Business Review

  • Sales 8% lower at €8,389 million, mainly due to the transfer of the paper and water chemicals business to the Solenis group
  • EBIT before special items €152 million higher as a result of considerable earnings growth in both divisions

At €8,389 million, sales to third parties in the Industrial Solutions segment were €731 million below the prior-year figure in 2019. This was primarily attributable to considerably lower sales in the Performance Chemicals division, where sales decreased by €617 million to €3,211 million. Sales in the Dispersions & Pigments division declined slightly by €114 million to €5,178 million.

Factors influencing sales – Industrial Solutions

 

Industrial Solutions

Dispersions & Pigments

Performance Chemicals

Volumes

(1%)

(3%)

2%

Prices

(1%)

(1%)

(1%)

Portfolio

(8%)

0%

(19%)

Currencies

2%

2%

2%

Sales

(8%)

(2%)

(16%)

Segment data – Industrial Solutions (Million €)

 

 

2019

2018

+/–

a

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

b

Additions to intangible assets and property, plant and equipment

Sales to third parties

 

8,389

9,120

(8%)

of which Dispersions & Pigments

 

5,178

5,292

(2%)

Performance Chemicals

 

3,211

3,828

(16%)

Intersegment transfers

 

524

525

(0%)

Sales including transfers

 

8,913

9,645

(8%)

Income from operations before depreciation, amortization and special items

 

1,249

1,090

15%

Income from operations before depreciation and amortization (EBITDA)

 

1,327

1,076

23%

EBITDA margin

%

15.8

11.8

Depreciation and amortizationa

 

438

423

4%

Income from operations (EBIT)

 

889

653

36%

Special items

 

69

(15)

.

EBIT before special items

 

820

668

23%

Return on capital employed (ROCE)

%

12.5

8.7

Assets

 

6,903

7,464

(8%)

Investments including acquisitionsb

 

426

436

(2%)

Research and development expenses

 

192

224

(14%)

The sales decrease largely reflected the transfer of BASF’s paper and water chemicals business, which was previously reported under the Performance Chemicals division, to the Solenis group as of January 31, 2019.

Volumes were also lower overall. Slightly higher sales volumes in the Performance Chemicals division, especially for fuel and lubricant solutions, were unable to offset the slightly lower volumes in the Dispersions & Pigments division.

The slight decline in prices in both divisions, mainly as a result of lower raw materials prices, also contributed to the sales decrease.

Positive currency effects in both divisions, especially relating to the U.S. dollar, had an offsetting impact.

Dispersions & Pigments – Sales by region

Location of customer

Industrial Solutions – Dispersions & Pigments – Sales by region (pie chart)
Performance Chemicals – Sales by region

Location of customer

Industrial Solutions – Performance Chemicals – Sales by region (pie chart)

Income from operations (EBIT) before special items rose by €152 million to €820 million. This was mainly the result of lower fixed costs, positive currency effects and higher margins. In both divisions, we considerably improved earnings compared with the previous year.

The earnings improvement in the Performance Chemicals division was attributable to lower fixed costs and positive currency effects.

The slight margin growth in the Dispersions & Pigments division was due to positive currency effects and lower raw materials prices. In addition, fixed costs were below the prior-year level thanks to cost optimization measures.

Compared with 2018, EBIT rose by €236 million to €889 million. EBIT included special income of €185 million in the Performance Chemicals division from the transfer of BASF’s paper and water chemicals business to the Solenis group.