Additional Indicators for Results of Operations

  • Adjusted earnings per share decline from €4.00 to €3.21
  • EBITDA before special items and EBITDA considerably below previous year

We also use alternative performance measures (APMs) to steer the BASF Group. Investors, analysts and rating agencies use them to assess our performance. These are not defined by IFRS. As such, the methods of calculation can differ from those used by other companies. Alternative performance measures for the results of operations are EBIT before special items, EBITDA before special items, EBITDA, the EBITDA margin and adjusted earnings per share. Other APMs are net debt,1 free cash flow1 and capital expenditure (capex).2

Income from operations before depreciation, amortization and special items (EBITDA before special items) and income from operations before depreciation and amortization (EBITDA) are indicators that describe operational performance independent of age-related depreciation and amortization of assets and any impairment or reversal of impairment. Both figures are therefore particularly useful in cross-company comparisons. EBITDA before special items is also highly useful in making comparisons over time. The EBITDA margin is a relative indicator and is calculated as the ratio of EBITDA to sales revenue, enabling operational performance to be compared independent of the size of the underlying business.

EBITDA before special items declined by €889 million year on year to €7,435 million in 2020. At €6,494 million, EBITDA was down €1,691 million from the prior-year figure. The EBITDA margin was 11.0% in 2020, compared with 13.8% in the previous year.

1 For more information on these indicators, see the Financial Position

2 For more information on capex, see Value-Based Management and Material Investments and Portfolio Measures

EBITDA before special items (Million €)

 

2020

2019

EBIT

–191

4.201

– Special items

–3,751

–442

EBIT before special items

3,560

4,643

+ Depreciation and amortizationa

3,805

3,660

+ Impairments and reversals of impairments on property, plant and equipment and intangible assets before special itemsa

70

21

Depreciation, amortization, impairments and reversals of impairments on property, plant and equipment and intangible assets before special items

3,875

3,681

EBITDA before special items

7,435

8,324

a

Excluding depreciation, amortization, impairments and reversals of impairments attributable to the discontinued construction chemicals business

EBITDA (Million €)

 

 

2020

2019

EBIT

 

–191

4,201

+ Depreciation and amortizationa

 

3,805

3,660

+ Impairments and reversals of impairments on intangible assets and property, plant and equipmenta

 

2,880

324

Depreciation, amortization, impairments and reversals of impairments on intangible assets and property, plant and equipment

 

6,685

3,984

EBITDA

 

6,494

8,185

Sales revenue

 

59,149

59,316

EBITDA margin

%

11.0

13.8

a

Excluding depreciation, amortization, impairments and reversals of impairments attributable to the discontinued construction chemicals business

Adjusted earnings per share (Million €)

 

 

2020

2019

Income after taxes

 

–1,075

8,491

– Special itemsa

 

–4,606

–484

+ Amortization, impairments and reversals of impairments on intangible assets

 

1,496

652

– Amortization, impairments and reversals of impairments on intangible assets contained in special items

 

819

8

– Adjustments to income taxes

 

958

318

– Adjustments to income after taxes from discontinued operations

 

251

5,559

Adjusted income after taxes

 

2,999

3,742

– Adjusted noncontrolling interests

 

54

72

Adjusted net income

 

2,945

3,670

Weighted average number of outstanding shares (in thousands)

 

918,479

918,479

Adjusted earnings per share

3.21

4.00

a

Includes special items in net income from shareholdings of €855 million for 2020 and €42 million for 2019

Compared with earnings per share, adjusted earnings per share is firstly adjusted for special items. Amortization, impairment and reversal of impairment on intangible assets are then eliminated. Amortization of intangible assets primarily results from the purchase price allocation following acquisitions and is therefore of a temporary nature. The effects of these adjustments on income taxes and on noncontrolling interests are also considered. This makes adjusted earnings per share a suitable measure for making comparisons over time and predicting future profitability.

In 2020, adjusted earnings per share amounted to €3.21, compared with €4.00 in the previous year.