4 – Reporting by Segment and Region

As of January 1, 2019, we have 11 divisions grouped into six segments as follows:

  • Chemicals: Petrochemicals, Intermediates
  • Materials: Performance Materials, Monomers
  • Industrial Solutions: Dispersions & Pigments, Performance Chemicals
  • Surface Technologies: Catalysts, Coatings
  • Nutrition & Care: Care Chemicals, Nutrition & Health
  • Agricultural Solutions: Agricultural Solutions

The Construction Chemicals division was part of the Surface Technologies segment until December 21, 2019. The division was reclassified to Other as a discontinued operation with the agreement on the sale of BASF’s construction chemicals business to an affiliate of Lone Star. The prior-year figures have been restated accordingly.

The composition of a number of divisions also changed at the beginning of 2019. The propylene oxide and propylene glycol business was transferred from the Petrochemicals division to the Monomers division. The superabsorbents business was reallocated from the Care Chemicals division to the Petrochemicals division. The styrene, polystyrene and styrene-based foams business, which previously mainly fell under the Performance Materials division and a small part under Other, is bundled in the Petrochemicals division.

The divisions are allocated to the segments based on their business models and according to their focal points, customer groups, the focus of their innovations, their investment relevance and sustainability aspects.

The Chemicals segment comprises the Petrochemicals and Intermediates divisions and is the cornerstone of BASF’s Verbund structure. It supplies the other segments with basic chemicals and intermediates, contributing to the organic growth of our key value chains. Alongside internal transfers, customers include the chemical and plastics industries. The segment’s competitiveness is strengthened by technological leadership and operational excellence.

The Materials segment is composed of the Performance Materials division and the Monomers division. The segment offers advanced materials and their precursors for new applications and systems. Its product portfolio includes isocyanates and polyamides as well as inorganic basic products and specialties for plastics and plastics processing.

The Industrial Solutions segment consists of the Dispersions & Pigments and the Performance Chemicals divisions. The segment develops and markets ingredients and additives for industrial applications, such as polymer dispersions, pigments, resins, electronic materials, antioxidants and additives. Its customers come from key industries such as automotive, plastics and electronics.

The Surface Technologies segment bundles chemical solutions for surfaces with the Catalysts and Coatings divisions. Its product spectrum includes catalysts and battery materials for the automotive and chemical industries, surface treatments, colors and coatings.

The Nutrition & Care segment comprises the Care Chemicals division and the Nutrition & Health division. The segment produces ingredients and solutions for consumer applications in the areas of nutrition, home and personal care. Its customers include food and feed producers as well as the pharmaceutical, cosmetics, detergent and cleaner industries.

The Agricultural Solutions segment consists of the division of the same name. As an integrated provider, its portfolio comprises fungicides, herbicides, insecticides and biological crop protection products, as well as seeds and seed treatment products. Furthermore, Agricultural Solutions offers farmers innovative solutions, including those based on digital technologies, combined with practical advice.

Activities that are not allocated to any of the segments are recorded under Other. These include other businesses, which comprise commodity trading, engineering and other services, as well as rental income and leases. Discontinued operations and all remaining activities after divestitures not previously reported under Other have also been reported here since January 1, 2019. These remaining activities include, for example, equity-accounted participating interests assumed in the context of divestitures or supply obligations. The remaining activities for the leather and textile chemicals business, previously recorded in the Performance Products segment, and the remaining activities for the industrial coatings business, previously recorded in the Functional Materials & Solutions segment, were reclassified to Other. Discontinued operations include the business of the former Construction Chemicals division and the oil and gas business. Following the merger of the oil and gas businesses of Wintershall and DEA, the equity-accounted interest in Wintershall Dea GmbH, Kassel/Hamburg, Germany, and the resulting contribution to earnings have also been reported under other businesses since May 1, 2019. The assets and liabilities of the oil and gas business were already presented under Other following the signing of the binding agreement between BASF and LetterOne to merge their oil and gas activities in the third quarter of 2018 until closing of the transaction.

The following activities are also presented under Other:

  • The steering of the BASF Group by corporate headquarters.
  • Cross-divisional corporate research, which includes plant biotechnology research, works on long-term topics of strategic importance to the BASF Group. Furthermore, it focuses on the development of specific key technologies, which are of central importance for the divisions.
  • Results from currency translation that are not allocated to the segments; earnings from the hedging of raw materials prices and foreign currency exchange risks; and gains and losses from the long-term incentive (LTI) program.
  • Miscellaneous income and expenses include expenses and income in connection with contaminated sites, project costs that are not allocated to the segments and, since the beginning of 2019, remanent fixed costs resulting from organizational changes or restructuring, function and region-related restructuring costs not allocated to a division, and idle capacity costs from internal human resource platforms.
Income from operations (EBIT) of Other (Million €)

 

2019

2018

Costs for cross-divisional corporate research

(397)

(414)

Costs of corporate headquarters

(231)

(249)

Other businesses

15

17

Foreign currency results, hedging and other measurement effects

(89)

324

Miscellaneous income and expenses

35

(184)

Income from operations of Other

(667)

(506)

Income from operations of Other declined by €161 million year on year, from minus €506 million to minus €667 million. The costs for cross-divisional corporate research decreased by €17 million to minus €397 million, and the costs of corporate headquarters were €18 million lower at minus €231 million. Income from other businesses declined by €2 million to €15 million. The line item foreign currency results, hedging and other measurement effects decreased by €413 million to minus €89 million. This was due to expenses resulting from the addition to provisions for the LTI program in 2019, compared with income from the release of provisions in the previous year, as well as negative currency effects. The line item miscellaneous income and expenses rose by €219 million to €35 million and includes the gain on the sale of our share of the Klybeck site in Basel, Switzerland.

Reconciliation of the assets of Other to the assets of the BASF Group (Million €)

 

December 31, 2019

December 31, 2018

a

For more information, see Note 2.5

Segment assets

59,365

59,700

Assets of businesses included in Other

15,904

2,528

Financial assets

636

570

Deferred tax assets

2,887

2,342

Cash and cash equivalents/marketable securities

2,871

2,644

Defined benefit assets

123

63

Other receivables/prepaid expenses

2,429

1,901

Operating assets of the oil and gas business disposal group

12,570

Other assets of the oil and gas business disposal group

1,518

Operating assets of the former Construction Chemicals division (2018) and of the construction chemicals business disposal group (2019)a

2,661

2,720

Other assets of the construction chemicals business disposal group (2019)a

74

Assets of Other

27,585

26,856

Assets of the BASF Group

86,950

86,556

Reconciliation of segment income to income before income taxes (Million €)

 

2019

2018

EBIT before special items of the segments

5,224

6,742

EBIT before special items of Other

(688)

(461)

EBIT before special items

4,536

6,281

Special items of the segments

(505)

(262)

Special items of Other

21

(45)

Special items

(484)

(307)

EBIT of the segments

4,719

6,480

EBIT of Other

(667)

(506)

EBIT

4,052

5,974

Financial result

(750)

(741)

Income before income taxes

3,302

5,233

The same accounting rules are used for segment reporting as those used for the Group, which are presented in these Notes. Transfers between the segments are generally executed at adjusted market-based prices, taking into account the higher cost efficiency and lower risk of intragroup transactions. Assets, as well as their depreciation and amortization, are allocated to the segments based on economic control. Assets used by more than one segment are allocated based on the percentage of usage. Assets not used by the segments are reported under Other.

Income from operations (EBIT) before special items is used for the internal steering of the segments and complements the key management indicator, ROCE. EBIT is calculated from gross profit on sales, selling expenses, general administrative expenses, research and development expenses, other operating income and expenses, and income from companies accounted for using the equity method. To calculate EBIT before special items, this figure is then adjusted for special items. Special items arise from the integration of acquired businesses, restructuring costs, certain impairments, gains or losses resulting from divestitures and sales of shareholdings accounted for using the equity method, and other expenses and income that arise outside of ordinary business activities. EBIT and EBIT before special items are alternative performance measures that are not defined under IFRS and are to be considered as being complementary to the indicators defined by IFRS.

Segments 2019 (Million €)

 

Chemicals

Materials

Industrial Solutions

Surface Tech­nologies

Nutrition & Care

Agri­cultural Solutions

Othera

BASF Group

a

Other includes assets and liabilities as well as amortization of intangible assets and depreciation of property, plant and equipment of the discontinued construction chemicals business. For more information, see Note 2.5. Until reclassification to the disposal group, additions to intangible assets and property, plant and equipment (including acquisitions) of the discontinued construction chemicals business, also included in Other, amounted to €176 million. The assets of Other also include the equity-accounted interest in Wintershall Dea GmbH.

Sales

9,532

11,466

8,389

13,142

6,075

7,814

2,898

59,316

Intersegment transfers

3,428

849

524

212

490

197

77

5,777

Sales including transfers

12,960

12,315

8,913

13,354

6,565

8,011

2,975

65,093

Income from companies accounted for using the equity method

99

22

26

5

(36)

116

Income from operations

622

973

889

663

644

928

(667)

4,052

Assets

8,978

8,782

6,903

11,773

6,399

16,530

27,585

86,950

of which goodwill

201

172

649

2,912

884

3,219

68

8,105

other intangible assets

65

102

256

1,158

558

4,224

57

6,420

property, plant and equipment

5,117

4,999

2,226

3,078

2,347

2,938

1,087

21,792

investments accounted for using the equity method

763

235

37

388

43

13,542

15,008

Liabilities

3,507

3,603

2,886

3,152

2,897

3,251

25,304

44,600

Research and development expenses

108

193

192

214

161

879

411

2,158

Additions to intangible assets and property, plant and equipment (including acquisitions)

1,108

784

426

565

595

320

299

4,097

Depreciation and amortization of intangible assets and property, plant and equipment

923

718

438

457

545

719

346

4,146

of which impairments and reversals of impairments

146

8

19

9

124

12

6

324

Segments 2018 (Million €)

 

Chemicals

Materials

Industrial Solutions

Surface Tech­nologies

Nutrition & Care

Agri­cultural Solutions

Othera

BASF Group

a

Other includes assets and liabilities as well as amortization of intangible assets and depreciation of property, plant and equipment of the discontinued construction chemicals business. For more information, see Note 2.5. Additions to intangible assets and property, plant and equipment (including acquisitions) of the discontinued construction chemicals business, also included in Other, amounted to €87 million in 2018. Other also includes assets and liabilities as well as amortization of intangible assets and depreciation of property, plant and equipment of the discontinued oil and gas business until the assets were reclassified to the disposal group at the end of the third quarter of 2018. Until reclassification to the disposal group, additions to intangible assets and property, plant and equipment (including acquisitions) of the discontinued oil and gas business, also included in Other, amounted to €468 million.

Sales

11,694

13,270

9,120

11,199

5,940

6,156

2,841

60,220

Intersegment transfers

3,611

962

525

192

470

58

15

5,833

Sales including transfers

15,305

14,232

9,645

11,391

6,410

6,214

2,856

66,053

Income from companies accounted for using the equity method

200

11

(3)

38

4

19

269

Income from operations

1,573

2,374

653

574

715

591

(506)

5,974

Assets

8,947

9,005

7,464

11,062

6,230

16,992

26,856

86,556

of which goodwill

197

170

1,060

2,881

846

3,236

821

9,211

other intangible assets

55

99

343

1,231

548

4,441

626

7,343

property, plant and equipment

4,700

4,789

2,345

2,723

2,133

2,660

1,430

20,780

investments accounted for using the equity method

854

235

57

384

48

625

2,203

Liabilities

2,953

2,952

2,712

2,232

2,431

3,080

34,087

50,447

Research and development expenses

114

194

224

217

152

679

414

1,994

Additions to intangible assets and property, plant and equipment (including acquisitions)

962

639

436

531

298

7,110

759

10,735

Depreciation and amortization of intangible assets and property, plant and equipment

661

619

423

379

392

394

882

3,750

of which impairments and reversals of impairments

26

4

5

4

5

7

2

53

In the United States, sales to third parties in 2019 amounted to €14,211 million (2018: €14,202 million) according to location of companies and €13,506 million (2018: €13,496 million) according to location of customers. In the United States, intangible assets, property, plant and equipment, and investments accounted for using the equity method amounted to €12,115 million on December 31, 2019, compared with €12,958 million in the previous year.

In China, sales to third parties in 2019 amounted to €7,216 million (2018: €7,501 million) according to location of companies and €6,734 million (2018: €6,644 million) according to location of customers. In China, intangible assets, property, plant and equipment, and investments accounted for using the equity method amounted to €4,299 million on December 31, 2019, compared with €4,162 million in the previous year.

Regions 2019 (Million €)

 

 

Europe

Of which Germany

North America

Asia
Pacific

South America, Africa, Middle East

BASF Group

Location of customer

 

 

 

 

 

 

 

Sales

 

23,827

6,123

15,948

14,203

5,338

59,316

Share

%

40.2

10.3

26.9

23.9

9.0

100.0

Location of company

 

 

 

 

 

 

 

Sales

 

25,706

14,049

16,420

13,384

3,806

59,316

Income from companies accounted for using the equity method

 

(45)

(18)

2

159

116

Income from operations

 

1,976

418

692

1,082

302

4,052

Assets

 

47,347

34,412

21,345

13,912

4,346

86,950

of which intangible assets

 

6,652

3,588

6,152

1,353

368

14,525

property, plant and equipment

 

9,857

6,928

6,467

4,644

824

21,792

investments accounted for using the equity method

 

13,516

12,761

125

1,367

15,008

Additions to intangible assets and property, plant and equipment (including acquisitions)

 

2,135

1,459

1,310

581

71

4,097

Amortization of intangible assets and depreciation of property, plant and equipment including impairments and reversals of impairments

 

1,896

1,235

1,501

599

150

4,146

Regions 2018 (Million €)

 

 

Europe

Of which Germany

North America

Asia
Pacific

South America, Africa, Middle East

BASF Group

Location of customer

 

 

 

 

 

 

 

Sales

 

25,589

6,687

15,388

14,210

5,033

60,220

Share

%

42.4

11.1

25.6

23.6

8.4

100.0

Location of company

 

 

 

 

 

 

 

Sales

 

27,526

17,767

15,900

13,454

3,340

60,220

Income from companies accounted for using the equity method

 

36

10

0

233

269

Income from operations

 

3,210

1,146

794

1,793

177

5,974

Assets

 

45,562

23,739

22,079

13,576

5,339

86,556

of which intangible assets

 

7,281

3,874

7,308

1,499

466

16,554

property, plant and equipment

 

9,231

6,357

6,286

4,416

847

20,780

investments accounted for using the equity method

 

637

289

122

1,444

2,203

Additions to intangible assets and property, plant and equipment (including acquisitions)

 

5,317

3,674

4,461

585

372

10,735

Amortization of intangible assets and depreciation of property, plant and equipment including impairments and reversals of impairments

 

2,031

1,180

990

479

250

3,750