BASF Group Increases Sales, but Earnings Below Prior-Year Quarter

In the third quarter of 2018, BASF Group sales rose by 8% year on year to reach €15.6 billion. This was primarily attributable to higher sales prices in all segments. Volumes growth and the acquisition of the Bayer businesses in August 2018 also contributed to the sales increase.
 
Income from operations (EBIT) before special items declined by €232 million to €1.5 billion, mainly due to the significantly lower contribution from the Chemicals segment. EBIT before special items also decreased considerably in the Functional Materials & Solutions and Agricultural Solutions segments but fell only slightly in the Performance Products segment.
 
Compared to the third quarter of 2017, EBIT declined by €429 million to €1.4 billion. Income from operations before depreciation, amortization and special items (EBITDA before special items) decreased by €254 million to €2.3 billion and EBITDA by €465 million to €2.2 billion.
 
At the presentation of BASF Group’s quarterly figures, chairman of the board of Executive Directors Dr. Martin Brudermüller and CFO Dr. Hans-Ulrich Engel pointed to some of the special factors in the third quarter: “We completed the acquisition of significant businesses and assets from Bayer and reached an agreement on the merger of Wintershall and DEA,” said Dr. Martin Brudermüller, chairman of the board of Executive Directors.
 
The low water level in the Rhine River had an impact on business. “Throughout the entire third quarter, we had to struggle with this, which led to production cutbacks and higher transportation costs,” said Brudermüller.
 
Sales in the Chemicals segment rose by 7% compared with the prior-year quarter to €4.3 billion. This a result of higher prices in all divisions, especially in Petrochemicals. At €851 million, income from operations (EBIT) before special items was down by €251 million versus the strong third quarter of 2017. This was primarily due to lower margins for isocyanates in the Monomers division and steam cracker products in the Petrochemicals division.
 
Sales of approximately €4 billion in the Performance Products segment were on a level with the prior-year quarter. BASF achieved higher prices in all divisions; however, sales volumes decreased in the Nutrition & Health, Dispersions & Pigments and Care Chemicals divisions. Income from operations (EBIT) before special items declined by 6% compared with the third quarter of 2017 to €360 million as a result of lower volumes, higher fixed costs and negative currency effects.
 
In the Functional Materials & Solutions segment, sales rose by 5% compared with the third quarter of 2017 to reach €5.2 billion. This was primarily attributable to higher prices in all divisions, especially in Catalysts and Performance Materials. Despite volumes growth, EBIT before special items of €347 million was considerably below the level of the prior year.
 
Net income declined by €136 million to €1.2 billion. Earnings per share amounted to €1.31 (third quarter of 2017: €1.45). Earnings per share adjusted for special items and amortization of intangible assets were €1.51 (third quarter of 2017: €1.40).
 
In the third quarter of 2018, cash flows from operating activities amounted to €2.9 billion, €865 million below the figure for the prior-year quarter. Free cash flow amounted to €2 billion, compared with €2.8 billion in the prior-year quarter.
 
The BASF Group’s total assets rose by €6.8 billion to €85.6 billion. The acquisition of significant businesses and assets from Bayer contributed €8 billion to this increase. As a result of the purchase price payment to Bayer, net debt increased by €6.5 billion as against Dec. 31, 2017, to €18 billion.