate research | (67) | (81) | 17.3 | (227) | (240) | 5.4 | |
| Currency results, hedges and other valuation effects | 104 | (92) | (231) | (521) | 55.7 | ||
| Styrenics, fertilizers, other business | 77 | 43 | 79.1 | 245 | 259 | (5.4) | |
| Special items | (68) | (96) | 29.2 | (208) | (203) | (2.5) | |
| EBIT | (10) | (391) | 97.4 | (717) | (971) | 26.2 |
3 Further information about Other can be found in the Notes on pages 23 and 24.
The Consolidated Financial Statements of the BASF Group for the year ending December 31, 2009 were prepared according to the International Financial Reporting Standards (IFRS) valid as of the balance sheet date. The Interim Financial Statements as of September 30, 2010 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 Analysis have been neither audited nor subject to an auditor's review.
The BASF Report 2009 containing the Consolidated Financial Statement as of December 31, 2009 can be found on the Internet: basf.com/report
The appreciation of important currencies against the euro since December 31, 2009 led to a balance sheet expansion of around €1.6 billion. Shareholders' equity increased by €501 million due to exchange rate effects.
| Jan. - Sept. | Average rates | ||
|---|---|---|---|
| Sept. 30, 2010 |
Dec. 31, 2009 |
Current year |
Previous year |
| 5.41 | 5.46 | 5.12 | 5.06 |
| 2.32 | 2.51 | 2.34 | 2.84 |
| 9.13 | 9.84 | 8.95 | 9.33 |
| 0.86 | 0.89 | 0.86 | 0.89 |
| 113.68 | 133.16 | 117.66 | 129.48 |
| 4.21 | 4.93 | 4.28 | 4.86 |
| 17.13 | 18.92 | 16.71 | 18.61 |
| 41.69 | 43.15 | 39.76 | 44.32 |
| 1,550.65 | 1,666.97 | 1,529.46 | 1,788.94 |
| 1.36 | 1.44 | 1.31 | 1.37 |
| Closing rates |
The Consolidated Financial Statements include BASF SE as well as all material subsidiaries on a fully consolidated basis. Material jointly operated companies are proportionally consolidated. The development of the number of fully and proportionally consolidated companies is shown in the table.
There have been five first-time consolidations since the beginning of 2010 due to the increasing importance of these companies.
Since the beginning of 2010, 45 companies have been deconsolidated as a result of mergers with other BASF companies, sale to third parties or decreased significance. These restructuring measures were primarily a consequence of the Ciba integration.
| 2010 | 2009 | |
|---|---|---|
| As of January 1 | 345 | 293 |
| Thereof proportionally consolidated | 19 | 19 |
| First-time consolidations | 5 | 74 |
| Thereof proportionally consolidated | 2 | – |
| Deconsolidations | 45 | 17 |
| Thereof proportionally consolidated | 1 | – |
| As of September 30 | 305 | 350 |
| Thereof proportionally consolidated | 20 | 19 |
On June 23, BASF reached an agreement to buy the specialty chemicals business Cognis, based in Monheim, Germany. The equity purchase price is €700 million, including net financial debt and pension obligations the enterprise value of the transaction is €3.1 billion. The acquisition is still subject to approval by the competent authorities. The closing of the transaction is expected in the second half of November, 2010.
As part of the Ciba acquisition, BASF was required by antitrust authorities to make certain divestitures. As of September 30, BASF divested its business with synthetic dry strength agents (used in the paper industry). In addition, the business with starch production and modification plants was sold to Chemigate Oy, Finland.
BASF signed an agreement on June 7, 2010 to divest its business with hydrophilic melt additives, marketed under the brand name Irgasurf® HL, to Techmer PM, based in Tennessee. In the first quarter, BASF divested major parts of the Ciba Expert Services business to Intertek Group plc as well as its businesses with the pigments bismuthvanadate and indanthrone blue to the Dominion Colour Corporation. Apart from these transactions, BASF did not make any material acquisitions or divestitures in the first three quarters of 2010.
BASF's worldwide business is managed by operating divisions that are aggregated into six segments for reporting purposes.
Chemicals consists of the Inorganics, Petrochemicals and Intermediates divisions. Its portfolio ranges from basic chemicals, glues and electronic chemicals to solvents and plasticizers, as well as starting materials for products such as detergents, plastics, textile fibers, paints and coatings and pharmaceuticals.
Plastics is composed of the Performance Polymers and Polyurethanes divisions.
As of August 1, 2010, the division Nutrition & Health was established within the Performance Products segment. This division's core business areas include human and animal nutrition as well as pharmaceuticals, which were previously part of the Care Chemicals division. The new division Nutrition & Health had been formed to prepare for the integration of the Cognis activities. Performance Products now includes five divisions that primarily make customer-specific specialties alongside standard products. In addition to Care Chemicals and Nutrition & Health, these divisions are Dispersions & Pigments, Paper Chemicals and Performance Chemicals.
Functional Solutions comprises the Catalysts, Construction Chemicals and Coatings divisions.
Agricultural Solutions contains the Crop Protection division.
Oil & Gas is composed of the Oil & Gas division with the Exploration & Production and Natural Gas Trading business sectors.
Activities not allocated to a particular segment are reported under Other and include, in particular, Styrenics as well as our fertilizer activities. In addition, the sale of raw materials, engineering and other services, rental income and leases are reported under Other. Group corporate costs consist of the expenses for steering the BASF Group; these costs are not allocated to the segments, they are reported under Other.
With our cross-divisional corporate research, which is also reported under Other, we develop growth clusters and ensure the long-term competence of BASF with regard to technology and methods.
Earnings from currency conversion that are not allocated to the segments are reported under Other as are earnings from the hedging of raw materials prices and foreign currency exchange risks. Expenses and revenues from the BASF option program are also reported under Other.
In the first three quarters of 2010, sales in Other increased significantly compared with the same period of 2009. This was mainly due to the positive business development in Styrenics. Earnings in the Styrenics business also increased substantially. Provisions for the BASF option program had a negative impact on earnings because BASF shares outperformed the benchmark index MSCI World Chemicals in the first three quarters of 2010.
Transfers between the segments are almost always executed at market-based prices. The allocation of assets and depreciation to the segments is based on economic control. Assets used by more than one segment are allocated based on the percentage of usage.
| January – September | ||
|---|---|---|
| 2010 | 2009 | |
| Assets of business included under Other | 2,493 | 2,360 |
| Financial assets | 2,910 | 2,904 |
| Deferred tax assets | 1,300 | 1,214 |
| Cash and cash equivalents, marketable securities | 2,298 | 3,098 |
| Defined benefit assets | 69 | 479 |
| Miscellaneous receivables/prepaid expenses | 2,330 | 1,580 |
| 11,400 | 11,635 |
| 3rd Quarter | January – September | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Income from operations | 573 | 550 | 1,717 | 1,781 |
| Income from participations | 44 | 26 | 153 | 50 |
| Other income | 5 | (14) | (23) | (225) |
| Income before taxes and minority interests | 622 | 562 | 1,847 | 1,606 |
| Income taxes | 298 | 320 | 987 | 910 |
| thereof income taxes on oil-producing operations non-compensable with German corporate income tax |
224 | 244 | 660 | 624 |
| Income before minority interests | 324 | 242 | 860 | 696 |
| Minority interests | 52 | 56 | 167 | 116 |
| Net income | 272 | 186 | 693 | 580 |
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.
The increase in income from participations in the first three quarters resulted chiefly from earnings at OAO Severneftegazprom, which is accounted for using the equity method.
Other income includes all expenses and income not included in income from operations of the segment, the interest result and the miscellaneous financial result.
| 3rd Quarter | January – September | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Income from currency conversion and foreign currency transactions | (43) | (16) | 154 | 83 |
| Disposal of property, plant and equipment | 29 | 6 | 70 | 28 |
| Reversal/usage of provisions | 22 | 9 | 29 | 18 |
| Reversal of allowances for doubtful receivables | 12 | 16 | 52 | 49 |
| Revenue from miscellaneous typical business activities | 88 | 36 | 104 | 70 |
| Miscellaneous | 86 | 124 | 287 | 470 |
| Other operating income | 194 | 175 | 696 | 718 |
| 3rd Quarter | January – September | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Losses from currency conversion and foreign currency transactions | (93) | (30) | 165 | 348 |
| Oil and gas exploration expenses | 33 | 25 | 121 | 76 |
| Miscellaneous | 323 | 784 | 1,441 | 1,861 |
| Other operating expenses | 263 | 779 | 1,727 | 2,285 |
The decline of income from currency conversion and foreign currency transactions in the third quarter of 2010 was mainly a result of the lower market value of U.S. dollar hedging transactions. The decrease in income from Miscellaneous in the first three quarters of 2010 resulted primarily from lower income from hedging for raw materials price risks. Losses from currency conversion and foreign currency transactions narrowed as a result of the depreciation of the U.S. dollar and the higher market value of hedging transactions in British pounds.
The reversal of provisions for the BASF option program resulted in income in the third quarter of 2010 because the benchmark index MSCI World Chemicals outperformed the BASF share. In the third quarter of 2009, the provisions had been increased in response to the higher market value of the option rights for the BASF option program.
The reduction in expenses from Miscellaneous was mainly the result of lower special charges. Expenses in the previous year were primarily related to the integration of Ciba.
| Income from companies accounted for using the equity method Income from participations in affiliated and associated companies Income from the disposal of participations Income from profit transfer agreements Income from tax allocation to participating interests Other income from participations |
2010 58 17 |
2009 33 |
2010 | |
|---|---|---|---|---|
| 2009 | ||||
| 162 | 49 | |||
| 4 | 47 | 72 | ||
| 1 | 1 | 2 | 1 | |
| 4 | 3 | 22 | 7 | |
| – | – | 2 | 1 | |
| 22 | 8 | 73 | 81 | |
| Losses from loss transfer agreements | (1) | (1) | (3) | (2) |
| Write-downs of/losses from the sale of participations | (2) | (3) | (9) | (6) |
| Other expenses from participations | (3) | (4) | (12) | (8) |
| Interest income from cash and cash equivalents | 27 | 24 | 69 | 68 |
| Interest and dividend income from securities and loans | 3 | 6 | 18 | 20 |
| Interest income | 30 | 30 | 87 | 88 |
| Interest expense | (194) | (199) | (567) | (538) |
| Write-ups/profits from the sale of securities and loans | – | (2) | – | 14 |
| Expected income from plan assets to cover pensions and similar obligations | 190 | 168 | 574 | 490 |
| Income from plan assets to cover other long-term personnel obligations | 1 | 8 | 5 | 14 |
| Income from construction interest | 16 | 16 | 46 | 44 |
| Miscellaneous financial income | 1 | – | 25 | – |
| Other financial income | 208 | 190 | 650 | 562 |
| Write-downs/losses from the disposal of securities and loans | (2) | – | (2) | (10) |
| Interest accrued on pension obligations and other similar obligations | (205) | (206) | (611) | (567) |
| Expenses from other long-term employee obligations | (8) | (14) | (33) | (34) |
| Interest accrued on other long-term liabilities | (11) | (11) | (25) | (32) |
| Miscellaneous financial expenses | – | – | – | (25) |
| Other financial expenses | (226) | (231) | (671) | (668) |
| Financial result | (105) | (173) | (278) | (434) |
Income from companies accounted for using the equity method grew in the first three quarters of 2010, due particularly to OAO Severneftegazprom.
Interest income and expenses relate to expenses and income from interest-bearing liabilities and financial investments, including dividend income on securities. In addition, these items take into account the ongoing interest expenses and income from interest rate and currency swaps with banks. The interest result was lower in comparison with the previous year. This is attributable to the higher interest expense for bonds issued in 2009.
The higher level of expected income from pension plan assets can be attributed to the increase in pension plan assets compared with the previous year.
Additional pension obligations arose due to the acquisition of Ciba in April 2009. As a result, expenses for interest accrued on pension obligations and similar obligations increased compared with the first three quarters of 2009.
Income before taxes and minority interests (million €)
| 3rd Quarter | January – September | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Germany | 781 | 90 | 1,926 | 206 |
| Foreign oil production branches of German companies | 303 | 314 | 859 | 809 |
| Other foreign | 966 | 394 | 3,011 | 1,222 |
| 2,050 | 798 | 5,796 | 2,237 |
| 3rd Quarter | January – September | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Germany | 220 | 43 | 596 | 88 |
| Foreign oil production branches of German companies | 268 | 291 | 786 | 744 |
| Thereof non-compensable | 224 | 244 | 660 | 624 |
| Other foreign | 196 | 148 | 558 | 281 |
| 684 | 482 | 1,940 | 1,113 | |
| Tax rate (%) | 33.4 | 60.4 | 33.5 | 49.8 |
The lower contribution to earnings from the highly taxed Oil & Gas segment led to a reduction in the tax rate.
| Million € | 3rd Quarter | January – September | |||
|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||
| Minority interests in profits | 118 | 66 | 400 | 172 | |
| Minority interests in losses | 3 | 13 | (1) | (3) | |
| 121 | 79 | 399 | 169 |
Minority interests in profits resulted primarily from natural gas trading companies as well as Gazprom's stake in the Wintershall subsidiary that holds production and exploration rights in Libya. Partners' minority interests in profits were higher in particular at BASF PETRONAS Chemicals Sdn. Bhd., based in Malaysia, and BASF FINA Petrochemicals Ltd. Partnership, based in the United States.
| 3rd Quarter | January – September | |||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |||
| Net income | million € | 1,245 | 237 | 3,457 | 955 | |
| Number of outstanding shares (weighted average) | (in thousands) | 918,479 | 918,479 | 918,479 | 918,479 | |
| Earnings per share | € | 1.35 | 0.26 | 3.76 | 1.04 |
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 incentive share program "Plus".
In the first three quarters of 2010, and in the corresponding period of 2009, there was no dilutive effect; undiluted earnings per share were the same as the diluted value per share.
| January – September 2010 | ||||||
|---|---|---|---|---|---|---|
| Intangible assets |
Property, plant and equipment |
Investments accounted for using the equity method and other financial assets |
||||
| Acquisition costs | ||||||
| Balance as of January 1 | 13,303 | 51,943 | 3,220 | |||
| Additions | 39 | 1,472 | 214 | |||
| Disposals | (226) | (367) | (332) | |||
| Transfers | 55 | 62 | 19 | |||
| Exchange differences | 403 | 974 | 36 | |||
| Balance as of September 30 | 13,574 | 54,084 | 3,157 | |||
| Amortization and depreciation | ||||||
| Balance as of January 1 | 2,854 | 35,658 | 261 | |||
| Additions | 467 | 1,887 | 6 | |||
| Disposals | (218) | (276) | (18) | |||
| Transfers | (75) | 26 | (1) | |||
| Exchange differences | 76 | 546 | (1) | |||
| Balance as of September 30 | 3,104 | 37,841 | 247 | |||
| Net book value as of September 30 | 10,470 | 16,243 | 2,910 | |||
| January – September 2009 | |||
|---|---|---|---|
| Intangible assets |
Property, plant and equipment |
Investments accounted for using the equity method and other financial assets |
|
| Acquisition costs | |||
| Balance as of January 1 | 12,408 | 49,147 | 3,424 |
| Additions | 1,850 | 3,428 | 403 |
| Disposals | (319) | (596) | (158) |
| Transfers | (64) | 29 | (474) |
| Exchange differences | (208) | (455) | (15) |
| Balance as of September 30 | 13,667 | 51,553 | 3,180 |
| Amortization and depreciation | |||
| Balance as of January 1 | 2,519 | 34,115 | 331 |
| Additions | 636 | 1,849 | 18 |
| Disposals | (309) | (532) | (72) |
| Transfers | (1) | (8) | (1) |
| Exchange differences | (19) | (259) | – |
| Balance as of September 30 | 2,826 | 35,165 | 276 |
| Net book value as of September 30 | 10,841 | 16,388 | 2,904 |
Additions to property, plant and equipment from January to September 2010 arose from a number of investments. The most significant investments were: the expansion of the synthesis gas plants in Ludwigshafen, Germany; the construction of natural gas pipelines in Europe (in particular OPAL and NEL); the expansion measures at the site in Nanjing, China; construction of a sulfuric acid plant and a Deacon plant in Antwerp, Belgium; and the construction of a polyol plant and a production plant for methylamines in Geismar, Louisiana.
| Million € | Sept. 30, 2010 | Sept. 30, 2009 | Dec. 31, 2009 |
|---|---|---|---|
| Raw materials and factory supplies | 2,146 | 1,774 | 1,845 |
| Work-in-process, finished goods and merchandise | 5,724 | 4,680 | 4,860 |
| Advance payments and services-in-process | 92 | 105 | 71 |
| Inventories | 7,962 | 6,559 | 6,776 |
| Accounts receivables, trade | 9,005 | 7,737 | 7,738 |
| Other receivables and miscellaneous short-term assets | 4,009 | 2,800 | 3,223 |
| Marketable securities | 16 | 167 | 15 |
| Cash and cash equivalents | 2,282 | 2,931 | 1,835 |
| Other short-term assets | 6,307 | 5,898 | 5,073 |
| Short-term assets | 23,274 | 20,194 | 19,587 |
Work-in-process and finished goods and merchandise are combined into one item because of the production conditions in the chemical industry. Uncompleted contracts relate primarily to services not invoiced at the balance sheet date. Inventories are valued using the weighted average cost method.
The increase in inventories compared with year-end 2009 is in part attributable to translation effects amounting to €195 million.
Trade accounts receivable increased in comparison with yearend 2009 as a result of currency effects of €232 million as well as the expansion of business activities.
At the Annual Meeting of April 30, 2009, shareholders authorized the Board of Executive Directors to increase subscribed capital by issuing new shares in an amount of up to €500 million against cash with the approval of the Supervisory Board 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. Until now, this option has not been exercised and no new shares were issued.
Transfers to Other retained earnings increased legal reserves by €9 million in the first three quarters. The offsetting of actuarial gains and losses, as well as the asset ceiling, resulted in a reduction in retained earnings of €1,126 million in the first three quarters of 2010, and an increase of €367 million in the same period of 2009.
The Annual Meeting of BASF SE decided on April 29, 2010 to distribute a dividend of €1,561 million for 2009 to shareholders, corresponding to €1.70 per share.
| Sept. 30, 2010 |
Dec. 31, 2009 |
|
|---|---|---|
| Legal reserves | 431 | 429 |
| Other retained earnings | 13,261 | 12,487 |
| 13,692 | 12,916 |
| Germany | Foreign | |||
|---|---|---|---|---|
| Sept. 30, 2010 | 31.12.2009 | Sept. 30, 2010 | 31.12.2009 | |
| Discount rate | 4.25 | 5.50 | 4.25 | 5.17 |
| Projected increase of wages and salaries | 2.75 | 2.75 | 3.91 | 3.91 |
| Projected pension increase | 2.00 | 2.00 | 0.92 | 0.92 |
| Germany | Foreign | ||||
|---|---|---|---|---|---|
| Sept. 30, 2010 | 31.12.2009 | Sept. 30, 2010 | 31.12.2009 | ||
| Discount rate | 5.50 | 6.00 | 5.17 | 5.59 | |
| Projected increase of wages and salaries | 2.75 | 2.75 | 3.91 | 3.82 | |
| Projected pension increase | 2.00 | 2.00 | 0.92 | 0.76 | |
| Expected return on plan assets | 5.13 | 5.42 | 6.28 | 6.60 |
The assumptions regarding the overall expected long-term rate of return are based on the target asset allocation and the weighted average rate of expected returns of each individual asset class. 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 three quarters of 2010, developments in the capital markets led to a significant reduction of the average weighted discount rate for existing pension obligations. In particular, the resulting actuarial losses of €2,320 million led to an increase in pension provisions as of September 30, 2010.
| Million € | Sept. 30, 2010 | Sept. 30, 2009 | Dec. 31, 2009 |
|---|---|---|---|
| Other long-term provisions | 3,398 | 3,252 | 3,289 |
| Short-term provisions | 3,215 | 3,020 | 3,276 |
| 6,613 | 6,272 | 6,565 |
In the first three quarters of 2010, other provisions increased compared with the end of 2009. This increase primarily affects provisions for the BASF option program.
| Sept. 30, 2010 | Sept. 30, 2009 | Dec. 31, 2009 | ||||
|---|---|---|---|---|---|---|
| Short-term | Long-term | Short-term | Long-term | Short-term | Long-term | |
| Accounts payable, trade | 4,157 | – | 3,196 | – | 2,786 | – |
| Bonds and other liabilities to the capital market | 1,472 | 10,231 | 2,443 | 11,264 | 1,491 | 11,351 |
| Liabilities to credit institutions | 609 | 1,385 | 918 | 1,177 | 884 | 1,093 |
| Financial indebtedness | 2,081 | 11,616 | 3,361 | 12,441 | 2,375 | 12,444 |
| Tax liabilities | 1,155 | – | 1,007 | – | 1,003 | – |
| Advances received on orders | 69 | – | 68 | – | 116 | – |
| Liabilities on bills | 14 | 25 | 62 | 24 | 52 | 23 |
| Liabilities related to social security | 155 | 35 | 163 | 15 | 156 | 30 |
| Miscellaneous liabilities | 1,890 | 625 | 2,032 | 858 | 1,801 | 663 |
| Deferred income | 256 | 202 | 225 | 183 | 115 | 182 |
| Other liabilities | 2,384 | 887 | 2,550 | 1,080 | 2,240 | 898 |
| Nominal Effective value |
Carrying amounts based on effective interest method |
||||
|---|---|---|---|---|---|
| interest rate | Sept. 30, 2010 |
Dec. 31, 2009 |
Sept. 30, 2009 |
||
| 3.5% Euro Bond 2003/2010 of BASF SE | 1,000 | 3.63 % | – | 999 | 999 |
| 4% Euro Bond 2006/2011 of BASF SE | 1,000 | 4.05 % | 1,000 | 999 | 999 |
| 3.375% Euro Bond 2005/2012 of BASF SE | 1,400 | 3.42 % | 1,399 | 1,399 | 1,398 |
| 3.75% Euro Bond 2009/2012 of BASF SE | 1,350 | 3.97 % | 1,345 | 1,343 | 1,342 |
| 4.5% Euro Bond 2006/2016 of BASF SE | 500 | 4.62 % | 497 | 497 | 497 |
| 4.25% Euro Bond 2009/2016 of BASF SE | 200 | 4.40 % | 198 | 198 | 198 |
| 5.875% GBP Bond 2009/2017 of BASF SE | 400 | 6.04 % | 461 | 446 | 436 |
| 4.625% Euro Bond 2009/2017 of BASF SE | 300 | 4.69 % | 299 | 299 | 299 |
| 3.25% CHF Bond 2008/2011 of BASF Finance Europe N.V. | 300 | 3.39 % | 226 | 202 | 199 |
| 6% Euro Bond 2008/2013 of BASF Finance Europe N.V. | 1,250 | 6.15 % | 1,245 | 1,244 | 1,243 |
| 5% Euro Bond 2007/2014 of BASF Finance Europe N.V. | 1,000 | 5.09 % | 997 | 996 | 996 |
| 5% Euro Bond 2007/2014 of BASF Finance Europe N.V. | 250 | 4.83 % | 251 | 252 | 252 |
| 3.625% CHF Bond 2008/2015 of BASF Finance Europe N.V. | 200 | 3.77 % | 149 | 134 | 132 |
| 5.125% Euro Bond 2009/2015 of BASF Finance Europe N.V. | 1,500 | 5.30 % | 1,489 | 1,488 | 1,487 |
| 5.125% Euro Bond 2009/2015 of BASF Finance Europe N.V. | 500 | 4.38 % | 515 | 517 | 518 |
| 4.5% Euro Medium Term Note 2009/2016 of BASF Finance Europe N.V. | 150 | 4.56 % | 150 | 149 | 149 |
| USD Extendible Floating Rate Notes of BASF Finance Europe N.V. | 0.33 % | – | 3 | 242 | |
| 3.25% CHF Bond 2006/2012 of Ciba Spezial. Finanz AG | 225 | 3.32 % | 166 | 147 | 145 |
| 4.875% Euro Bond 2003/2018 of Ciba Special. Chem. Finance Luxembourg S.A. | 477 | 4.88 % | 399 | 393 | 391 |
| USD Commercial Paper | 320 | 234 | 487 | 1,198 | |
| Other bonds | 683 | 650 | 587 | ||
| Bonds and other liabilities to the capital market | 11,703 | 12,842 | 13,707 | ||
| Liabilities to credit institutions | 1,994 | 1,977 | 2,095 | ||
| 13,697 | 14,819 | 15,802 |
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 €647 million in the first three quarters of 2010 and €622 million in the same period of 2009.
In addition, there are material supply relationships with Ellba C.V., Netherlands, and Ellba Eastern Private Ltd., Singapore. The unconsolidated portion of these supplies amounted to €353 million in the first three quarters of 2010 and €204 million in the same period of 2009.
There were no reportable related party transactions with members of the Board of Executive Directors or the Supervisory Board. BASF has not issued loans to members of the Board of Executive Directors or the Supervisory Board.
| Million € | 3rd Quarter | January – September | |||
|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||
| Income before taxes and minority interests | 2,050 | 798 | 5,796 | 2,237 | |
| Special items | 58 | 277 | 299 | 702 | |
| Amortization of intangible assets | 161 | 301 | 467 | 636 | |
| Amortization of intangible assets contained in the special items | – | (128) | (5) | (187) | |
| Adjusted income before taxes and minority interests | 2,269 | 1,248 | 6,557 | 3,388 | |
| Adjusted income taxes | 756 | 606 | 2,167 | 1,418 | |
| Adjusted income before minority interests | 1,513 | 642 | 4,390 | 1,970 | |
| Adjusted minority interests | 123 | 82 | 406 | 176 | |
| Adjusted net income | 1,390 | 560 | 3,984 | 1,794 | |
| Weighted average number of outstanding shares (in thousands) |
918,479 | 918,479 | 918,479 | 918,479 | |
| Adjusted earnings per share € |
1.52 | 0.61 | 4.34 | 1.95 |
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.
The special items are primarily the result of the integration of acquired businesses, restructuring measures, impairment losses and gains or losses resulting from divestitures. This involves expenses and income that do not arise in conjunction with ordinary business activities. Intangible assets primarily result from 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 IFRS is presented in the Notes on page 27. The adjusted income before taxes and minority interests, the adjusted net income and the adjusted earnings per share are indicators that are not defined in 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 103 to 111 in the BASF Report 2009. The BASF Report can be found on the Internet at: basf.com/report. We do not assume any obligation to update the forward-looking statements contained in this report.
Full Year Results 2010
Annual Meeting 2011 / Interim Report 1st Quarter 2011
May 6, 2011
Interim Report 1st Half 2011
July 28, 2011
Interim Report 3rd Quarter 2011
Oct. 27, 2011
Published on October 28, 2010
You can find this and other BASF publications online at www.basf.com
You can also order the reports:
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 www.basf.com
BASF SE, 67056 Ludwigshafen, Germany
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.