6-K UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
May 4, 2006
BASF AKTIENGESELLSCHAFT
(Exact name of Registrant as Specified in its Charter)
BASF CORPORATION
(Translation of Registrant's name into English)
Carl Bosch Strasse 38, LUDWIGSHAFEN, GERMANY 67056
(Address of Principal Executive Offices)
Indicate by check mark whether the Registrant files or will file annual
reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the
Registrant in connection with Rule 12g3-2(b): 82- .
BASF: Successful Start to 2006
LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--May 4, 2006--BASF
(NYSE:BF)(FWB:BAS)(LSE:BFA):
-- Further increase in volumes, sales climb 24 percent
-- EBIT before special items rises 19 percent
-- Positive outlook for 2006:
-- Significantly higher sales
-- Increase in EBIT before special items
In the first quarter of 2006, BASF continued its success story
with another top performance. "Our declared goal is to create
sustainable value by implementing our strategy," said BASF chairman
Dr. Juergen Hambrecht in his presentation of BASF's first-quarter
results at the company's 54th Annual Meeting on May 4, 2006.
At EUR 12.5 billion, first-quarter sales were 24 percent higher
than in the same period of 2005. Growth was driven above all by
considerably higher volumes and price increases in the chemical
businesses and in the Oil & Gas segment. Disregarding currency
effects, in particular due to the appreciation of the U.S. dollar,
sales increased by 20 percent.
Income from operations (EBIT) before special items rose by 19
percent compared with the first quarter of 2005 to EUR 1.9 billion. In
the Chemicals segment, significantly higher raw materials and energy
prices could not be completely passed on to the market in the form of
higher sales prices. Earnings in the Plastics segment rose as a result
of higher volumes and improved margins in the global polyurethanes
business. The Performance Products segment posted higher earnings
thanks in particular to strong volume growth and stable margins in the
Coatings division. First-quarter earnings in the Agricultural Products
division were negatively impacted by the difficult market environment
in Brazil and higher research costs. The profitability of the products
lysine and vitamin C remained unsatisfactory in the Fine Chemicals
division. Higher prices and expansion of the natural gas trading
business led to very good earnings in the Oil & Gas segment.
First-quarter EBIT after special items rose by 23 percent to EUR
1.8 billion. Special items were related to income from the ongoing
portfolio optimization measures in the Agricultural Products division
and expenses for restructuring, which are recorded under "Other" until
they are implemented in the course of the year.
The financial result declined by EUR 24 million to EUR 21 million.
In the first quarter of 2005, the financial result still contained
earnings from BASF's stake in the Basell joint venture, which was sold
in the third quarter of 2005. Income before taxes and minority
interests rose by 21 percent to EUR 1.9 billion.
The tax rate was 46 percent compared with 40 percent in the first
quarter of 2005. This increase was due to the higher contribution to
earnings from the Oil & Gas segment. Taxes for oil production that are
noncompensable with German corporate income tax amounted to EUR 272
million compared with EUR 198 million in the same period of 2005.
Net income increased 10 percent to EUR 950 million. Earnings per
share were EUR 1.87 compared with EUR 1.60 in the same period of the
previous year.
Positive outlook for full-year 2006
Hambrecht's outlook for full-year 2006 is confident, based on
global economic growth of more than 3 percent. In 2006, BASF expects
an average oil price of $60 per barrel of Brent crude and an average
euro/dollar exchange rate of $1.25 per euro.
Hambrecht formulated his optimistic prognosis as follows: "Our
business has developed very positively since the beginning of 2006,
and the level of orders remains extremely robust. We have seen two
strong years in a row, and we are confident that we will continue our
successful performance in 2006. We aim to continue to grow faster than
the market. Above all, though, we want to achieve profitable growth.
We expect to post higher EBIT before special items compared with the
previous year's strong level. This depends, of course, on a stable
geopolitical environment and the development of the crude oil price."
Growth in Europe, North America and Asia
In Europe, sales by location of company increased by 28 percent in
the first quarter of 2006. EBIT before special items rose by EUR 286
million to EUR 1.4 billion. The higher sales and earnings were
primarily due to the contribution of the Oil & Gas segment.
First-quarter sales by location of company in North America rose
by 7 percent in dollar terms. The sales growth was due in particular
to the Chemicals and Plastics segments. EBIT before special items
increased by EUR 27 million to EUR 298 million.
In Asia Pacific, we increased sales in local currencies by 19
percent. EBIT before special items rose EUR 28 million to EUR 115
million. Growth in the Chemicals segment was due especially to the
Verbund site in Nanjing, China, which started operations in the second
quarter of 2005.
Sales by location of company in South America, Africa, Middle East
declined by 11 percent in local currency terms. EBIT before special
items was EUR 39 million lower than in the same period of 2005 because
of the difficult market environment in the agricultural products
business in Brazil. The Coatings division recorded strong business, in
particular with decorative paints.
BASF is the world's leading chemical company: The Chemical
Company. Its portfolio ranges from chemicals, plastics, performance
products, agricultural products and fine chemicals to crude oil and
natural gas. As a reliable partner to virtually all industries, BASF's
intelligent system solutions and high-value products help its
customers to be more successful. BASF develops new technologies and
uses them to open up additional market opportunities. It combines
economic success with environmental protection and social
responsibility, thus contributing to a better future. In 2005, BASF
had approximately 81,000 employees and posted sales of more than EUR
42.7 billion. BASF shares are traded on the stock exchanges in
Frankfurt (BAS), London (BFA), New York (BF) and Zurich (AN). Further
information on BASF is available on the Internet at www.basf.com.
On May 4, 2006, you can obtain further information from the
Internet at the following addresses:
Interim Report (from 7:30 a.m. CEST)
corporate.basf.com/interimreport (English)
corporate.basf.com/zwischenbericht (German)
Press release (from 7:30 a.m. CEST)
corporate.basf.com/pressrelease (English)
corporate.basf.com/pressemitteilungen (German)
Live-Transmission - Speech Dr. Juergen Hambrecht
(from 10:00 a.m. CEST)
corporate.basf.com/shareholdermeeting (English)
corporate.basf.com/hauptversammlung (German)
Speech Dr. Juergen Hambrecht - print version
(from 11:00 a.m. CEST)
corporate.basf.com/pressconference (English)
corporate.basf.com/pressekonferenz (German)
Photos (from 7:30 a.m. CEST)
corporate.basf.com/photos (English)
corporate.basf.com/fotos (German)
Photos from the Annual Shareholder Meeting
(from 11:30 a.m. CEST)
corporate.basf.com/photos (English)
corporate.basf.com/fotos (German)
Information about BASF shares
corporate.basf.com/share (English)
corporate.basf.com/aktie (German)
Live-Transmission Telephone Conference for Analysts
(from 8:30 a.m. CEST)
corporate.basf.com/share (English)
corporate.basf.com/aktie (German)
This press release contains forward-looking statements. All
statements contained in this press release that are not clearly
historical in nature or that necessarily depend on future events are
forward-looking, and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended to
identify forward-looking statements. These statements are based on
current expectations, estimates and projections of BASF management and
currently available information. They are not guarantees of future
performance, involve certain risks and uncertainties that are
difficult to predict and are based upon assumptions as to future
events that may not prove to be accurate. Many factors could cause the
actual results, performance or achievements of BASF to be materially
different from those that may be expressed or implied by such
statements. Such factors include those discussed in BASF's Form 20-F
filed with the SEC.
Successful start to 2006
BASF sets course for future success
First-Quarter Results 2006
January - March 2006
published on May 4, 2006
BASF Group
1st Quarter
Million EUR Change
2006 2005 in %
Sales 12,515 10,083 24.1
Income from operations before interest,
taxes, depreciation and amortization
(EBITDA) 2,401 2,019 18.9
Income from operations (EBIT) before
special items 1,865 1,563 19.3
Income from operations (EBIT) 1,849 1,499 23.3
Financial result 21 45 (53.3)
Income before taxes and minority interests 1,870 1,544 21.1
Net income 950 861 10.3
Earnings per share (EUR) 1.87 1.60 16.9
EBIT before special items in percent of
sales 14.9 15.5 -
Cash provided by operating activities 1,448 1,104 31.2
Additions to fixed assets(a) 600 362 65.7
Excluding acquisitions 473 362 30.7
Amortization and depreciation(a) 552 520 6.2
Segment assets (end of period)(b) 29,680 27,374 8.4
Personnel costs 1,392 1,277 9.0
Number of employees (end of period) 79,926 81,335 (1.7)
(a) Tangible and intangible fixed assets
(b) Tangible and intangible fixed assets, inventories and
business-related receivables
The interim financial statements have not been audited.
1 BASF Group Business BASF shares
Review and Outlook 1st Quarter Full Year
4 Chemicals 2006 2005
5 Plastics Share price
(end of period)(a)(EUR) 64.70 64.71
6 Performance Products High(a)(EUR) 65.95 65.33
7 Agricultural Products Low(a)(EUR) 61.65 50.11
& Nutrition
8 Oil & Gas Average daily
trade (million shares)(a) 3.01 2.70
9 Regions BASF share
performance(b) 0.0% 26.2%
10 Consolidated Statements of DAX 30
Income performance(b) 10.4% 27.1%
11 Consolidated Balance EURO STOXX 50
Sheets performance(b) 7.9% 24.3%
12 Consolidated Statements Market
capitalization
(end of period)
of Cash Flows (billion EUR) 33.33 33.33
13 Consolidated Statements Number of shares
(end of period)
of Recognized Income and
Expense (million shares)(c) 515.06 515.06
14 Consolidated Statements (a) XETRA trading
of Stockholders' Equity (b)With dividends
reinvested
15 Segment Reporting (c)Including bought-back shares
intended for cancellation
Cover photo:
Antonio Germani, delegate from BASF Italy and Director Special
Projects Pharma Solutions, and Verena Bertgen, laboratory assistant at
BASF's Competence Center Polymer Research in Ludwigshafen
News from our innovation centers
Environmentally friendly processing of cellulose
BASF and the University of Alabama cooperate on the use of ionic
liquids
BASF has set up a research partnership with the University of
Alabama to study the dissolution and processing of cellulose by means
of ionic liquids. The two partners will further develop practical uses
for this innovative application. Cellulose is the commonest organic
compound and is a constituent of virtually all plant cell walls. Of
the 40 billion tons formed by nature every year, only 100 million tons
is used as a feedstock for further processing. A more widespread use
of cellulose as a renewable raw material has to date been prevented by
its poor solubility. By means of ionic liquids, however, solutions of
cellulose can now be produced for the first time at technically useful
concentrations.
BASF is in the process of evaluating a variety of ideas that might
improve the use of cellulose. The use of ionic liquids can
significantly simplify the production of cellulose fibers, for
example.
"We believe ionic liquids have a promising future," says Dr.
Matthias Maase, who works in the New Business Development unit of
BASF's Intermediates division. "Their properties will open up
completely new applications in addition to classical chemical uses.
Examples include fluids used in engineering, optical devices,
electronic components and heat transfer."
BASF has several years of experience in the fairly recent field of
ionic liquids. At its Ludwigshafen site, the company operates the
world's first large-scale industrial process that uses ionic liquids.
The process allows fast and simple removal of the acids from the
desired product, and the ionic liquids employed can be almost
completely recycled.
BASF sells its ionic liquids under the brand name Basionics(TM),
while the corresponding processes are marketed under the name
Basil(TM).
Renewable raw materials: Turning cellulose into fibers.
BASF markets its portfolio of ionic liquids under the brand name
Basionics.
The current portfolio consists of 19 different ionic liquids.
News from our innovation centers
Polyurethane composite protects imperiled dikes
The innovative covering of small stones and the Elastocoast
polyurethane system is elastic and porous. As a result, it can
withstand the force of the water masses particularly well.
Flexible covering with BASF's Elastocoast withstands even harsh
storms
During the coming century, scientists predict that global warming
will cause a rise in the sea level and increased flooding from rivers.
More than ever before, innovative solutions are needed to provide
effective and stable coastal protection and river dikes. One of them
is a specially developed elastomer polyurethane system from BASF's
subsidiary Elastogran: Under the name Elastocoast(R), the company is
offering a novel plastic for reinforcing stone ballast revetments for
dikes. These coverings represent the first line of defense, for
example, against the sea. They protect the dike by absorbing the force
of the breaking waves and slowing down the water masses.
Elastic and porous - these two properties are the secret of
Elastocoast: The ability to yield slightly protects the revetment
against the brute force of the water masses crashing down upon them;
the interconnecting cavities between the stones absorb their energy.
Rigid and solid revetments made from the conventional "adhesives"
concrete or asphalt, on the other hand, are often broken down by the
pounding force of the waves: starting from an initial, tiny defect,
the breakers gradually make deeper and deeper inroads into the
revetment.
It could hardly be easier to use: The liquid two-component special
plastic polyurethane is stirred on site and then mixed - for example
in a concrete mixer - with the crushed stone which it envelops like a
thin, transparent film. With relatively little effort, the finished
mix of materials can be applied in covering layers about 15 to 30
centimeters thick. The mixture even hardens underwater. Elastocoast
also provides benefits for nature: Flora and fauna can find new
habitats in the porous structure of the cover layers.
Following its successful use in the redevelopment of a jetty on
the bank of the River Elbe in Hamburg, Elastocoast is now facing its
biggest challenge on the island of Sylt. Especially in winter, the
North Sea gnaws away at the island. In September 2005, a revetment
made of Elastocoast has been protecting part of the particularly
exposed northern part of the island. Dr. Marcus Leberfinger, project
manager for maritime applications at Elastogran, is very satisfied
with the results achieved in the first winter: "Even in the breaker
zone of the open coast of Sylt, the revetment reliably withstood the
high dynamic stresses caused by wave impact, salt water and the
effects of frost." A similar pilot project has also been completed on
Hamburger Hallig to the north of the German town of Husum.
BASF Group Business Review and Outlook
-- Further increase in volumes, sales climb 24%
-- EBIT before special items rises 19%
-- Agreement reached on acquisition of Degussa's construction
chemicals business
-- Positive outlook for 2006:
-- Significantly higher sales
-- Increase in EBIT before special items
Sales
At EUR12.5 billion, first-quarter sales were 24% higher than in
the same period of 2005. Growth was driven above all by considerably
higher volumes and price increases in our chemical businesses and in
the Oil & Gas segment. Disregarding currency effects, in particular
due to the appreciation of the U.S. dollar, sales increased by 20%.
Factors influencing sales in comparison with previous year
% of sales 1st Quarter
Volumes 7
Prices 12
Currencies 4
Acquisitions/divestitures 1
Total 24
Sales increased in all segments.
Volumes in the Chemicals segment rose in particular due to the
startup of the Verbund site in Nanjing, China, in 2005. The electronic
chemicals business, which was acquired in April last year, also
contributed to the significant increase in sales.
In the Plastics and Performance Products segments we also posted
higher volumes while adjusting sales prices to reflect increased raw
material costs.
Sales by segment, 1st Quarter 2006
Chemicals 2006 2,239 23%
2005 1,822
Plastics 2006 3,091 10%
2005 2,800
Performance 2006 2,147 13%
Products 2005 1,908
Agricultural
Products 2006 1,376 2%
& Nutrition 2005 1,354
Oil & Gas 2006 2,985 62%
2005 1,840
In the Agricultural Products & Nutrition segment, the Fine
Chemicals division recorded higher sales thanks to an increase in
volumes and the acquisition of Orgamol Group's pharmaceutical contract
manufacturing business in the fourth quarter of 2005. Sales in the
Agricultural Products division declined slightly compared with the
first quarter of 2005 due to lower sales volumes in South America.
With a sales increase of more than EUR1.1 billion, the Oil & Gas
segment accounted for 11 percentage points of the BASF Group's sales
growth. This was a consequence of the high oil price and increased
sales volumes in the natural gas trading business.
Special items
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Million EUR 2006 2005 2006 2005 2006 2005 2006 2005
Special items in:
Income from
operations (16) (64) (70) (65) (109)
Financial result - - - 222 -
Income before taxes
and minority
interests (16) (64) (70) 157 (109)
Earnings
Compared with the first quarter of 2005, we increased income from
operations (EBIT) before special items by 19% to EUR1,865 million.
In the Chemicals segment, significantly higher raw material and
energy prices could not be completely passed on to the market in the
form of higher sales prices. It was therefore not possible to match
the previous year's very strong first-quarter earnings, in particular
in the Petrochemicals division.
Earnings in the Plastics segment rose as a result of higher
volumes and improved margins in the global polyurethanes business.
The Performance Products segment posted higher earnings thanks in
particular to strong volume growth and stable margins in the Coatings
division.
First-quarter earnings in the Agricultural Products division were
negatively impacted by the difficult market environment in Brazil and
higher research costs.
The profitability of the products lysine and vitamin C remained
unsatisfactory in the Fine Chemicals division.
Higher prices and expansion of the natural gas trading business
led to very good earnings in the Oil & Gas segment.
First-quarter EBIT after special items rose by 23% to EUR1,849
million.
Special items in income from operations were related to income
from the ongoing portfolio optimization measures in the Agricultural
Products division and expenses for restructuring, which are recorded
under "Other" until they are implemented in the course of the year.
The financial result declined by EUR24 million to EUR21 million.
In the first-quarter of 2005, the financial result still contained
earnings from our stake in the Basell joint venture, which was sold in
the third quarter of 2005.
Chemicals 2006 317 (26)%
2005 426
Plastics 2006 332 23%
2005 269
Performance 2006 248 10%
Products 2005 225
Agricultural
Products 2006 224 (24)%
& Nutrition 2005 296
Oil & Gas 2006 848 75%
2005 484
Income before taxes and minority interests rose by 21% to EUR1,870
million.
The tax rate was 46% compared with 40% in the first quarter of
2005. This increase was due to the higher contribution to earnings
from the Oil & Gas segment. Taxes for oil production that are
noncompensable with German corporate income tax amounted to EUR272
million compared with EUR198 million in the same period of 2005.
Net income increased 10% to EUR950 million. Earnings per share
were EUR1.87 compared with EUR1.60 in the same period of the previous
year.
Outlook
We expect the following conditions in 2006:
-- Average oil prices (Brent) of about $60/barrel
-- An average euro/dollar exchange rate of $1.25 per euro and
moderately higher interest rates
-- Global economic growth of more than 3%
On this basis, we expect that our business will continue to
develop positively in the further course of the year. We plan to
increase our sales prices to counter the pressure on margins caused by
rising raw material prices. Risk factors continue to be the political
situation in regional hotspots and the development of the crude oil
price.
The good start in the first quarter confirms our positive outlook
for the full year. We expect to post significantly higher sales and
higher EBIT before special items compared with the previous year's
strong level.
Significant events
On February 28, 2006, BASF reached an agreement with Degussa AG,
Duesseldorf, to acquire Degussa's construction chemicals business. The
purchase price for equity is just under EUR2.2 billion. As a result,
the transaction value for BASF is EUR2.7 billion including debt.
Subject to approval by the relevant authorities, the transaction
is expected to close by the middle of 2006. We will place Degussa's
construction chemicals business in a new operating division -
Construction Chemicals - in our Performance Products segment.
On April 27, 2006, BASF and Gazprom agreed on a swap of assets of
equivalent value. In accordance with this agreement, BASF's subsidiary
Wintershall will receive a total interest of 35% less one share in the
Yuzhno Russkoye gas field. In return, Gazprom is to increase its
interest in WINGAS GmbH to 50% less one share. In addition, Gazprom
will receive a share in a Wintershall subsidiary with interests in
exploration and production activities in Libya as well as a 50% share
in a company that will be responsible for expanding gas marketing
activities in Europe (excluding Germany).
On May 1, 2006, BASF announced that it extended the expiration
date of its cash offer to acquire all outstanding shares in Engelhard
Corporation until Monday, June 5, 2006. At the same time, the tender
offer was increased to $38 per share. BASF is confident that
Engelhard's shareholders will accept this offer. Further information
is available on the Internet at corporate.basf.com/tender-offer and on
the SEC's website at www.sec.gov
Chemicals
-- Strong sales growth in all operating divisions
-- Pressure on margins due to high raw material and energy prices
-- First-quarter earnings below previous year's very high level
Overview Chemicals 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,239 1,822 23
Thereof Inorganics 306 207 48
Petrochemicals 1,374 1,136 21
Intermediates 559 479 17
EBITDA 452 544 (17)
EBIT before special items 317 426 (26)
EBIT before special items in percent of
sales 14.2 23.4 -
EBIT 317 426 (26)
Sales in the Chemicals segment increased significantly in the
first quarter (volumes 11%, portfolio 3%, prices 4%, currencies 5%).
This was due in particular to the volumes from our Verbund site in
Nanjing, China, as well as from the electronic chemicals business
acquired in April 2005. Higher raw material and energy prices could
not be passed on fully to the market in the form of higher prices.
Earnings were below the previous year's very strong level.
Inorganics
Sales of electronic chemicals developed very positively, in
particular in Asia. We also posted higher sales of inorganic
specialties, catalysts and glues and impregnating resins. The
division's earnings declined slightly. Margins in the basic products
business in particular were adversely affected by high raw material
and energy costs.
Petrochemicals
Sales rose thanks to strong demand worldwide. High crude oil
prices resulted in significantly higher purchase prices for our main
feedstock, naphtha, and impaired margins for cracker products in
particular in Europe, but also in Asia. In addition, earnings were
negatively impacted by scheduled plant turnarounds as well as by
production losses at the cracker in Port Arthur, Texas. Earnings were
therefore significantly lower than in the first quarter of 2005. Raw
material prices are expected to continue to rise in the second
quarter. Sales and earnings in the second quarter will also be
impaired by the scheduled turnaround of the crackers in Port Arthur
and Ludwigshafen, and by the temporary shutdown of the cracker at the
site in Antwerp, Belgium, as the result of a power outage.
Intermediates
Sales increased in all regions and product lines, in particular
due to higher volumes. Considerably higher raw material costs put
margins under pressure, especially at our new THF plant in Caojing,
China. Earnings declined as a result.
The THF and PolyTHF(R) plants in Yokkaichi, Japan, were closed in
the first quarter of 2006 as announced last year.
Plastics
-- Segment earnings increase significantly
-- Polyurethanes business continues to perform well
-- Integrated isocyanate site in Caojing, China, to start
operations in mid-2006
Overview Plastics 1st Quarter
Million EUR Change
2006 2005 in %
Sales 3,091 2,800 10
ThereofStyrenics 1,151 1,136 1
Performance Polymers 750 689 9
Polyurethanes 1,190 975 22
EBITDA 456 380 20
EBIT before special items 332 269 23
EBIT before special items in percent of
sales 10.7 9.6 -
EBIT 331 268 24
In the Plastics segment, sales rose thanks to higher volumes,
increased sales prices and positive currency effects (volumes 3%,
prices 2%, currencies 5%). The significant increase in earnings was
primarily due to the Polyurethanes division.
Styrenics
Volumes remained unchanged and sales and earnings increased
slightly compared with the first quarter of 2005. The temporary loss
of production at the styrene plant in Ludwigshafen and persistently
high raw material prices prevented a significant increase in earnings.
To strengthen this division, we plan to acquire Lanxess' business
with styrene-acrylonitrile (SAN) copolymers in Europe and South
America. The transaction is subject to approval by the relevant
antitrust authorities.
Performance Polymers
Although sales increased due to higher volumes, earnings were
below the high level posted in the first quarter of 2005. This was due
to higher raw material costs, which we were unable to pass on to our
customers to a sufficient extent. In addition, earnings were impacted
by the startup of the PBT plant in Kuantan, Malaysia, which was
constructed in a joint venture with Toray Industries, Inc. Leuna
Miramid GmbH, which was acquired in November 2005, made a positive
contribution to earnings.
Polyurethanes
The strong business performance recorded in the previous year
continued in all regions in the first quarter of 2006. We
significantly increased sales and earnings thanks to higher volumes
worldwide and higher sales prices.
In Geismar, Louisiana, we acquired a production plant for DNT -
precursor for polyurethanes - from Air Products and Chemicals Inc.,
Pennsylvania.
The integrated isocyanate site in Caojing, China, is scheduled to
start operations in mid-2006 as planned.
Performance Products
-- Strong sales growth in all operating divisions
-- Earnings rise due to strong business with coatings
-- Agreement with Degussa on the acquisition of the construction
chemicals business
Overview Performance Products 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,147 1,908 13
ThereofPerformance Chemicals 764 694 10
Coatings 591 472 25
Functional Polymers 792 742 7
EBITDA 329 304 8
EBIT before special items 248 225 10
EBIT before special items in percent of sales 11.6 11.8 -
EBIT 247 224 10
In the Performance Products segment, we recorded significantly
higher sales in all divisions as a result of an increase in volumes,
higher prices and positive currency effects (volumes 4%, portfolio 1%,
prices 3%, currencies 5%). We also posted a further increase in
earnings compared with the same period of the previous year. This was
due in particular to strong business in the Coatings division.
We reached an agreement with Degussa AG to acquire Degussa's
construction chemicals business. Thanks to this forward integration,
we will further improve BASF's strong position as a partner to the
construction industry. Our goal is to expand the highly profitable
construction chemicals business, which is both very innovative and
cyclically resilient. We expect the transaction to close by the middle
of 2006.
Performance Chemicals
Sales rose in particular due to strong business with performance
chemicals for the automotive and oil industry and for detergents and
formulators. All regions contributed to this sales growth. Earnings
improved further despite higher raw material costs.
Coatings
We increased sales and earnings considerably thanks to strong
business with automotive (OEM) and automotive refinish coatings, in
particular in Asia and North America, and with industrial coatings in
Europe and decorative paints in South America. We benefited from the
upturn in the automotive industry. We also gained new customers in the
automotive refinish coatings business.
Functional Polymers
The increase in sales was due primarily to higher sales volumes of
superabsorbents and products for the adhesives and construction
industry. Earnings were slightly lower than in the strong first
quarter of 2005. With raw material prices remaining high, acrylic
monomers were subject to increased price pressure. The business was
also negatively impacted by restructuring among customers in the paper
industry.
Agricultural Products & Nutrition
-- Earnings down on previous year's quarter despite a slight
increase in sales
-- Portfolio optimization continues in the Agricultural Products
division
-- Fine Chemicals demonstrates growth in aroma chemicals and
fat-soluble vitamins
Overview Agricultural Products 1st Quarter
Million EUR Change
2006 2005 in %
Sales 928 959 (3)
EBITDA 333 332 -
EBIT before special items 213 276 (23)
EBIT before special items in percent of sales 23.0 28.8 -
EBIT 280 284 (1)
Sales in the Agricultural Products division declined compared with
the first quarter of 2005 (volumes -4%, portfolio -1%,
prices/currencies 2%). This was due mainly to subdued demand for
fungicides to combat soybean rust in Brazil and North America. The
appreciation of the real and low prices for agricultural products are
putting pressure on our customers in Brazil. Our herbicides business
developed positively, especially in North America and Europe. In Asia
and Eastern Europe, we posted higher sales in all indications.
Income from operations before special items declined as a result
of lower sales volumes of fungicides, higher research costs, and
higher expenses associated with the development of new market
segments. Our ongoing portfolio optimization measures resulted in
special income. In March 2006, we sold the generics business of Micro
Flo Company LLC, Memphis, Tennessee, to Arysta LifeScience North
America Corporation.
Overview Fine Chemicals 1st Quarter
Million EUR Change
2006 2005 in %
Sales 448 395 13
EBITDA 40 50 (20)
EBIT before special items 11 20 (45)
EBIT before special items in percent of sales 2.5 5.1 -
EBIT 10 20 (50)
Sales volumes increased, in particular for aroma chemicals and
vitamins A and E for animal nutrition. Orgamol Group's contract
manufacturing business, which was acquired in October 2005 also
contributed to the rise in sales (volumes 7%, portfolio 6%, prices
-5%, currencies 5%). Declining prices for lysine and vitamin C and
significantly higher raw material costs, for example for crude sugar,
increased pressure on margins. Fixed costs in the vitamin C business
declined due to the closure of the plant in Grenaa, Denmark, as well
as a number of restructuring measures carried out in 2005. Overall,
earnings were below the previous year's level but were nevertheless
significantly higher than in the fourth quarter of 2005.
Oil & Gas
-- Sales and earnings rise significantly
-- Exploration and production benefits from higher oil prices
-- Volumes and margins improve considerably in natural gas trading
Overview Oil & Gas 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,985 1,840 62
ThereofExploration and production 1,081 693 56
Natural gas trading 1,904 1,147 66
EBITDA 953 590 62
ThereofExploration and production 707 459 54
Natural gas trading 246 131 88
EBIT before special items 848 484 75
ThereofExploration and production 638 386 65
Natural gas trading 210 98 114
EBIT before special items in percent of
sales 28.4 26.3 -
ThereofExploration and production 59.0 55.7 -
Natural gas trading 11.0 8.5 -
EBIT 848 484 75
ThereofExploration and production 638 386 65
Natural gas trading 210 98 114
Sales increased significantly due to a considerable rise in the
price of oil, a slight increase in natural gas production and the
expansion of the natural gas trading business (volumes 11%,
prices/currencies 51%). These factors resulted in a strong increase in
earnings.
Natural gas production was increased in the exploration and
production business sector. Crude oil production declined slightly as
a result of scheduled maintenance work at production facilities.
Compared with the same quarter of 2005, the average price of Brent
crude rose by $14/barrel to $62/barrel. In euro terms, this
corresponds to an increase of EUR15/barrel to EUR51/barrel.
The natural gas trading business sector recorded high volumes, in
particular because of the long, cold winter in Europe. Compared with
the same period of the previous year, sales prices were significantly
higher and margins improved. Earnings more than doubled.
Debottlenecking of the STEGAL long-distance gas pipeline through
the German regions of Saxony and Thuringia was completed at the end of
March 2006, further increasing our east-west transport capacities.
Regions
-- Europe: Strong increase in earnings thanks to the Oil & Gas
segment
-- North America (NAFTA): Positive earnings trend continues
-- Asia: Growth due to Nanjing Verbund site
-- South America: Difficult market environment in the agricultural
products business
Overview Regions Sales Sales
(location of company) (location of customer)
---------------- ---------------------- --------------------------
Change Change
Million EUR 2006 2005 in % 2006 2005 in %
1st Quarter
Europe 7,786 6,102 28 7,415 5,851 27
Thereof
Germany 5,757 4,310 34 2,972 2,201 35
North America
(NAFTA) 2,637 2,265 16 2,617 2,243 17
Asia Pacific 1,648 1,299 27 1,777 1,366 30
South America,
Africa, Middle
East 444 417 6 706 623 13
12,515 10,083 24 12,515 10,083 24
Overview Regions EBIT before
special items
---------------- ----------------------
Change
Million EUR 2006 2005 in %
1st Quarter
Europe 1,420 1,134 25
Thereof
Germany 1,015 742 37
North America
(NAFTA) 298 271 10
Asia Pacific 115 87 32
South America,
Africa, Middle
East 32 71 (55)
1,865 1,563 19
In Europe, sales by location of company increased by 28% in the
first quarter of 2006. EBIT before special items rose by EUR286
million to EUR1,420 million. The higher sales and earnings were
primarily due to the contribution of the Oil & Gas segment.
First-quarter sales by location of company in North America rose
by 7% in dollar terms. The sales growth was due in particular to the
Chemicals and Plastics segments. EBIT before special items increased
by EUR27 million to EUR298 million. In the Chemicals segment, earnings
were negatively impacted by the temporary shutdown of the cracker in
Port Arthur, Texas. The Plastics segment benefited from strong demand
for polyurethanes. We further optimized our portfolio in the
Agricultural Products & Nutrition segment by selling the generics
business of Micro Flo Company LLC, Memphis, Tennessee.
In Asia Pacific, we increased sales in local currencies by 19%.
EBIT before special items rose EUR28 million to EUR115 million. Growth
in the Chemicals segment was due especially to the Verbund site in
Nanjing, China, which started operations in the second quarter of
2005. The Performance Products segment additionally benefited from the
strengthened Coatings business following the acquisition of remaining
shares in a joint venture in Japan in 2005.
Sales by location of company in South America, Africa, Middle East
declined by 11% in local currency terms. EBIT before special items was
EUR39 million lower than in the same period of 2005 because of the
difficult market environment in the agricultural products business in
Brazil. The Coatings division recorded strong business, in particular
for decorative paints.
Consolidated Statements of Income
1st Quarter Full
Year
Million EUR Change
2006 2005 in % 2005
Sales 12,515 10,083 24.1 42,745
Cost of sales 8,888 6,845 29.8 29,567
Gross profit on sales 3,627 3,238 12.0 13,178
Selling expenses 1,103 1,004 9.9 4,330
General and administrative
expenses 186 164 13.4 780
Research and development expenses 305 250 22.0 1,064
Other operating income 250 126 98.4 601
Other operating expenses 434 447 (2.9) 1,775
Income from operations 1,849 1,499 23.3 5,830
(Expenses)/income from financial
assets 15 71 (78.9) 348
Interest result (48) (40) (20.0) (170)
Other financial result 54 14 285.7 (82)
Financial result 21 45 (53.3) 96
Income before taxes and minority
interests 1,870 1,544 21.1 5,926
Income taxes 853 622 37.1 2,758
Net income before minority
interests 1,017 922 10.3 3,168
Minority interests 67 61 9.8 161
Net income 950 861 10.3 3,007
Earnings per shares (EUR ) 1.87 1.60 16.9 5.73
Number of shares, in million
(weighted) 509 537 (5.2) 525
The interim financial statements have not been audited.
The previous year's figures have been adjusted as follows:
Expenses in the Oil & Gas segment related to exploration for oil and
gas deposits and to dry holes are now recorded as other operating
expenses rather than as research and development expenses. In
association with the change to standard IAS 19, actuarial gains and
losses from the valuation of pension obligations are recognized
against retained earnings in the reporting period in which they occur.
Consolidated Balance Sheets
Assets
March March Dec.
31, 31, Change 31, Change
Million EUR 2006 2005 in % 2005 in %
Long-term assets
Intangible assets 3,662 3,543 3.4 3,720 (1.6)
Property, plant and
equipment 13,976 13,202 5.9 13,987 (0.1)
Investments accounted for
using the equity method 267 1,165 (77.1) 244 9.4
Other financial assets 866 930 (6.9) 813 6.5
Deferred taxes 1,046 1,211 (13.6) 1,255 (16.7)
Other long-term assets 521 585 (10.9) 524 (0.6)
20,338 20,636 (1.4) 20,543 (1.0)
Short-term assets
Inventories 5,364 4,964 8.1 5,430 (1.2)
Accounts receivable,
trade 7,529 6,589 14.3 7,020 7.3
Other receivables and
miscellaneous short-term
assets 1,694 2,224 (23.8) 1,586 6.8
Liquid funds 3,115 3,007 3.6 1,091 185.5
17,702 16,784 5.5 15,127 17.0
Total assets 38,040 37,420 1.7 35,670 6.6
Stockholders' equity
March March Dec.
31, 31, Change 31, Change
Million EUR 2006 2005 in % 2005 in %
Stockholders' equity
Subscribed capital 1,301 1,371 (5.1) 1,317 (1.2)
Capital surplus 3,118 3,043 2.5 3,100 0.6
Retained earnings 12,525 12,533 (0.1) 11,928 5.0
Other comprehensive
income 680 11 696 (2.3)
Minority interests 478 413 15.7 482 (0.8)
18,102 17,371 4.2 17,523 3.3
Long-term liabilities
Provisions for pensions
and similar obligations 1,419 4,133 (65.7) 1,547 (8.3)
Other provisions 2,788 2,315 20.4 2,791 (0.1)
Deferred taxes 640 831 (23.0) 699 (8.4)
Financial indebtedness 3,629 1,966 84.6 3,682 (1.4)
Other long-term
liabilities 1,033 1,064 (2.9) 1,043 (1.0)
9,509 10,309 (7.8) 9,762 (2.6)
Short-term liabilities
Accounts payable, trade 2,770 2,879 (3.8) 2,777 (0.3)
Provisions 3,046 2,547 19.6 2,763 10.2
Tax liabilities 1,252 1,110 12.8 887 41.1
Financial indebtedness 1,719 1,455 18.1 259 .
Other short-term
liabilities 1,642 1,749 (6.1) 1,699 (3.4)
10,429 9,740 7.1 8,385 24.4
Total stockholders'
equity and liabilities 38,040 37,420 1.7 35,670 6.6
Consolidated Statements of Cash Flows
January - March
Million EUR 2006 2005
Net income 950 861
Depreciation and amortization of long-term assets 552 521
Changes in net working capital 61 (175)
Miscellaneous items (115) (103)
Cash provided by operating activities 1,448 1,104
Payments related to tangible and intangible assets (493) (393)
Acquisitions/divestitures (7) 139
Financial investments and other items 195 38
Cash using in investing activities (305) (216)
Proceeds from capital increases/repayments (377) (264)
Changes in financial liabilities 1,407 143
Dividends (85) (19)
Cash used in financing activities 945 (140)
Net changes in cash and cash equivalents 2,088 748
Cash and cash equivalents as of beginning of year
and other changes 911 2,094
Cash and cash equivalents 2,999 2,842
Marketable securities 116 165
Liquid funds 3,115 3,007
At EUR1,448 million, cash provided by operating activities was
EUR344 million higher than in the first quarter of 2005. This was due
to higher earnings as well as a reduction in net working capital.
Cash used in investing activities amounted to EUR305 million
compared with EUR216 million in the same period of 2005. Payments
related to tangible and intangible fixed assets were below the level
of depreciation and amortization on fixed assets.
We spent EUR396 million on share buybacks. Of this amount, EUR339
million was associated with the EUR1.5 billion share buyback program
that was completed in mid-February 2006. EUR57 million was associated
with the new EUR500 million program that is scheduled to run until the
Annual Meeting in 2007. In the first quarter, a total of 6.3 million
shares were bought back for an average price of EUR63.20 per share.
Liquid funds rose by EUR2,024 million to EUR3,115 million. At
EUR5,348 million, financial indebtedness was EUR1,407 million higher
than on December 31, 2005. Net debt declined by EUR617 million to
EUR2,233 million. The equity ratio at the end of the first quarter was
47.6%.
Consolidated Statements of Recognized Income and Expense
Income and expense items
January - March
Million EUR 2006 2005
Net income before minority interests 1,017 922
Fair value changes in available-for-sale securities 56 (15)
Cash-flow hedges 16 16
Change in foreign currency translation adjustments (83) 77
Actuarial gains/losses from pensions and other
obligations 55 39
Deferred taxes (14) (22)
Minority interests (5) 11
Total income and expenses recognized in equity 25 106
Total income and expense for the period 1,042 1,028
Thereof BASF 979 956
Thereof minority interests 63 72
Development of income Retained earnings Other comprehensive income
and expense recognized
directly in equity
Actuarial Foreign Fair value
gains/losses currency changes in
translation available-
adjustment for-
sale
securities
Million EUR
As of January 1, 2006 (894) 475 258
Additions 55 - 56
Releases - (83) -
Deferred taxes (9) 2 (1)
As of March 31, 2006 (848) 394 313
As of January 1, 2005 (234) (226) 193
Additions 39 77 -
Releases - - (15)
Deferred taxes (15) (1) -
As of March 31, 2005 (210) (150) 178
Development of income Other Total
and expense compre- income and
recognized hensive expense
directly in equity income recognized
directly in
equity
Cash- Total of
flow other
hedges comprehen-
sive income
Million EUR
As of January 1, 2006 (37) 696 (198)
Additions 16 72 127
Releases - (83) (83)
Deferred taxes (6) (5) (14)
As of March 31, 2006 (27) 680 (168)
As of January 1, 2005 (27) (60) (294)
Additions 16 93 132
Releases - (15) (15)
Deferred taxes (6) (7) (22)
As of March 31, 2005 (17) 11 (199)
Consolidated Statements of Stockholders' Equity
January - March 2006 Number of Subscribed Capital
subscribed capital surplus
shares
outstanding
Million EUR
As of January 1, 2006 514,379,000 1,317 3,100
Share buy-back and cancellation
of own shares including own
shares intended to
be cancelled (6,259,000) (16) 18
Capital injection by minority
interests - - -
Dividends paid - - -
Net income - - -
Income and expense recognized
directly
in equity - - -
Change in scope of consolidation
and
other changes - - -
As of March 31, 2006 508,120,000 1,301 3,118
January - March 2006 Retained Other com- Minority Stock-
earnings prehensive interests holders'
income equity
Million EUR
As of January 1, 2006 11,928 696 482 17,523
Share buy-back and
cancellation of own shares
including own shares
intended to
be cancelled (398) - - (396)
Capital injection by minority
interests - - 18 18
Dividends paid - - (85) (85)
Net income 950 - 67 1,017
Income and expense recognized
directly
in equity 46 (16) (5) 25
Change in scope of
consolidation and
other changes (1) - 1 -
As of March 31, 2006 12,525 680 478 18,102
January - March 2005 Number of Subscribed Capital Retained
subscribed capital surplus earnings
shares
outstanding
Million EUR
As of January 1, 2005 540,440,410 1,384 3,028 11,923
Share buy-back and
cancellation of own
shares including own
shares intended to
be cancelled (5,091,410) (13) 15 (276)
Capital injection by
minority interests - - - -
Dividends paid - - - -
Net income - - - 861
Income and expense
recognized directly
in equity - - - 24
Change in scope of
consolidation and
other changes - - - 1
As of March 31, 2005 535,349,000 1,371 3,043 12,533
January - March 2005 Other com- Minority Stock-
prehensive interests holders'
income equity
Million EUR
As of January 1, 2005 (60) 328 16,603
Share buy-back and
cancellation of own
shares including own
shares intended to
be cancelled - - (274)
Capital injection by
minority interests - 10 10
Dividends paid - (19) (19)
Net income - 61 922
Income and expense
recognized directly
in equity 71 11 106
Change in scope of
consolidation and
other changes - 22 23
As of March 31, 2005 11 413 17,371
Segment Reporting
Segments Sales EBITDA
Million EUR
1st Quarter 2006 2005 in % 2006 2005 in %
Chemicals 2,239 1,822 22.9 452 544 (16.9)
Plastics 3,091 2,800 10.4 456 380 20.0
Performance Products 2,147 1,908 12.5 329 304 8.2
Agricultural
Products &
Nutrition 1,376 1,354 1.6 373 382 (2.4)
Agricultural
Products 928 959 (3.2) 333 332 0.3
Fine Chemicals 448 395 13.4 40 50 (20.0)
Oil & Gas 2,985 1,840 62.2 953 590 61.5
Other(1) 677 359 88.6 (162) (181) 10.5
12,515 10,083 24.1 2,401 2,019 18.9
Segments Income from operations Income from
before special items operations (EBIT)
Million EUR
1st Quarter 2006 2005 in % 2006 2005 in %
Chemicals 317 426 (25.6) 317 426 (25.6)
Plastics 332 269 23.4 331 268 23.5
Performance Products 248 225 10.2 247 224 10.3
Agricultural Products &
Nutrition 224 296 (24.3) 290 304 (4.6)
Agricultural Products 213 276 (22.8) 280 284 (1.4)
Fine Chemicals 11 20 (45.0) 10 20 (50.0)
Oil & Gas 848 484 75.2 848 484 75.2
Other(1) (104) (137) 24.1 (184) (207) 11.1
1,865 1,563 19.3 1,849 1,499 23.3
Segments Research and Assets(b)
development expenses
1st Quarter
-------------------- ------------------------------------------------
Chemicals 31 27 14.8 6,198 5,416 14.4
Plastics 41 34 20.6 6,894 6,530 5.6
Performance Products 60 50 20.0 4,936 4,711 4.8
Agricultural
Products &
Nutrition 97 86 12.8 6,854 6,700 2.3
Agricultural
Products 80 68 17.6 5,365 5,402 (0.7)
Fine Chemicals 17 18 (5.6) 1,489 1,298 14.7
Oil & Gas - 1 - 4,798 4,017 19.4
Other(1) 76 52 46.2 8,360 10,046 (16.8)
305 250 22.0 38,040 37,420 1.7
Segments Additions to Amortization and
fixed assets(c) depreciation(c)
1st Quarter
------------------------------------------------------------------
Chemicals 162 88 84.1 135 118 14.4
Plastics 218 82 165.9 125 112 11.6
Performance Products 81 54 50.0 82 80 2.5
Agricultural Products &
Nutrition 37 31 19.4 83 78 6.4
Agricultural Products 15 12 25.0 53 48 10.4
Fine Chemicals 22 19 15.8 30 30 0.0
Oil & Gas 75 94 (20.2) 105 106 (0.9)
Other(1) 27 13 107.7 22 26 (15.4)
600 362 65.7 552 520 6.2
(a) "Other" includes the fertilizers business and other businesses
as well as expenses, income and assets not allocated to the segments.
This item also includes foreign currency results from financial
indebtedness that are not allocated to the segments, hedging of
forecasted sales as well as from currency positions that are
macro-hedged {EUR55 million in the first quarter (first quarter 2005
EUR(45) million)}.
(b) The assets of "Other" includes the assets of the fertilizers
business and other businesses as well as assets that are not allocated
to the segments (financial assets, liquid funds, financial
receivables, deferred taxes; first quarter 2006: EUR6,685 million,
first quarter 2005: EUR8,388 million).
(c) Tangible and intangible fixed assets
Forward-looking statements
This report contains forward-looking statements under the U.S.
Private Securities Litigation Reform Act of 1995. These statements are
based on current expectations, estimates and projections of BASF
management and currently available information. They are not
guarantees of future performance, involve certain risks and
uncertainties that are difficult to predict and are based upon
assumptions as to future events that may not prove to be accurate.
Many factors could cause the actual results, performance or
achievements of BASF to be materially different from those that may be
expressed or implied by such statements. Such factors include those
discussed in BASF's Form 20-F filed with the Securities and Exchange
Commission. {The Annual Report on Form 20-F is available on the
Internet at corporate.basf.com/20-f-report.} We do not assume any
obligation to update the forward-looking statements contained in this
report.
- Important Dates -- Contacts
- August 2, 2006 -- Corporate Media Relations:
Interim Report Second Quarter Michael Grabicki
2006 Phone: +49 621 60-99938
Fax: +49 621 60-92693
- November 2, 2006
Interim Report Third Quarter -- Investor Relations:
2006 Magdalena Moll
Phone: +49 621 60-48230
Fax: +49 621 60-22500
-- General inquires:
Phone: +49 621 60-0
- Annual Meetings Fax: +49 621 60-42525
- May 4, 2006, Mannheim -- Internet: corporate.basf.com
- April 26, 2007, Mannheim -- BASF Aktiengesellschaft
67056 Ludwigshafen
Germany
You can find this and other publications from
BASF on the Internet at corporate.basf.com.
You can also order the reports
-- by telephone: +49 621 60-91827
-- by fax: +49 621 60-20162
-- on the Internet: corporate.basf.com/mediaorders
CONTACT: BASF
Michael Grabicki, +49 621 60-99938
Fax: +49 621 60-92693
michael.grabicki@basf.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BASF Aktiengesellschaft
May 4, 2006 By: /s/ Elisabeth Schick
------------------------------------------------
Name: Elisabeth Schick
Title: Director Site Communications Ludwigshafen
and Europe
By: /s/ Christian Schubert
------------------------------------------------
Name: Christian Schubert
Title: Director Corporate Communications
BASF Group