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
August 2, 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- .
Dynamic BASF on Course for Profitable Growth; Second-Quarter Results 2006
LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--Aug. 2, 2006--BASF
(NYSE:BF)(FWB:BAS)(LSE:BFA):
April - June 2006 published on August 2, 2006
-- Strong sales growth of 16%
-- EBIT before special items up 15%
-- New growth opportunities from acquisitions
-- Outlook: Higher sales and EBIT before special items compared with 2005
Overview 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 12,322 10,581 16.5
Income from operations before interest,
taxes, depreciation and amortization
(EBITDA) 2,374 2,149 10.5
Income from operations (EBIT) before
special items 1,910 1,657 15.3
Income from operations (EBIT) 1,797 1,587 13.2
Financial result 23 (82) .
Income before taxes and minority
interests 1,820 1,505 20.9
Net income 920 778 18.3
Earnings per share (EUR) 1.82 1.48 23.0
EBIT before special items in percent of
sales 15.5 15.7 -
Cash provided by operating activities 760 977 (22.2)
Additions to fixed assets (a) 4,957 850 483.2
Excluding acquisitions 491 482 1.9
Amortization and depreciation (a) 577 562 2.7
Segment assets (end of period) (b) 35,241 28,631 23.1
Personnel costs 1,430 1,393 2.7
Number of employees (end of period) 86,794 80,946 7.2
Overview 1st
Half
Million EUR Change
2006 2005 in %
Sales 24,837 20,664 20.2
Income from operations before interest, taxes,
depreciation and amortization (EBITDA) 4,775 4,168 14.6
Income from operations (EBIT) before special
items 3,775 3,220 17.2
Income from operations (EBIT) 3,646 3,086 18.1
Financial result 44 (37) .
Income before taxes and minority interests 3,690 3,049 21.0
Net income 1,870 1,639 14.1
Earnings per share (EUR) 3.69 3.08 19.8
EBIT before special items in percent of sales 15.2 15.6 -
Cash provided by operating activities 2,208 2,081 6.1
Additions to fixed assets (a) 5,557 1,212 358.5
Excluding acquisitions 964 844 14.2
Amortization and depreciation (a) 1,129 1,082 4.3
Segment assets (end of period) (b) - - -
Personnel costs 2,822 2,670 5.7
Number of employees (end of period) - - -
* Tangible and intangible fixed assets (including acquisitions)
** Tangible and intangible fixed assets, inventories and business-related
receivables
Contents
1 BASF Group Business Review 13 Consolidated Statements of Income
3 BASF Shares 14 Consolidated Balance Sheets
4 Significant Events and 15 Consolidated Statements of Cash Flows
Outlook
6 Chemicals 16 Consolidated Statements of Recognized
7 Plastics Income and Expense
8 Performance Products 17 Consolidated Statements of
Stockholders'
9 Agricultural Products & Equity
Nutrition
10 Oil & Gas 18 Segment Reporting
11 Regions 20 Explanations to the Interim Financial
12 Overview of Other Topics Statements
Cover photo:
Shah Kazi, senior research engineer from the BASF Catalysts R&D Center in
Iselin, New Jersey and Dr. Henrik Junicke, product manager for catalysts in
Ludwigshafen.
News from our innovation centers
Wax in the wall for a pleasant indoor climate
BASF's phase-change material Micronal(R) PCM absorbs daytime temperature
peaks
Summer, sun, sunshine - although much longed for throughout the winter
months, they can soon become too much of a good thing when they arrive. Modern
lightweight construction houses and steel and glass office complexes with
transparent frontages can become more like saunas overnight. BASF's
SmartBoard(TM) offers a solution to this problem. The cooling properties of this
innovative gypsum wallboard are provided by the raw material Micronal(R) PCM, a
microencapsulated latent heat store based on paraffin wax that absorbs excess
heat. PCM stands for phase change material. Micronal(R) is an effective thermal
buffer due to the physical phenomena that occur when wax changes from the solid
to the liquid state. During this phase transition, a large amount of thermal
energy (known as latent heat) is consumed without the temperature of the
material itself changing.
The waxes contained in Micronal(R) PCM melt at 23C or 26C (73/79F)
depending on the application. When they melt, they absorb large amounts of heat
from the environment, thereby preventing the room temperature from rising
further. At night, when the outside temperature falls, the heat bound when the
wax solidifies is released and the heat store is ready for a new summer's day.
Thanks to microencapsulation the wax can be safely integrated into building
materials like wall plaster, mortar or gypsum boards: Microscopically small
droplets of wax are enclosed in a virtually indestructible acrylic polymer shell
that withstands even drilling and sawing. Depending on the material, between 20
and 40 percent Micronal(R) PCM may be used.
The ready-to-use gypsum wallboard Micronal(R) PCM SmartBoard(TM) is very
user-friendly: although only 1.5 centimeters thick, each square meter contains
around three kilograms of Micronal(R) PCM, and its heat insulating capacity
corresponds to that of a brick wall 12 centimeters thick. As a result, it acts
as an important functional component of the building that actively improves the
indoor climate.
The SmartBoard(TM) wallboards can be obtained directly through BASF's
subsidiary BTC Specialty Chemical Distribution GmbH in Cologne. But several
other industrial partners are also offering PCM construction materials based on
Micronal(R) PCM. The German company H+H Celcon, for example, has incorporated
BASF's phase-change material in aerated cement blocks. The heat storage capacity
of the blocks, which are sold under the brand name CelBloc Plus and recognizable
by their characteristic green color, is thus considerably enhanced.
The perspex microcapsules - about 5 micrometers in diameter - contain a
storage medium such as paraffin.
When the contents melt, heat is taken up and is given out again only when
the material solidifies.
News from our innovation centers
Biotechnologists fight dreaded potato disease
Microscope image of the fungus Phytophthora infestans (light red structure
in the center of the picture).
The fungus spreads through leaf tissue in potatoes and causes potato
blight.
Two genes from wild potatoes protect crops
Phytophthora infestans is every potato farmer's nightmare. Once this
harmful fungus shows up, the dreaded potato blight can't be far behind. This
disease can result in considerable crop losses. In the mid-19th century, it
caused a famine in Ireland, and even today around 20 percent of potato harvest
losses in the world are due to this disease. Researchers at BASF Plant Science
GmbH have now developed a genetically improved potato that is resistant to this
harmful pathogen.
The starting point for this modern innovation is a remote valley in the
Central American Andes. Various wild types of potato grow here and potato blight
is also rampant. But not all the potato plants are infested. Some seem to have
developed a very effective strategy to protect themselves against the pathogen
that causes the disease.
Scientists discovered that the resistant potato plants had at least one
gene that the infested plants did not have. This gene ensures that the plant
recognizes the harmful fungus in the first place. To set its defense mechanisms
in motion, the plant needs to know that the fungus is there.
That is precisely the problem with the modern cultivated potato. These
plants would be able to fight off the fungus if they were only able to recognize
its presence. This encouraged scientists to attempt to transfer the benefits of
the wild potato to its cultivated counterpart. Conventional breeding methods
were attempted for years but without success. Although the new types were
partially resistant, they had other negative properties such as the lower yield
typical of the wild potato. The breakthrough finally came in recent years with
the aid of biotechnology: Scientists isolated a resistance gene of the wild
potato and transferred it to the cultivated potato.
Because the fungus adapts to varying environmental conditions, mutates and
forms a large number of variants, scientists from BASF Plant Science identified
other resistance genes in the wild potato. Together with potato breeders, a
potato with two additional genes taken from the wild potato has now been
developed.
The potato from BASF Plant Science has already demonstrated its resistance
in the greenhouse. Field trials are now being carried out at a number of
locations to investigate whether various climatic conditions adversely affect
the resistance of the genetically improved potato. The potato can be launched on
the market as soon as these trials have been completed and following E.U.
approval.
BASF Group Business Review
-- Sales volumes up 7%
-- Sales growth of 16%
-- EBIT before special items up 15%
Sales
Compared with the same period of the previous year, sales in the second
quarter of 2006 increased by 16% to EUR 12.3 billion. The sales growth was due
to the following factors:
Factors influencing sales in comparison with previous year
% of sales 2nd Quarter 1st Half
Volumes 7 7
Prices 7 9
Acquisitions/divestitures 2 2
Currencies 0 2
16 20
The new Catalysts division has been assigned to the Chemicals segment. This
division includes the catalysts business and precious metals trading acquired on
June 6, 2006 as part of Engelhard Corporation as well as our own existing
catalysts business, which was formerly part of the Inorganics division. In
addition to the effect of the activities of Engelhard, which contributed sales
of EUR 240 million, sales in the Chemicals segment were boosted by the Verbund
site in Nanjing, China, which started operations in June 2005. Furthermore,
sales increased due to sales price increases to pass on significantly higher raw
material costs.
In the Plastics segment, sales rose considerably due to higher sales
volumes in the Styrenics and Polyurethanes division.
Second-quarter sales by segment
Million EUR
Chemicals 2006 2,443 22%
2005 2,007
Plastics 2006 3,168 8%
2005 2,924
Performance 2006 2,197 5%
Products 2005 2,098
Agricultural Products 2006 1,389 (5)%
& Nutrition 2005 1,465
Oil & Gas 2006 2,481 50%
2005 1,650
In the Performance Products segment, all operating divisions posted higher
sales due to higher volumes and a slight increase in sales prices.
Volumes and sales prices declined in the Agricultural Products & Nutrition
segment. Together with the divestiture of major parts of the generics business
in North America, this resulted in significantly lower sales in the Agricultural
Products division. The Fine Chemicals division posted significantly higher sales
thanks to the pharmaceutical contract manufacturing business of the Orgamol
Group that was acquired in the fourth quarter of 2005 and the personal care
business acquired from Engelhard Corporation.
Sales in the Oil & Gas segment rose strongly due to higher volumes and
prices.
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) (113) (70) (65) (109)
- Financial
result - - - - 222 -
(16) (64) (113) (70) 157 (109)
Earnings
Compared with the same period of 2005, we increased income from operations
(EBIT) before special items by 15% to EUR 1,910 million.
Margins in the Chemicals segment declined due to significantly higher
prices for energy and raw materials. In addition, earnings were negatively
affected by maintenance turnarounds at several plants as well as plant outages.
In the Plastics segment, increased raw material costs reduced our margins.
Nevertheless, higher volumes led to a rise in earnings.
Earnings in the Performance Products segment declined due to severe
pressure on margins, in particular in the Functional Polymers division.
Second-quarter earnings in the Agricultural Products division were impacted
by lower volumes due to the late start to the season in Europe as well as
subdued demand from customers in North America.
In the Fine Chemicals division, earnings increased as a result of the
contribution from the acquired businesses as well as a reduction in fixed costs
compared with the same period of the previous year.
The Oil & Gas segment posted the strongest earnings growth, due partly to
higher crude oil prices and increased volumes in the natural gas trading
business.
Compared with the same period of 2005, second-quarter EBIT rose by 13% to
EUR 1,797 million. Special items in income from operations were related to the
integration of Engelhard Corporation, as well as expenses for restructuring,
which are primarily recorded under "Other" in the course of the year. The
reduction of a fine imposed by the E.U. in 2001 for anti-trust violations
related to vitamin sales resulted in special income of EUR 66 million.
Second-quarter EBIT before special items
Million EUR
Chemicals 2006 351 (15)%
2005 415
Plastics 2006 315 15%
2005 274
Performance 2006 209 (23)%
Products 2005 272
Agricultural Products 2006 183 (39)%
& Nutrition 2005 302
Oil & Gas 2006 868 50%
2005 579
The financial result increased by EUR 105 million to EUR 23 million. This
was due in particular to lower net financing costs for pension obligations
recorded under "Other financial result" following the transfer of approximately
EUR 3.7 billion to a contractual trust arrangement at the end of 2005.
Income before taxes and minority interests rose by 21% to EUR 1,820
million.
The tax rate was 47.6% compared with 46.3% in the second quarter of 2005.
Taxes for oil production that are noncompensable with German corporate income
tax amounted to EUR 383 million compared with EUR 267 million in the same period
of the previous year.
Net income increased 18% to EUR 920 million. Earnings per share were EUR
1.82 compared with EUR 1.48 in the second quarter of 2005.
BASF Shares
-- BASF shares better than DAX 30 and EURO STOXX 50 indices in the second
quarter
-- Shares buybacks for EUR 285 million in the second quarter of 2006
BASF shares 2nd Quarter 1st Half
2006 2006
Performance (with dividends reinvested)
BASF (%) (0.14) (0.16)
DAX 30 (%) (4.80) + 5.09
EURO STOXX 50 (%) (3.66) + 3.97
Share prices and trade (XETRA trading)
Average (EUR) 64.07 63.78
High (EUR) 69.49 69.49
Low (EUR) 58.97 58.97
Close (EUR) 62.78 62.78
Average daily trade in shares (million shares) 3.37 3.20
BASF share performance
After a relatively flat period in the first quarter of 2006, the price of
BASF's stock increased significantly in April and reached a record high of EUR
69.49 on April 21. In May, the stock pared gains in a market characterized by
high crude oil prices and anticipated interest rate increases and closed the
quarter with a performance of - 0.14% (assuming reinvestment of the EUR 2.00 per
share dividend paid on May 5). As a result, BASF shares performed better than
the DAX 30 and EURO STOXX 50 indices, which declined by 4.80% and 3.66%,
respectively, in the second quarter.
Share buybacks
In the second quarter of 2006, BASF Aktiengesellschaft bought back 4.54
million shares for a total of EUR 285 million and an average price of EUR 62.83
per share.
Up to the end of the second quarter, BASF had bought back shares for a
total of EUR 342 million under the EUR 500 million share buyback program that
was announced in February 2006. This program is scheduled to run until the
Annual Meeting in 2007.
We also plan to buy back shares in the future.
Up-to-date information on BASF shares is available on the Internet at
www.basf.de/share.
You can reach BASF's investor relations team by calling +49 621 60-48230 or
by sending an e-mail to investorrelations@basf.com.
Significant Events and Outlook
Acquisition of Engelhard Corporation
Following the acceptance of BASF's cash offer by the majority of
shareholders, BASF gained control of Engelhard Corporation on June 6, 2006. BASF
owns 100% of the company since June 9, 2006.
As a result of this acquisition, we will become a leading supplier in the
fast growing market for catalysts. The combination of the two companies' R&D
activities will create a unique Know-how Verbund and thus open up further
potential for innovation and growth in the area of catalysis.
The acquisition involves 50 production sites and 22 R&D centers in more
than 20 countries. Approximately 7,300 Engelhard employees have transferred to
BASF as a result of the acquisition. The purchase price for Engelhard shares
amounted to $ 4.8 billion or appoximately EUR 3.8 billion.
Engelhard Corporation reported the following results for fiscal 2005:
Key data Engelhard Corporation
Million $ 2005
Sales 4,597
Income from operations 299
Assets 3,879
The catalysts business will be managed in BASF's new Catalysts operating
division and reported as part of the Chemicals segment. Engelhard's remaining
businesses will be integrated primarily in BASF's Performance Products segment
and in the Fine Chemicals operating division.
The companies acquired as a result of the acquisition are included in BASF
Group's consolidated financial statements as of June 6, 2006.
Acquisition of Degussa's construction chemicals business
The acquisition of the construction chemicals business of Degussa AG by
BASF Aktiengesellschaft was completed on July 1.
With BASF's chemical expertise and Degussa's know-how in construction
chemicals applications, we offer our customers a greater range of innovative
products and help them to be more successful in the competitive construction
sector. BASF's strong presence in Asia will additionally generate growth
opportunities in this region's booming construction sector.
The acquisition includes production sites and sales centers in over 50
countries as well as an R&D center in Trostberg, Germany. Approximately 7,400
employees have transferred from Degussa to BASF. The purchase price for equity
was just under EUR 2.2 billion. In addition, the transaction was associated with
debt of EUR 0.5 billion.
Degussa reported the following results for its construction chemicals
business in fiscal 2005:
Key data Degussa Construction Chemicals
Million $ 2005
Sales 1,968
Income from operations 223
Assets 1,472
The activities will be reported in the new Construction Chemicals division,
which is part of the Performance Products segment. The companies acquired as a
result of the acquisition will be included in BASF Group's consolidated
financial statements as of July 1, 2006. The acquisition price of EUR 2.7
billion for Degussa's construction chemicals business is reported under "Other
receivables" as of June 30, 2006.
Further significant events
The acquisition of Johnson Polymer was completed on July 1, 2006. It
provides BASF with a range of water-based resins that complements our portfolio
of high solids and UV resins for the coatings and paints industry and will
strengthen our market presence, in particular in North America.
The acquisition of Johnson Polymer involves one production site each in the
United States and in the Netherlands, as well as technical centers and offices
in Asia Pacific. The purchase price was $470 million on a cash and debt-free
basis.
In 2005, Johnson Polymer posted sales of approximately $360 million and had
430 employees worldwide. The business will be integrated into the Performance
Chemicals division and included in BASF Group's consolidated financial
statements as of July 1, 2006. The acquisition price of EUR 376 million for
Johnson Polymer is reported under "Other receivables" as of June 30, 2006.
BASF acquired CropDesign on June 27, 2006. This Belgian biotechnology
company will be integrated in BASF Plant Science GmbH, in which all of our plant
biotechnology activities are combined. CropDesign will strengthen our research
network thanks to the workforce of over 70 employees at its research facilities
in Ghent, Belgium.
On July 10, BASF and the China Petroleum & Chemical Corporation (SINOPEC
Corp.) signed a $500 million agreement to expand their joint Verbund site in
Nanjing, China. BASF-YPC Co. Ltd. - the 50-50 joint venture between BASF and
SINOPEC - plans to invest in additional downstream plants and expand the
capacity of its steam cracker. The new activities are expected to come on stream
in 2009.
On July 7, 2006, the Supervisory Board of BASF Aktiengesellschaft extended
the appointment of BASF Chairman Dr. Juergen Hambrecht until the end of the
Annual Meeting in 2011.
At the same time, the Supervisory Board extended the appointments of Klaus
Peter Loebbe and Dr. Stefan Marcinowski to the Board of Executive Directors.
Loebbe's appointment will now run until the end of the Annual Meeting in 2008,
Marcinowski's until May 2012.
Outlook
We expect the following conditions in 2006:
-- Average oil prices (Brent) of about $ 65/barrel
-- An average euro/dollar exchange rate of $ 1.25 per euro and a further
increase in interest rates
-- Global economic growth and chemical production growth (excluding
pharmaceuticals) of more than 3%
On this basis, we expect that our business will continue to develop
positively in the further course of the year. Persistently high oil prices are
likely to lead to an increase in raw material costs and margin pressure.
Additional sales price increases are therefore necessary.
Major risk factors continue to be the political situation in unstable
areas, especially in the Middle East, and the development of the crude oil
price.
In view of the strong business performance in the first half, we remain
optimistic 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.
Furthermore, our acquisitions will contribute to sales in the second half,
bringing total sales to more than EUR 50 billion.
We anticipate an additional contribution to EBIT before special items.
Chemicals
-- Higher sales and volumes in all divisions
-- Margins and earnings decline due to high raw material and energy
pricesas well as plant shutdowns
-- New Catalysts operating division
Overview Chemicals 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,443 2,007 22
Thereof Inorganics 285 250 14
Catalysts 259 18 .
Petrochemicals 1,324 1,227 8
Intermediates 575 512 12
EBITDA 409 477 (14)
EBIT before special items 351 415 (15)
EBIT before special items in percent of
sales 14.4 20.7 -
EBIT 263 345 (24)
Assets 10,903 6,026 81
Overview Chemicals 1st Half
Million EUR 2006 2005 Change in %
Sales 4,682 3,829 22
Thereof Inorganics 570 439 30
Catalysts 280 36 .
Petrochemicals 2,698 2,363 14
Intermediates 1,134 991 14
EBITDA 861 1,021 (16)
EBIT before special items 668 841 (21)
EBIT before special items in
percent of sales 14.3 22.0 -
EBIT 580 771 (25)
Assets - - -
We increased sales significantly in the second quarter. In addition to
higher volumes and sales prices, sales were boosted by Engelhard's catalyst
business, which was acquired at the beginning of June (volumes 6%, prices 4%,
portfolio 12%). EBIT before special items was negatively impacted by
significantly higher prices for raw materials and energy as well as by plant
turnarounds and outages. EBIT contains special charges related to the
integration of Engelhard Corporation.
Inorganics
Sales rose especially due to strong demand for inorganic basic chemicals
and specialties. Significantly higher prices for natural gas put pressure on
margins, especially for methane-based derivatives, and led to a decline in
earnings.
The catalysts business unit, which was previously part of the Inorganics
division, was assigned to the new Catalysts division with effect from January 1,
2006. The previous year's figures were restated accordingly.
Catalysts
BASF acquired Engelhard Corporation at the beginning of June and has
started the integration process. Effective June 6, Engelhard's catalysts
business and precious metals trading are reported in this new operating division
together with BASF's existing catalyst business.
Petrochemicals
Higher prices and additional volumes from production at the site in
Nanjing, China, led to an increase in sales compared with the same period of
2005. Business with plasticizers and solvents was strong. Earnings were
significantly lower, however, due to high and rising raw material costs, as well
as plant turnarounds and outages. Following shutdowns lasting several weeks,
plants in Ludwigshafen, Antwerp, Belgium, and Port Arthur, Texas, are again
operating at high capacity utilization rates.
Intermediates
As in previous quarters, demand continued to rise in the second quarter of
2006. Sales were higher than in the same period of 2005. Very high prices for
raw materials worldwide could only be passed on to a limited extent in the form
of higher sales prices. Earnings were at the same level as in the previous year.
Plastics
-- Further increase in sales and earnings
-- Higher volumes of polyurethanes and styrenics
-- Startup of new plants in Kuantan, Malaysia, and Caojing, China
Overview Plastics 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 3,168 2,924 8
Thereof Styrenics 1,232 1,128 9
Performance Polymers 738 732 1
Polyurethanes 1,198 1,064 13
EBITDA 442 400 11
EBIT before special items 315 274 15
EBIT before special items in percent of
sales 9.9 9.4 -
EBIT 314 280 12
Assets 6,867 6,591 4
Overview Plastics 1st Half
Million EUR 2006 2005 Change in %
Sales 6,259 5,724 9
Thereof Styrenics 2,383 2,264 5
Performance Polymers 1,488 1,421 5
Polyurethanes 2,388 2,039 17
EBITDA 898 780 15
EBIT before special items 647 543 19
EBIT before special items in percent of
sales 10.3 9.5 -
EBIT 645 548 18
Assets - - -
The Plastics segment posted an increase in sales compared with the second
quarter of 2005 due to higher volumes and virtually stable prices (volumes 9%,
prices -1%, portfolio -1%, currencies 1%). Earnings rose to an even greater
extent. This was due in particular to improved earnings in the Styrenics
division and continued strong earnings in the Polyurethanes division.
Styrenics
Sales were higher than in the same period of the previous year, in
particular thanks to strong demand in Europe and Asia. Earnings increased
significantly compared with the weak second quarter of 2005. Margins, however,
remain unsatisfactory. Earnings were additionally impacted by the shutdown of
the styrene plant in Ludwigshafen for maintenance.
In order to expand our specialties business, we have opened a service
center called designfabrik(R) in Ludwigshafen through which we support our
customers in the early stages of product development.
Performance Polymers
Second-quarter sales and earnings were at the same level as in 2005. Sales
volumes of engineering plastics developed positively in Asia and Europe. The
business acquired from Leuna-Miramid in November 2005 contributed to this
effect.
Together with our partner Toray, we started operations at a world-scale
production plant for polybutylene terephthalate (PBT) at our Verbund site in
Kuantan, Malaysia, as scheduled in April 2006. The capacity utilization of the
plant is already high as a result of the customer base that has been
systematically established.
Polyurethanes
We increased sales significantly thanks to strong demand, in particular in
North America. Earnings were increased slightly compared with the previous
year's high level.
In Caojing, China, we are currently starting operations as planned at the
integrated isocyanate complex for MDI and TDI that we have built with Huntsman
and Chinese partners.
Together with DOW and Solvay we will start construction work on plants for
hydrogen peroxide and propylene oxide (HPPO) in Antwerp, Belgium, in September
2006.
Performance Products
-- Higher sales due to increased volumes in all divisions
-- Decline in earnings due to rise in raw material costs
-- Acquisition of Degussa's construction chemicals business and resins
producer Johnson Polymer
Overview Performance Products 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,197 2,098 5
Thereof Coatings 576 555 4
Functional Polymers 848 809 5
Performance Chemicals 773 734 5
EBITDA 298 366 (19)
EBIT before special items 209 272 (23)
EBIT before special items in percent of
sales 9.5 13.0 -
EBIT 209 282 (26)
Assets 5,884 4,938 19
Overview Performance Products 1st Half
Million EUR Change
2006 2005 in %
Sales 4,344 4,006 8
Thereof Coatings 1,167 1,027 14
Functional Polymers 1,640 1,551 6
Performance Chemicals 1,537 1,428 8
EBITDA 627 670 (6)
EBIT before special items 457 497 (8)
EBIT before special items in percent of
sales 10.5 12.4 -
EBIT 456 506 (10)
Assets - - -
In the Performance Products segment, all divisions posted higher
second-quarter sales compared with the same period of 2005 (volumes 2%, prices
1%, portfolio 2%). Rising raw material costs negatively affected margins, and
earnings were lower than in the previous year's second quarter.
The construction chemicals business acquired from Degussa will be reported
in the new operating division Construction Chemicals with effect from July 1,
2006. Johnson Polymer, a producer of water-based resins for the coatings and
printing inks industry that was acquired by BASF, will become part of the
Performance Chemicals division as of July 1, 2006.
The pigments business of Engelhard Corporation is reported in the
Functional Polymers and Performance Chemicals divisions effective June 6, 2006.
Coatings
We increased sales of automotive coatings in Asia and North America. This
growth occurred despite a slight decline in automotive production in North
America. In Europe, sales of industrial coatings grew in particular. Earnings
increased compared with the same period of 2005.
Functional Polymers
We improved sales of functional polymers thanks in particular to higher
volumes of polymers for construction chemicals, adhesive raw materials and
superabsorbents. Prices for acrylic monomers came increasingly under pressure
due to additional capacities in Asia. The business environment in the paper
industry is negatively affected by ongoing restructuring activities among our
customers. Overall, earnings were lower than in the strong second quarter of
2005.
The high level of prices in almost all product lines is making it
increasingly difficult to pass on increased raw material costs promptly to our
customers.
Performance Chemicals
We increased volumes and sales, in particular for performance chemicals for
the automotive and oil industry. Further increases in raw material costs could
be passed on to the market only to a limited extent. Thanks to strict cost
management, earnings were at almost the same level as in the second quarter of
2005.
Agricultural Products & Nutrition
-- Difficult market environment for agricultural products
-- Fine Chemicals division improves sales and earnings
Overview Agricultural 2nd Quarter 1st Half
Products
Million EUR Change Change
2006 2005 in % 2006 2005 in %
Sales 924 1,043 (11) 1,852 2,002 (7)
EBITDA 217 351 (38) 550 683 (19)
EBIT before special items 165 295 (44) 378 571 (34)
EBIT before special items
in percent of sales 17.9 28.3 - 20.4 28.5 -
EBIT 164 291 (44) 444 575 (23)
Assets 5,025 5,540 (9) - - -
Sales were significantly lower than in the second quarter of 2005. This was
due primarily to a decline in sales volumes and the divestiture of major parts
of the North American generics business (volumes -6%, prices/currency -1%,
portfolio -4%).
In Europe, business was negatively affected by the late start to the
season, which resulted in the application of smaller amounts of crop protection
products.
The agricultural economy in North America was impacted by higher operating
costs and lower sales prices for agricultural produce. In addition, retailers
reduced high inventory levels of fungicides that were established in 2005 in
expectation of the rapid spread of Asian soybean rust.
Earnings declined due to the drop in volumes. The further appreciation of
the Brazilian real also contributed to the decline.
On the basis of business to date, we do not expect to be able to match the
previous year's level of sales and earnings.
Overview Fine Chemicals 2nd Quarter 1st Half
Million EUR Change Change
2006 2005 in % 2006 2005 in %
Sales 465 422 10 913 817 12
EBITDA 96 12 . 136 62 119
EBIT before special items 18 7 157 29 27 7
EBIT before special items
in percent of sales 3.9 1.7 - 3.2 3.3 -
EBIT 63 (19) . 73 1 .
Assets 1,760 1,326 33 - - -
Sales increased thanks to the pharmaceutical contract manufacturing
business that we acquired in October 2005 and the personal care business of
Engelhard Corporation (volumes -1%, prices/currencies -2%, portfolio 13%).
While growth rates remained high in the aroma chemicals business, sales of
lysine and vitamin C continued to decline.
EBIT before special items improved considerably compared with the same
period of 2005. This was due in particular to the pharmaceutical contract
manufacturing business. We are continuing with our cost reduction measures to
combat the persisting pressure on margins for lysine, vitamin C and
pharmaceutical active ingredients.
EBIT contains special income of EUR 66 million resulting from the reduction
of a fine imposed by the E.U. for anti-trust violations related to vitamin sales
as well as special charges for restructuring measures.
Oil & Gas
-- Sales and earnings 50% up on previous year
-- Considerably higher volumes in natural gas trading
-- Achimgaz joint venture starts production wells
Overview Oil & Gas 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,481 1,650 50
Thereof Exploration and production 1,219 862 41
Natural gas trading 1,262 788 60
EBITDA 973 686 42
Thereof Exploration and production 835 609 37
Natural gas trading 138 77 79
EBIT before special items 868 579 50
Thereof Exploration and production 766 533 44
Natural gas trading 102 46 122
EBIT before special items in percent of
sales 35.0 35.1 -
Thereof Exploration and production 62.8 61.8 -
Natural gas trading 8.1 5.8 -
EBIT 868 579 50
Thereof Exploration and production 766 533 44
Natural gas trading 102 46 122
Assets 4,802 4,210 14
Thereof Exploration and production 2,232 2,063 8
Natural gas trading 2,570 2,147 20
Overview Oil & Gas 1st Half
Million EUR Change
2006 2005 in %
Sales 5,466 3,490 57
Thereof Exploration and production 2,300 1,555 48
Natural gas trading 3,166 1,935 64
EBITDA 1,926 1,276 51
Thereof Exploration and production 1,542 1,068 44
Natural gas trading 384 208 85
EBIT before special items 1,716 1,063 61
Thereof Exploration and production 1,404 919 53
Natural gas trading 312 144 117
EBIT before special items in percent of
sales 31.4 30.5 -
Thereof Exploration and production 61.0 59.1 -
Natural gas trading 9.9 7.4 -
EBIT 1,716 1,063 61
Thereof Exploration and production 1,404 919 53
Natural gas trading 312 144 117
Assets - - -
Thereof Exploration and production - - -
Natural gas trading - - -
Persistently high crude oil prices and considerably higher sales volumes in
the natural gas trading business sector (volumes 7%, prices/currencies 43%) led
to a significant increase in sales and earnings compared with the strong second
quarter of 2005.
In the exploration and production business sector, sales and earnings
increased significantly compared with the same period of the previous year as a
result of persistently high crude oil prices. Compared with the second quarter
of 2005, the average price of Brent crude rose by approximately $ 18/barrel to
just under $ 70/barrel. In euro terms, this corresponds to an increase of EUR
14/barrel to EUR 55/barrel.
The natural gas trading business sector again increased sales volumes
considerably in both Germany and Western Europe. Sales prices were also raised
compared with the previous year's second quarter. Significantly higher sales and
earnings were posted as a result.
Our Achimgaz joint venture with Gazprom started its first two production
wells in the second quarter. The construction work on the remaining facilities
is proceeding according to schedule. We therefore aim to start production around
the end of the year.
In April 2006, BASF and Gazprom signed an agreement on BASF's participation
in the Yuzhno Russkoye gas field. The contracts are expected to be completed by
the end of the year.
Regions
-- Europe: Strong increase in sales and earnings due to Oil & Gas segment
-- North America: Sales growth due to acquisition of Engelhard
Corporation; earnings impaired by plant turnarounds and weaker
agricultural products business
-- Asia: Additional growth from Verbund site in Nanjing, China
Regions Sales Sales
(location of company) (location of customer)
Change Change
Million EUR 2006 2005 in % 2006 2005 in %
2nd Quarter
Europe 7,499 6,178 21 7,051 5,829 21
Thereof Germany 5,544 4,141 34 2,439 2,053 19
North America (NAFTA) 2,720 2,585 5 2,738 2,588 6
Asia Pacific 1,707 1,451 18 1,871 1,560 20
South America, Africa,
Middle East 396 367 8 662 604 10
12,322 10,581 16 12,322 10,581 16
Regions EBIT before
special items
Change
Million EUR 2006 2005 in %
2nd Quarter
Europe 1,513 1,199 26
Thereof Germany 1,125 772 46
North America (NAFTA) 263 351 (25)
Asia Pacific 125 95 32
South America, Africa, Middle
East 9 12 (25)
1,910 1,657 15
1st Half
Europe 15,285 12,280 24 14,466 11,680 24
Thereof Germany 11,301 8,451 34 5,411 4,254 27
North America (NAFTA) 5,357 4,850 10 5,355 4,831 11
Asia Pacific 3,355 2,750 22 3,648 2,926 25
South America, Africa,
Middle East 840 784 7 1,368 1,227 11
24,837 20,664 20 24,837 20,664 20
1st Half
Europe 2,933 2,333 26
Thereof Germany 2,140 1,514 41
North America (NAFTA) 561 622 (10)
Asia Pacific 240 182 32
South America, Africa, Middle East 41 83 (51)
3,775 3,220 17
Sales by location of company in Europe rose by 21% in the second quarter of
2006. EBIT before special items climbed 26% to EUR 1,513 million. This strong
improvement was due above all to the Oil & Gas segment.
Companies in North America increased sales in dollar and euro terms by 5%.
This sales growth was due to the acquisition of Engelhard Corporation and higher
sales volumes in the Polyurethanes division. EBIT before special items declined
by 25% to EUR 263 million. The planned plant turnarounds and a decline in sales
of fungicides negatively impacted earnings in the Petrochemicals and
Agricultural Products divisions, respectively.
Sales by location of company in Asia Pacific increased by 17% in local
currency terms and by 18% in euro terms. EBIT before special items rose by 32%
to EUR 125 million. All segments contributed to the sales growth, in particular
the Chemicals segment as a result of the Verbund site in Nanjing, China, which
started operations in June 2005.
In South America, Africa, Middle East sales by location of company rose 4%
in local currencies and 8% in euro terms. EBIT before special items was
negatively impacted by higher costs due to the further significant appreciation
of the Brazilian real. Higher earnings from gas production in Argentina were
unable to offset this effect.
Overview of Other Topics
Research and development
In the first half of 2006, we increased spending on research and
development by 15% as planned to EUR 583 million. Of the amount spent in the
first six months of this year, approximately 80% fell under the operational
responsibility of the operating divisions. Corporate research costs accounted
for the remaining 20%.
We have expanded our global network of centers of excellence in the key
areas of catalysis and nanotechnology. Through the acquisition of Engelhard
Corporation we have significantly expanded our research capacity in process and
environmental catalysis and are now a world leader in this area. Together with
the University of Heidelberg, we plan to establish a joint laboratory for
homogeneous catalysis by fall 2006. To strengthen our research network in Asia,
we opened a research laboratory for nanostructured surfaces in Singapore at the
end of April.
Employees
The number of BASF Group employees rose by 5,849 compared with the end of
2005 to 86,794 as of June 30, 2006.
This increase was due in particular to the acquisition of Engelhard
Corporation. Simultaneously, employees left BASF as a result of continued
measures to increase efficiency.
In Europe, the number of employees increased by 0.5% in the first six
months of 2006. The greatest increase of 44.5% was in North America (NAFTA) as a
result of the acquistion of Engelhard Corporation. Employee numbers increased by
11% in Asia Pacific and by 2.5% in South America, Africa, Middle East.
Employees by region
June 30, 2006 Dec. 31, 2005
Europe 56,904 56,614
North America (NAFTA) 14,202 9,826
Asia Pacific 10,733 9,669
South America, Africa,
Middle East 4,955 4,836
86,794 80,945
Compared with the first half of 2005, personnel costs rose by 5.7% to EUR
2.8 billion in the same period of 2006.
Consolidated Statements of Income
2nd Quarter
Million EUR Change
2006 2005 in %
Sales 12,322 10,581 16.5
Cost of sales 8,658 7,083 22.2
Gross profit on sales 3,664 3,498 4.7
Selling expenses 1,143 1,085 5.3
General and administrative expenses 207 193 7.3
Research and development expenses 278 256 8.6
Other operating income 168 56 200.0
Other operating expenses 407 433 (6.0)
Income from operations 1,797 1,587 13.2
(Expenses)/income from financial assets 30 42 (28.6)
Interest result (55) (51) (7.8)
Other financial result 48 (73) .
Financial result 23 (82) .
Income before taxes and minority interests 1,820 1,505 20.9
Income taxes 866 697 24.2
Net income before minority interests 954 808 18.1
Minority interests 34 30 13.3
Net income 920 778 18.3
Earnings per share (EUR)
Number of shares, in million (weighted) 506 527 (4.0)
Dilutive effect - - -
Earnings per share (EUR)
Undiluted 1.82 1.48 23.0
Diluted 1.82 1.48 23.0
2nd Quarter 1st
Half
Million EUR Change
2006 2005 in %
Sales 24,837 20,664 20.2
Cost of sales 17,546 13,928 26.0
Gross profit on sales 7,291 6,736 8.2
Selling expenses 2,246 2,089 7.5
General and administrative expenses 393 357 10.1
Research and development expenses 583 506 15.2
Other operating income 418 182 129.7
Other operating expenses 841 880 (4.4)
Income from operations 3,646 3,086 18.1
(Expenses)/income from financial assets 45 113 (60.2)
Interest result (103) (91) (13.2)
Other financial result 102 (59) .
Financial result 44 (37) .
Income before taxes and minority interests 3,690 3,049 21.0
Income taxes 1,719 1,319 30.3
Net income before minority interests 1,971 1,730 13.9
Minority interests 101 91 11.0
Net income 1,870 1,639 14.1
Earnings per share (EUR)
Number of shares, in million (weighted) 507 532 (4.7)
Dilutive effect - - -
Earnings per share (EUR)
Undiluted 3.69 3.08 19.8
Diluted 3.69 3.08 19.8
Consolidated Balance Sheets
Million EUR June 30, June 30, Change Dec. Change
2006 2005 in % 31, in %
2005
Long-term assets
Intangible assets 6,938 3,773 83.9 3,720 86.5
Property, plant and
equipment 14,782 13,709 7.8 13,987 5.7
Investments accounted for
using the equity method 261 1,168 (77.7) 244 7.0
Other financial assets 1,099 974 12.8 813 35.2
Deferred taxes 899 1,425 (36.9) 1,255 (28.4)
Other long-term assets 557 362 53.9 524 6.3
24,536 21,411 14.6 20,543 19.4
Short-term assets
Inventories 6,122 5,331 14.8 5,430 12.7
Accounts receivable, trade 7,825 6,815 14.8 7,020 11.5
Other receivables and
miscellaneous short-term
assets 5,492 1,869 193.8 1,586 246.3
Liquid funds 496 3,156 (84.3) 1,091 (54.5)
19,935 17,171 16.1 15,127 31.8
Total assets 44,471 38,582 15.3 35,670 24.7
Million EUR June 30, June Change Dec. Change
2006 30, in % 31, in %
2005 2005
Stockholders' equity
Subscribed capital 1,289 1,342 (3.9) 1,317 (2.1)
Capital surplus 3,130 3,072 1.9 3,100 1.0
Retained earnings 12,337 11,244 9.7 11,928 3.4
Other comprehensive income 356 416 (14.4) 696 (48.9)
Minority interests 476 435 9.4 482 (1.2)
17,588 16,509 6.5 17,523 0.4
Long-term liabilities
Provisions for pensions and
similar obligations 1,193 4,837 (75.3) 1,547 (22.9)
Other provisions 2,749 2,463 11.6 2,791 (1.5)
Deferred taxes 1,203 788 52.7 699 72.1
Financial indebtedness 5,920 3,496 69.3 3,682 60.8
Other long-term liabilities 1,323 1,014 30.5 1,043 26.8
12,388 12,598 (1.7) 9,762 26.9
Short-term liabilities
Accounts payable, trade 3,215 2,369 35.7 2,777 15.8
Provisions 2,856 2,759 3.5 2,763 3.4
Tax liabilities 1,178 1,078 9.3 887 32.8
Financial indebtedness 5,037 1,510 233.6 259 .
Other short-term liabilities 2,209 1,759 25.6 1,699 30.0
14,495 9,475 53.0 8,385 72.9
Total stockholders' equity
and liabilities 44,471 38,582 15.3 35,670 24.7
Consolidated Statements of Cash Flows
1st Half
Million EUR 2006 2005
Net income 1,870 1,639
Depreciation and amortization of long-term assets 1,129 1,082
Changes in net working capital (611) (573)
Miscellaneous items (180) (67)
Cash provided by operating activities 2,208 2,081
Payments related to tangible and intangible
assets (983) (875)
Acquisitions/divestitures (6,987) (51)
Financial investments and other items 268 13
Cash using in investing activities (7,702) (913)
Proceeds from capital increases/repayments (663) (858)
Changes in financial liabilities 6,772 1,494
Dividends (1,124) (942)
Cash provided by/used in financing activities 4,985 (306)
Net changes in cash and cash equivalents (509) 862
Cash and cash equivalents as of beginning of year
and other changes 901 2,126
Cash and cash equivalents 392 2,988
Marketable securities 104 168
Liquid funds 496 3,156
Cash provided by operating activities was EUR 2,208 million in the first
half of 2006 compared with EUR 2,081 million in the same period of 2005. The
increase was primarily due to the rise in earnings.
Cash used in investing activities was EUR 7,702 million compared with EUR
913 million in the same period of the previous year. Approximately EUR 7 billion
was spent in the second quarter on the acquisitions described under "Significant
Events and Outlook."
In cash provided by financing activities, share buybacks and dividend
payments led to a cash outflow of EUR 1,805 million. In the first six months of
2006, we bought back 10.8 million shares for EUR 681 million or an average of
EUR 63.04 per share.
At EUR 10.957 million, financial indebtedness was EUR 7,016 million higher
than on December 31, 2005.
On April 11, BASF Aktiengesellschaft issued a euro benchmark bond with a
volume of EUR 1 billion and a maturity of five years. The coupon is 4.0% per
year. In addition, on June 22, BASF Aktiengesellschaft issued a three-year
floating rate note and a 10-year euro fixed-rate benchmark bond, each with a
nominal volume of EUR 500 million. The coupon of the 10-year bond is 4.5 percent
per year. In addition, commercial paper equivalent to approximately EUR 4.4
billion was outstanding as of June 30, 2006.
As of June 30, 2006, nebt debt was EUR 10,461 million and the equity ratio
was 39.5%.
Consolidated Statements of Recognized Income and Expense
Income and expense items
1st Half
Million EUR 2006 2005
Net income before minority interests 1,971 1,730
Fair value changes in available-for-sale securities (2) (22)
Cash-flow hedges 23 (3)
Change in foreign currency translation adjustments (360) 501
Actuarial gains/losses from pensions and other
obligations 368 (874)
Deferred taxes (132) 340
Minority interests (15) 23
Total income and expenses recognized in equity (118) (35)
Total income and expense for the period 1,853 1,695
Thereof BASF 1,767 1,581
Thereof minority interests 86 114
Development Retained Other comprehensive income
of income earnings
and expense
recognized
directly in
equity
Actuarial Foreign Fair value Cash- Total of
gains/losses currency changes in flow other compr-
translation available- hedges ehensive
adjustments for income
sale
securities
Million EUR
As of
January 1,
2006 (894) 475 258 (37) 696
Additions 368 - - 23 23
Releases - (360) (2) - (362)
Deferred
taxes (131) 7 1 (9) (1)
As of June
30, 2006 (657) 122 257 (23) 356
As of
January 1,
2005 (234) (226) 193 (27) (60)
Additions - 501 - - 501
Releases (874) - (22) (3) (25)
Deferred
taxes 340 (10) 8 2 -
As of June
30, 2005 (768) 265 179 (28) 416
Development of income Total
and expense recognized income and
directly in equity expense
recognized
directly in
equity
Million EUR
As of January 1, 2006 (198)
Additions 391
Releases (362)
Deferred taxes (132)
As of June 30, 2006 (301)
As of January 1, 2005 (294)
Additions 501
Releases (899)
Deferred taxes 340
As of June 30, 2005 (352)
Consolidated Statements of Stockholders' Equity
January - June 2006 Number of Subscribed Capital Retained
subscribed capital surplus earnings
shares
outstanding
Million EUR
As of January 1, 2006 514,379,000 1,317 3,100 11,928
Share buy-back and
cancellation of own shares
including own shares intended
to
be cancelled (10,799,000) (28) 30 (683)
Capital injection by minority
interests - - - -
Dividends paid - - - (1,014)
Net income - - - 1,870
Income and expense recognized
directly
in equity - - - 237
Change in scope of
consolidation and
other changes - - - (1)
As of June 30, 2006 503,580,000 1,289 3,130 12,337
January - June 2006 Other com- Minority Stock-
prehensive interests holders'
income equity
Million EUR
As of January 1, 2006 696 482 17,523
Share buy-back and cancellation
of own shares including own
shares intended to
be cancelled - - (681)
Capital injection by minority
interests - 18 18
Dividends paid - (110) (1,124)
Net income - 101 1,971
Income and expense recognized
directly
in equity (340) (15) 118
Change in scope of consolidation
and
other changes - - 1
As of June 30, 2006 356 476 17,588
January - June 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 (16,402,229) (42) 44 (869)
Capital distribution to
minority interests - - - -
Dividends paid - - - (904)
Net income - - - 1,639
Income and expense recognized
directly
in equity - - - (534)
Change in scope of
consolidation and
other changes - - - (11)
As of June 30, 2005 524,038,181 1,342 3,072 11,244
January - June 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 - - (867)
Capital distribution to minority
interests - 10 10
Dividends paid - (38) (942)
Net income - 91 1,730
Income and expense recognized
directly
in equity 476 23 (35)
Change in scope of consolidation
and
other changes - 21 10
As of June 30, 2005 416 435 16,509
Segment Reporting
2nd Quarter Sales EBITDA
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 2,443 2,007 21.7 409 477 (14.3)
Plastics 3,168 2,924 8.3 442 400 10.5
Performance Products 2,197 2,098 4.7 298 366 (18.6)
Agricultural Products &
Nutrition 1,389 1,465 (5.2) 313 363 (13.8)
Thereof Agricultural
Products 924 1,043 (11.4) 217 351 (38.2)
Fine Chemicals 465 422 10.2 96 12 .
Oil & Gas 2,481 1,650 50.4 973 686 41.8
Other (a) 644 437 47.4 (61) (143) 57.3
12,322 10,581 16.5 2,374 2,149 10.5
2nd Quarter Income from Income from
operations (EBIT) operations (EBIT)
before special
items
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 351 415 (15.4) 263 345 (23.8)
Plastics 315 274 15.0 314 280 12.1
Performance Products 209 272 (23.2) 209 282 (25.9)
Agricultural Products &
Nutrition 183 302 (39.4) 227 272 (16.5)
Thereof Agricultural Products 165 295 (44.1) 164 291 (43.6)
Fine Chemicals 18 7 157.1 63 (19) .
Oil & Gas 868 579 49.9 868 579 49.9
Other (a) (16) (185) 91.4 (84) (171) 50.9
1.910 1.657 15.3 1,797 1,587 13.2
2nd Quarter Research and Assets (b)
development
expenses
Chemicals 35 28 25.0 10,903 6,026 80.9
Plastics 32 35 (8.6) 6,867 6,591 4.2
Performance Products 59 47 25.5 5,884 4,938 19.2
Agricultural Products &
Nutrition 99 92 7.6 6,785 6,866 (1.2)
Thereof
Agricultural Products 83 75 10.7 5,025 5,540 (9.3)
Fine Chemicals 16 17 (5.9) 1,760 1,326 32.7
Oil & Gas - - - 4,802 4,210 14.1
Other (a) 53 54 (1.9) 9,230 9,951 (7.2)
278 256 8.6 44,471 38,582 15.3
2nd Quarter Additions to Amortization and
fixed assets (c) depreciation (c)
Chemicals 3,233 369 . 146 132 10.6
Plastics 116 120 (3.3) 128 120 6.7
Performance Products 921 134 . 89 84 6.0
Agricultural Products &
Nutrition 282 33 . 86 91 (5.5)
Thereof
Agricultural Products 37 14 164.3 53 60 (11.7)
Fine Chemicals 245 19 . 33 31 6.5
Oil & Gas 115 156 (26.3) 105 107 (1.9)
Other (a) 290 38 . 23 28 (17.9)
4,957 850 483.2 577 562 2.7
Segment Reporting
1st Half Sales EBITDA
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 4,682 3,829 22.3 861 1,021 (15.7)
Plastics 6,259 5,724 9.3 898 780 15.1
Performance Products 4,344 4,006 8.4 627 670 (6.4)
Agricultural Products &
Nutrition 2,765 2,819 (1.9) 686 745 (7.9)
Thereof Agricultural
Products 1,852 2,002 (7.5) 550 683 (19.5)
Fine Chemicals 913 817 11.8 136 62 119.4
Oil & Gas 5,466 3,490 56.6 1,926 1,276 50.9
Other (a) 1,321 796 66.0 (223) (324) 31.2
24,837 20,664 20.2 4,775 4,168 14.6
1st Half Income from Income from
operations (EBIT) operations (EBIT)
before special
items
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 668 841 (20.6) 580 771 (24.8)
Plastics 647 543 19.2 645 548 17.7
Performance Products 457 497 (8.0) 456 506 (9.9)
Agricultural Products &
Nutrition 407 598 (31.9) 517 576 (10.2)
Thereof Agricultural
Products 378 571 (33.8) 444 575 (22.8)
Fine Chemicals 29 27 7.4 73 1 .
Oil & Gas 1,716 1,063 61.4 1,716 1,063 61.4
Other (a) (120) (322) 62.7 (268) (378) 29.1
3,775 3,220 17.2 3,646 3,086 18.1
1st Half Research and Assets (b)
development
expenses
Chemicals 66 55 20.0 10,903 6,026 80.9
Plastics 73 69 5.8 6,867 6,591 4.2
Performance Products 119 97 22.7 5,884 4,938 19.2
Agricultural Products &
Nutrition 196 178 10.1 6,785 6,866 (1.2)
Thereof
Agricultural Products 163 143 14.0 5,025 5,540 (9.3)
Fine Chemicals 33 35 (5.7) 1,760 1,326 32.7
Oil & Gas - 1 - 4,802 4,210 14.1
Other (a) 129 106 21.7 9,230 9,951 (7.2)
583 506 15.2 44,471 38,582 15.3
1st Half Additions to Amortization and
fixed assets (c) depreciation (c)
Chemicals 3,395 457 . 281 250 12.4
Plastics 334 202 65.3 253 232 9.1
Performance Products 1,002 188 433.0 171 164 4.3
Agricultural Products &
Nutrition 319 64 398.4 169 169 0.0
Thereof
Agricultural Products 52 26 100.0 106 108 (1.9)
Fine Chemicals 267 38 . 63 61 3.3
Oil & Gas 190 250 (24.0) 210 213 (1.4)
Other (a) 317 51 . 45 54 (16.7)
5,557 1,212 358.5 1,129 1,082 4.3
(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, from hedging of forecasted sales as well as from
currency positions that are macro-hedged (EUR 38 million in the second quarter
(2005: EUR (94) million) and EUR 93 million in the first half (2005: EUR (139)
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
half 2006: EUR 7,189 million, first half 2005: EUR 8,180 million).
(c) Intangible and tangible fixed assets
Explanations to the Interim Financial Statements
1. Basis of presentation
The Consolidated Financial Statements of BASF Group for the year ended
December 31, 2005 were prepared according to the International Financial
Reporting Standards (IFRS) valid as of the balance sheet date. The current
interim financial statements were prepared using the same accounting policies.
BASF's Financial Report for fiscal 2005 is available on the Internet at
corporate.basf.com/financial-report.
The previous year's figures have been adjusted as follows in accordance
with the changes made effective December 31, 2005: 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 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.
Compared with the end of 2005, the assumptions used to determine expenses
for pension benefit were changed as follows with effect from June 30, 2006: The
interest rate was increased from 4.25% to 4.75% and the expected pension
increase from 1.50% to 1.75%.
The interim financial statements have not been audited.
2. Scope of consolidation
The Consolidated Financial Statements include BASF Aktiengesellschaft, the
parent company, as well as all material subsidaries on a fully consolidated
basis. Material jointly operated companies are proportionally consolidated. The
number of fully and proportionally consolidated companies has developed as
follows:
2006 2005
As of January 1 180 160
Thereof proportionally
consolidated 15 12
First-time consolidations 91 28
Thereof proportionally
consolidated - 4
Thereof changes in the
consolidation
method - (1)
Deconsolidations 4 8
Thereof proportionally
consolidated - -
As of June 30/December 31 267 180
Thereof proportionally
consolidated 15 15
First-time consolidations since January 1, 2006 comprised:
-- A total of 79 companies associated with the acquisition of Engelhard
Corporation, United States;
-- The biotechnology company CropDesign N.V., Belgium, acquired in May;
-- BASF Services Europe GmbH, Berlin, which performs finance and human
resources services for BASF companies in Europe; and
-- Ten previously unconsolidated companies with headquarters in Germany,
Australia, China, Malta and Switzerland due to their increased
importance.
Four companies have been deconsolidated since the beginning of 2006 due to
their decreased significance or merger with other BASF companies.
Companies accounted for using the equity method were as follows:
June 30, Dec. 31,
2006 2005
Affiliated companies 11 11
Joint ventures 2 2
Other associated companies 3 3
16 16
Companies acquired in association with the purchase of Degussa's
construction chemicals business will be included in BASF's Consolidated
Financial Statements as of July 1, 2006. Companies acquired in association with
the purchase of Johnson Polymer will also be consolidated as of July 1, 2006.
3. Acquisitions/divestitures
Effect of acquisitions and divestitures
on BASF Group assets
June 30, 2006
Million
EUR %
Long-term assets 4,818 46.4
Thereof goodwill 2,089 20.1
Intangible assets 1,214 11.7
Property, plant and equipment 1,260 12.1
Short-term assets 5,559 53.6
Thereof Inventories 655 6.3
Accounts receivable, trade 484 4.7
Other receivables and miscellaneous short-term
assets 4,366 42.1
Assets 10,377 100.0
The total purchase price for Degussa's construction chemicals business and
for Johnson Polymer of EUR 3,048 million is reported under "Other receivables"
as of June 30, 2006.
The provisional purchase price allocation for Engelhard Corporation is
included in the above table under the respective balance sheet items. The
activities acquired from Engelhard Corporation increased sales by EUR 288
million in the second quarter of 2006.
-- Important Dates
-- November 2, 2006
Interim Report Third
Quarter 2006
-- February 22, 2007
Annual Results 2006
-- April 26, 2007
Interim Report First Quarter
2007 and Annual Meeting
-- August 1, 2007
Interim Report Second
Quarter 2007
-- October 30, 2007
-- Interim Report Third Quarter 2007
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.
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 Aktiengesellschaft, Ludwigshafen
Corporate Media Relations
Michael Grabicki, +49 621 60-99938
Fax +49 621 60-92693
or
Investor Relations
Magdalena Moll, +49 621 60-48230
Fax +49 621 60-22500
or
General inquiries, +49 621 60-0
Fax +49 621 60-42525
Internet: corporate.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
August 2, 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