Information on Q2 2022: BASF Group

The BASF Group increased sales by €3,221 million compared with the prior-year quarter to €22,974 million. This was primarily due to significant price increases in almost all segments. In all segments, the sales performance was supported by positive currency effects, mainly relating to the U.S. dollar. In addition, portfolio effects in the Surface Technologies segment in connection with the acquisition of a majority shareholding in BASF Shanshan Battery Materials contributed to sales growth. This more than compensated for negative portfolio effects in the Industrial Solutions segment, mainly from the sale of the global pigments business. Slightly lower sales volumes overall had an offsetting effect. Volume growth in the Agricultural Solutions and Nutrition & Care segments was unable to fully offset the decline in volumes in the other segments, especially in the Surface Technologies segment.

Factors influencing BASF Group sales in Q2 2022

Factors influencing BASF Group sales in Q2 2022 (bar chart)

At €2,339 million, income from operations (EBIT) before special items1 was €16 million below the figure for the second quarter of 2021. The slight decline in earnings was mainly attributable to considerably lower EBIT before special items in the Chemicals and Materials segments. EBIT before special items also declined considerably in the Surface Technologies segment. By contrast, the Agricultural Solutions and Nutrition & Care segments posted considerably higher earnings, while the Industrial Solutions segment recorded slight earnings growth. EBIT before special items attributable to Other improved considerably.

Overall, special items in EBIT led to income of €11 million in the second quarter of 2022, after an expense of €39 million in the prior-year quarter. Gains on divestitures totaled €173 million, primarily from the sale of 25.2% of the Hollandse Kust Zuid offshore wind farm. This was partially offset by restructuring expenses of €133 million, mainly in connection with the discontinuation of our business activities in Russia and Belarus2 as well as the carve-out of the newly established BASF Automotive Catalysts & Recycling unit within the Catalysts division. Expenses totaling €28 million arose from other charges and income as well as integration costs.

EBIT3 rose by €34 million to €2,350 million. This includes income from integral companies accounted for using the equity method, which declined by €82 million to €101 million. The contribution from BASF-YPC Company Ltd. amounted to €72 million, compared with €103 million in the prior-year period.

1 For an explanation of this indicator, see Our Steering Concept in the BASF Report 2021.

2 For more information on the discontinuation of our business activities in Russia and Belarus, see Significant Events.

3 The calculation of income from operations (EBIT) is shown in the Statement of Income.

Q2 sales

Million €, relative change

Q2 sales (bar chart)

Q2 EBITDA before special items

Million €, absolute change

Q2 EBIT before special items (bar chart)
Q2 EBITDA before special items (Million €)

 

2022

2021

EBIT

2,350

2,316

– Special items

11

–39

EBIT before special items

2,339

2,355

+ Depreciation and amortization before special items

953

859

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

2

3

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

954

862

EBITDA before special items

3,293

3,217

Q2 EBITDA (Million €)

 

2022

2021

EBIT

2,350

2,316

+ Depreciation and amortization

953

859

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

93

24

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

1,046

883

EBITDA

3,396

3,199

Income from operations before depreciation, amortization and special items (EBITDA before special items)4 rose by €76 million to €3,293 million and EBITDA4 increased by €197 million to €3,396 million in the second quarter of 2022.

Net income from shareholdings improved by €477 million compared with the prior-year period to €433 million. This was mainly attributable to the higher earnings contribution from Wintershall Dea (€446 million; Q2 2021: –€12 million) due to higher oil and gas prices.

The financial result amounted to –€125 million after –€83 million in the prior-year period, primarily as a result of higher interest expenses for financial indebtedness. Additions to valuation allowances on finance-related receivables and cash equivalents in particular reduced the other financial result by €16 million compared with the second quarter of 2021.

Overall, income before income taxes rose by €469 million to €2,658 million. The tax rate was 18.0%, as in the prior-year quarter.

Income after taxes increased by €385 million to €2,179 million. Noncontrolling interests amounted to €90 million, down €50 million from the prior-year figure. One reason was a lower earnings contribution from BASF TotalEnergies Petrochemicals LLC. This was partially offset by positive earnings from the BASF Shanshan companies, which were not yet included in the prior-year quarter. As a result, net income amounted to €2,090 million (Q2 2021: €1,654 million).

Earnings per share rose to €2.31 in the second quarter of 2022, after €1.80 in the prior-year period. Earnings per share adjusted4 for special items and amortization of intangible assets amounted to €2.37 (Q2 2021: €2.03).

4 For an explanation of this indicator, see Results of Operations in the BASF Report 2021.

Q2 adjusted earnings per share (Million €)

 

 

2022

2021

Income after taxes

 

2,179

1,794

– Special items

 

11

–39

+ Amortization, impairments and reversals of impairments on intangible assets

 

166

149

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

 

3

– Adjustments to income taxes

 

95

–20

– Adjustments to income after taxes from discontinued operations

 

Adjusted income after taxes

 

2,236

2,002

– Adjusted noncontrolling interests

 

93

141

Adjusted net income

 

2,143

1,861

Weighted average number of outstanding sharesa

in thousands

903,148

918,479

Adjusted earnings per share

2.37

2.03

a

Due to the current share buyback program, the weighted average number of outstanding shares in the second quarter of 2022 was 903,147,947.

Cash flows from operating activities amounted to €1,228 million in the second quarter of 2022, a decrease of €1,309 million compared with the prior-year quarter. This was mainly attributable to bonus payments, which rose by almost €1 billion. In addition, a stronger buildup of inventories led to cash tied up of €847 million compared with €562 million in the second quarter of 2021. Overall, cash tied up in net working capital amounted to €1,661 million. In the prior-year quarter, the changes in net working capital almost offset each other. The €436 million improvement in net income to €2,090 million was almost offset by the €377 million increase in reclassifications of equity-accounted income, which is reported under miscellaneous items.

Cash flows from investing activities amounted to –€639 million after a cash inflow of €323 million in the prior-year quarter, which included the proceeds from the divestiture of the global pigments business. At €369 million, net payments received for divestitures and acquisitions were €756 million below the figure for the prior-year quarter and were therefore the main driver for the decline in cash flows from investing activities. In addition, payments made for property, plant and equipment and intangible assets amounted to €892 million in the second quarter of 2022, €125 million higher year on year.

Cash flows from financing activities resulted in a cash outflow of €1,386 million in the second quarter of 2022. This was €2,758 million lower than in the second quarter of 2021. The improvement was attributable to cash inflows of €2,061 million from the change in financial and similar liabilities, after this had led to cash outflows of €999 million in the prior-year quarter. By contrast, the dividend payment exceeded that of the previous year by €46 million. The figure for the second quarter of 2022 also includes payments of €256 million made for share buybacks.

Free cash flow5 amounted to €336 million in the second quarter of 2022, after €1,770 million in the second quarter of the prior year.

5 For an explanation of this indicator, see Financial Position in the BASF Report 2021.

Q2 free cash flow (Million €)

 

2022

2021

Cash flows from operating activities

1,228

2,537

– Payments made for property, plant and equipment and intangible assets

892

767

Free cash flow

336

1,770