BASF Report 2021

Results of Operations

The global economy recovered much more strongly than we expected in 2021 following the severe slump in the previous year due to the effects of the coronavirus pandemic. Many governments’ aid programs and rising vaccination rates were key contributing factors to this. In this market environment, growth in global industrial production and in the global chemical industry (excluding pharmaceuticals) was also significantly above the prior-year level and the long-term average. BASF’s business also developed favorably: We considerably increased sales and earnings.

At a glance

  • Sales and EBIT before special items considerably above prior year
  • Considerable increase in ROCE to 13.5%
  • Net income from shareholdings improves by €1,116 million
  • Earnings per share of €6.01; adjusted earnings per share of €6.76

Sales rose by €19,449 million compared with the previous year to €78,598 million in 2021. This was mainly driven by higher prices and volumes in all segments. Price levels increased in the Chemicals, Surface Technologies and Materials segments in particular. Sales volumes grew primarily in the Surface Technologies and Materials segments. Currency effects, mainly relating to the U.S. dollar, had an offsetting effect. Sales performance was also weighed down by negative portfolio effects, especially in the Industrial Solutions segment following the divestiture of the global pigments business. This could only be partly offset by positive portfolio effects, mainly from the acquisition of a majority shareholding in BASF Shanshan Battery Materials Co., Ltd. in the Surface Technologies segment.

Salesa, b

Million €

Sales (bar chart)

a Sales for 2018 were reduced by the share attributable to construction chemicals activities due to their presentation as discontinued operations. Figures for 2017 have not been restated.

b Sales for 2017 were reduced by the share attributable to oil and gas activities due to their presentation as discontinued operations.

Factors influencing sales of the BASF Group

 

Change
in million €

Change
in %

Volumes

6,279

10.6

Prices

14,673

24.8

Currencies

–1,439

–2.4

Acquisitions

431

0.7

Divestitures

–495

–0.8

Changes in the scope of consolidation

–1

0.0

Total change in sales

19,449

32.9

Income from operations (EBIT) before special items rose by €4,208 million to €7,768 million, largely due to considerably higher earnings in the Chemicals and Materials segments. Earnings development in the Chemicals segment was primarily driven by higher margins, higher sales volumes and an improvement in equity-accounted income. Earnings growth in the Materials segment was mainly attributable to higher margins in isocyanates and polyamides, as well as positive volume development. EBIT before special items also improved considerably in the Surface Technologies and Industrial Solutions segments, largely as a result of higher volumes. By contrast, the Nutrition & Care and Agricultural Solutions segments recorded considerably lower EBIT before special items. The decline in earnings in the Nutrition & Care segment was mainly attributable to lower margins on the back of higher raw materials and energy prices, as well as an increase in fixed costs. EBIT before special items was lower in the Agricultural Solutions segment, largely due to higher fixed costs, higher raw materials prices and logistics costs, and a low-margin product mix. The segment’s earnings were additionally weighed down by negative currency effects.

EBIT before special itemsa, b, c

Million €

EBIT before special items (bar chart)

a EBIT for 2019 has been restated to reflect the reclassification of income from non-integral companies accounted for using the equity method to net income from shareholdings. Figures for the years 2017 and 2018 have not been restated.

b EBIT before special items for 2018 was reduced by the share attributable to construction chemicals activities due to their presentation as discontinued operations. Figures for 2017 have not been restated.

c EBIT before special items for 2017 was reduced by the share attributable to oil and gas activities due to their presentation as discontinued operations.

Special items in EBIT totaled –€91 million in 2021, compared with –€3,751 million in the previous year, which was strongly impacted by impairments on property, plant and equipment and intangible assets in the total amount of around €2.9 billion. In 2021, restructuring measures gave rise to expenses of €99 million (2020: expenses of €952 million), mainly in the Agricultural Solutions and Materials segments and in Other. The release of provisions in connection with the restructuring of the Global Business Services unit had an offsetting effect. Integration costs amounted to €85 million (2020: integration costs of €157 million) and primarily related to the integration of the acquired BASF Shanshan companies and the polyamide business acquired from Solvay in 2020. Divestitures, which also included the disposal of the global pigments business, gave rise to special income totaling €120 million, especially from the sale of our production site in Kankakee, Illinois, the Coatings division’s precision microchemicals business and our share in the condensate splitter in Port Arthur, Texas. Other items led to special charges in the total amount of €27 million.

Special items (Million €)

 

2021

2020

Restructuring measures

–99

–952

Integration costs

–85

–157

Divestitures

120

–76

Other charges and income

–27

–2,566

Total special items in EBIT

–91

–3,751

At €7,677 million, EBIT for the BASF Group in 2021 was considerably above the previous year, which was impacted by high impairments. This figure includes income from integral companies accounted for using the equity method, which rose by €455 million to €675 million. This was mainly attributable to the business-related increase in the earnings contributed by BASF-YPC Company Ltd., Nanjing, China, which rose by €343 million.

EBITa, b, c

Million €

EBIT (bar chart)

a EBIT for 2019 has been restated to reflect the reclassification of income from non-integral companies accounted for using the equity method to net income from shareholdings. Figures for the years 2017 and 2018 have not been restated.

b EBIT before special items for 2018 was reduced by the share attributable to construction chemicals activities due to their presentation as discontinued operations. Figures for 2017 have not been restated.

c EBIT for 2017 was reduced by the share attributable to oil and gas activities due to their presentation as discontinued operations.

We use the indicator return on capital employed (ROCE). ROCE was 13.5%, after 1.7% in the previous year. The increase in ROCE was primarily due to considerably higher EBIT.1

1 More information in Net Assets

ROCE (Million €)

 

 

2021

2020

EBIT of BASF Group

 

7,677

–191

– EBIT of Other

 

–641

–1,203

EBIT of the segments

 

8,317

1,012

Cost of capital basis of segments, average of month-end figures

 

61,579

60,111

ROCE

%

13.5

1.7

Capital employed (Million €)

 

2021

2020

Intangible assets

13,143

14,249

+ Property, plant and equipment

19,280

20,210

+ Integral investments accounted for using the equity method

1,682

1,395

+ Inventories

11,459

10,469

+ Accounts receivable, trade

11,588

9,379

+ Current and noncurrent other receivables and other assetsa

3,908

3,149

+ Assets of disposal groups

520

1,260

Cost of capital basis of segments, average of month-end figures

61,579

60,111

+ Deviation from cost of capital basis at closing rates as of December 31

2,688

–3,948

+ Assets not included in cost of capital

23,115

24,129

Assets of the BASF Group as of December 31

87,383

80,292

a

Including customer/supplier financing and other adjustments

Sales and earnings (Million €)

 

 

2021

2020

+/–

Sales

 

78,598

59,149

32.9%

Income from operations before depreciation, amortization and special items

 

11,348

7,435

52.6%

Income from operations before depreciation and amortization (EBITDA)

 

11,355

6,494

74.9%

EBITDA margin

%

14.4

11.0

Depreciation and amortizationa

 

3,678

6,685

–45.0%

Income from operations (EBIT)

 

7,677

–191

.

Special items

 

–91

–3,751

97.6%

EBIT before special items

 

7,768

3,560

118.2%

Income before income taxes

 

7,448

–1,562

.

Income after taxes from continuing operations

 

6,018

–1,471

.

Income after taxes from discontinued operations

 

–36

396

.

Net income

 

5,523

–1,060

.

Earnings per share

6.01

–1.15

.

Adjusted earnings per share

6.76

3.21

110.6%

a

Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)

Sales and earnings by quarter in 2021a (Million €)

 

 

Q1

Q2

Q3

Q4

Full year

Sales

 

19,400

19,753

19,669

19,776

78,598

Income from operations before depreciation, amortization and special items

 

3,181

3,217

2,771

2,179

11,348

Income from operations before depreciation and amortization (EBITDA)

 

3,176

3,199

2,729

2,250

11,355

Depreciation and amortizationb

 

865

883

907

1,023

3,678

Income from operations (EBIT)

 

2,311

2,316

1,822

1,227

7,677

Special items

 

–10

–39

–43

1

–91

EBIT before special items

 

2,321

2,355

1,865

1,227

7,768

Income before income taxes

 

2,247

2,189

1,777

1,235

7,448

Income after taxes from continuing operations

 

1,810

1,794

1,424

990

6,018

Income after taxes from discontinued operations

 

–43

7

–36

Net income

 

1,718

1,654

1,253

898

5,523

Earnings per share

1.87

1.80

1.36

0.98

6.01

Adjusted earnings per share

2.00

2.03

1.56

1.17

6.76

a

Quarterly results not audited

b

Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)

Sales and earnings by quarter in 2020a (Million €)

 

 

Q1

Q2

Q3

Q4

Full year

Sales

 

16,753

12,680

13,811

15,905

59,149

Income from operations before depreciation, amortization and special items

 

2,579

1,229

1,542

2,085

7,435

Income from operations before depreciation and amortization (EBITDA)

 

2,428

1,070

1,044

1,952

6,494

Depreciation and amortizationb

 

972

1,011

3,682

1,020

6,685

Income from operations (EBIT)

 

1,456

59

–2,638

932

–191

Special items

 

–184

–167

–3,219

–181

–3,751

EBIT before special items

 

1,640

226

581

1,113

3,560

Income before income taxes

 

1,200

–923

–2,786

947

–1,562

Income after taxes from continuing operations

 

881

–888

–2,177

713

–1,471

Income after taxes from discontinued operations

 

22

14

13

347

396

Net income

 

885

–878

–2,122

1,055

–1,060

Earnings per share

0.97

–0.96

–2.31

1.15

–1.15

Adjusted earnings per share

1.26

0.25

0.60

1.10

3.21

a

Quarterly results not audited

b

Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)