Results of Operations

Global economic development in 2022 was exceptionally volatile and characterized by strong regional differences. Especially the war in Ukraine, rising raw materials and energy prices, high inflation and interest rates, as well as China’s prolonged and strict zero-COVID policy took their toll on the markets. In this market environment, growth in the global economy, worldwide industrial production and chemical production were significantly weaker than we had expected at the begin­ning of the year. BASF’s business was nevertheless robust: Sales increased considerably, while EBIT before special items was €6.9 billion, within the forecast range. At 10.0%, ROCE was considerably below the prior-year figure.

Exceptionally high impairment losses on the shareholding in Wintershall Dea AG negatively affected the BASF Group’s net income from shareholdings.

• Business reviews by segment
• More information on the development of CO₂ emissions

Compared with the previous year, sales rose by €8,729 million to €87,327 million in the 2022 business year. Sales growth was mainly driven by higher prices across almost all segments due to an increase in raw materials and energy prices. The Materials and Chemicals segments implemented the highest price increases. Currency effects considerably supported the positive sales development. Portfolio effects in the Surface Technologies segment from the acquisition of a majority shareholding in BASF Shanshan Battery Materials Co., Ltd. as of August 31, 2021, also contributed to the sales increase. This more than compensated for negative portfolio effects in the Industrial Solutions segment, mainly from the sale of the global pigments business as of June 30, 2021. Significantly lower volumes overall dampened sales growth in the BASF Group. Volumes development was primarily driven by lower sales volumes in the Surface Technologies and Chemicals segments.

Sales

Million €

At €6,878 million, income from operations (EBIT) before special items was €890 million below the prior-year figure. The earnings development was attributable to a strong decline in earnings con­tributions from the Chemicals and Materials segments. Both segments recorded lower margins and volumes as well as higher fixed costs. By contrast, EBIT before special items rose in all other segments. The Agricultural Solutions segment increased EBIT before special items considerably, in particular as a result of the positive sales performance. The Nutrition & Care segment also achieved a considerable increase here, mainly due to price-driven margin growth. The Surface Tech­nologies segment recorded con­sider­ably higher earnings, especially due to increased earnings contributions from the automotive catalysts and battery materials businesses. Higher prices and volumes in the Coatings division additionally supported the segment’s earnings performance. The Industrial Solutions segment slightly increased EBIT before special items as a result of price-driven margin growth. EBIT before special items attributable to Other improved slightly.

• Explanation of the indicator EBIT before special items

EBIT before special items

Million €

Special items in EBIT amounted to –€330 million in 2022 compared with –€91 million in the previous year. Special charges for restruc­turing measures were €249 million, mainly in connection with the carve-out of the newly established BASF Environmental Catalyst and Metal Solutions unit within the Catalysts division, the dis­continuation of our business activities in Russia and restructuring measures. In other charges and income, the impairment loss on a plant in the Chemicals segment in particular led to total special charges of €222 million (2021: other charges of €27 million). Integration costs amounted to €32 million compared with €85 million in the previous year; in both years, these were primarily related to the integration of the BASF Shanshan companies acquired in 2021. Special income from divestitures totaled €174 million, mainly from the sale of 51% of our share in the Hollandse Kust Zuid offshore wind farm. This was partly offset by impairments in connection with the planned divestiture of our production site in De Meern, Netherlands.

• Definition of special items

At €6,548 million, EBIT for the BASF Group in 2022 was considerably lower than the previous year. This figure includes income from integral companies accounted for using the equity method, which declined by €289 million to €386 million. This was mainly attributable to the €196 million lower earnings contribution by BASF-YPC Company Ltd., Nanjing, China.

EBIT

Million €

We use the indicator return on capital employed (ROCE) to measure our rate of return. ROCE declined to 10.0% (2021: 13.7%) due to a significant increase in the cost of capital basis and a simultaneous decrease in earnings.¹

• More information on the calculation of ROCE
• The calculation of EBIT as part of our statement of income is shown in the Consolidated Financial Statements