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 1, 2007
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 Posts Very Strong Results in Second
Quarter Of 2007
-- Volume demand remains strong:
Second-quarter sales climb to EUR 14.7 billion (up 19 percent)
-- EBIT before special items reaches EUR 2.0 billion (up
6 percent)
-- Further portfolio measures: Strategic options under review for
parts of styrenics business
-- Outlook for 2007 confirmed: Significantly higher sales, EBIT
before special items to at least match the previous year's
record level
LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--Aug. 1, 2007--BASF - The
Chemical Company -(NYSE:BF) (FWB:BAS) (LSE:BFA) remains in top form:
In the second quarter and first half of 2007, the company again
exceeded the record results posted in the same periods of the previous
year. In the second quarter, BASF increased sales by 19 percent and
income from operations (EBIT) before special items by 6 percent.
Cumulative sales in the first half of 2007 amounted to EUR 29.3
billion, or 18 percent more than in the same period of 2006. In the
first half of this year, EBIT before special items rose by
approximately 10 percent to EUR 4.1 billion.
"Our significant earnings growth demonstrates that BASF has
reached a higher level of sustainable earnings," said Dr. Jurgen
Hambrecht, Chairman of the Board of Executive Directors of BASF
Aktiengesellschaft when presenting BASF's latest results.
BASF has entered the second half of 2007 in stronger form than
ever. The demand for chemical products is high, and there are no signs
of a summer slowdown.
BASF confirms optimistic forecast for full-year 2007
Hambrecht expects the economy to continue to develop positively.
For 2007, he anticipates global economic growth of approximately
3.5 percent, although with large variations from region to region.
BASF's chairman expects an average euro/dollar exchange rate of $1.35
per euro in 2007. Due to the rise in oil prices, the company has
increased its assumption for the average price of Brent crude in 2007
to $65 per barrel.
Risks are seen as lying in the renewed significant rise in the
price of oil, the weak U.S. dollar, and tension in conflict areas
around the world.
"In our outlook for 2007 we confirm our optimistic expectations:
We are confident that we will grow faster than the chemical market. In
2007, we expect significantly higher sales than in 2006. Scheduled
plant turnarounds, in particular in the Petrochemicals division, are
likely to reduce earnings by EUR 150 million in the second half of
2007. In addition, we plan to further increase spending on research
and development. We nevertheless expect full-year EBIT before special
items to at least match the previous year's record level," said
Hambrecht.
BASF's Chief Financial Officer, Dr. Kurt Bock, commented on the
positive development of cash provided by operating activities: "Cash
provided by operating activities developed very positively in the
second quarter. The cumulative value for the first half was in excess
of EUR 2.7 billion compared with EUR 2.2 billion in the first half of
2006."
Sales in the Chemicals segment rise by 50 percent
Second-quarter sales in the Chemicals segment climbed 50 percent
due to higher sales volumes and prices and the contribution from the
acquired catalysts business. EBIT before special items also rose
significantly by more than 70 percent, with a considerable
contribution from the Petrochemicals division.
In the Plastics segment, sales increased by 10 percent in the
second quarter thanks to higher volumes and sales prices. Earnings
rose by 15 percent. This was due to significantly higher earnings in
the Styrenics division.
In the Performance Products segment, strong sales growth of
37 percent and earnings growth of 24 percent was due primarily to the
inclusion of activities acquired in the previous year. The
Construction Chemicals division grew very strongly in Europe.
In the Agricultural Products & Nutrition segment, sales increased
by 3 percent compared with the second quarter of 2006; EBIT before
special items rose by more than 44 percent. Higher sales volumes in
the Agricultural Products division more than compensated for negative
currency effects. The Fine Chemicals division posted a significant
increase in EBIT before special items, in particular due to a
reduction of fixed costs.
Sales and earnings in the Oil & Gas segment declined compared with
the very high level of the second quarter of 2006 due to lower prices
and currency effects.
Double-digit growth in all regions
BASF's sales increased in all regions in the first half of 2007.
The strongest growth in percentage terms was seen in South America,
Africa, Middle East and in Asia.
In Europe, companies posted total sales of EUR 17.4 billion in the
first half. This corresponds to an increase of 14 percent. EBIT before
special items rose by 6 percent to EUR 3.1 billion. This was due to
the acquired businesses and organic growth in the chemical businesses,
in particular in Petrochemicals.
Companies in North America increased sales by 26 percent in dollar
terms and by 18 percent in euro terms in the first half. EBIT before
special items declined by 3 percent to EUR 544 million. This was due
to the shutdown of the TDI plant in Geismar, Louisiana, for a number
of weeks, as well as currency effects and the impact of divestitures
in the Agricultural Products division. The acquired businesses and
strong earnings in the Petrochemicals division were unable to offset
this fully.
Growth remains strong in Asia Pacific, where BASF increased sales
by 34 percent in local currency terms and by 27 percent in euro terms.
EBIT before special items also rose considerably by 58 percent to EUR
380 million. The investments in the Verbund sites in Kuantan,
Malaysia, and Nanjing, China, are paying off. In Africa and the Middle
East, sales rose in particular thanks to the contribution of the
Catalysts and Construction Chemicals divisions.
The region South America, Africa, Middle East also made a positive
contribution. Here, BASF increased sales by 57 percent in local
currency terms and by 51 percent in euro terms. EBIT before special
items rose almost threefold. This was due primarily to the
agricultural products business in South America. In Africa and the
Middle East, sales rose in particular thanks to the contribution of
the Catalysts and Construction Chemicals divisions.
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
high-value products and intelligent system solutions help its
customers to be more successful. BASF develops new technologies and
uses them to meet the challenges of the future and open up additional
market opportunities. It combines economic success with environmental
protection and social responsibility, thus contributing to a better
future. BASF has approximately 95,000 employees and posted sales of
EUR 52.6 billion in 2006. BASF shares are currently 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 August 1, 2007, 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 (from 10:30 a.m. CEST)
corporate.basf.com/pcon (English)
corporate.basf.com/pk (German)
Speech Dr. Jurgen Hambrecht/Dr. Kurt Bock - print version
(from 10:30 a.m. CEST)
corporate.basf.com/pcon (English)
corporate.basf.com/pk (German)
Live Transmission-Telephone Conference for Analysts
(from 3:00 p.m. CEST)
corporate.basf.com/share (English)
corporate.basf.com/aktie (German)
Photos (from 7:30 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)
Forward-looking statements
This release 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. We do not assume any obligation to update the
forward-looking statements contained in this release.
BASF Posts Very Strong First-Half Results in 2007
Interim Financial Statements
January - June 2007
Published on August 1, 2007
BASF Group First-Half Results 2007
Overview
2nd Quarter 1st Half
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Sales 14,656 12,322 18.9 29,288 24,837 17.9
Income from operations
before depreciation and
amortization (EBITDA) 2,663 2,374 12.2 5,336 4,775 11.7
Income from operations
(EBIT) before special
items 2,030 1,910 6.3 4,146 3,775 9.8
Income from operations
(EBIT) 2,007 1,797 11.7 4,017 3,646 10.2
Financial result (65) 23 . (159) 44 .
Income before taxes and
minority interests 1,942 1,820 6.7 3,858 3,690 4.6
Net income 1,024 920 11.3 2,059 1,870 10.1
Earnings per shares (EUR ) 2.08 1.82 14.3 4.16 3.69 12.7
EBIT before special items
in percent of sales 13.9 15.5 - 14.2 15.2 -
Cash provided by operating
activities 2,042 760 168.7 2,743 2,208 24.2
Additions to long-term
assets(1) 597 4,784 (87.5) 1,036 5,384 (80.8)
Excluding acquisitions 597 538 11.0 1,036 1,021 1.5
Amortization and
depreciation(2) 656 577 13.7 1,319 1,129 16.8
Segment assets (end of
period)(3) 38,452 35,241 9.1 - - -
Personnel costs 1,677 1,430 17.3 3,272 2,822 15.9
Number of employees (end of
period) 94,708 86,794 9.1 - - -
(1) Property, plant and equipment and intangible assets; previous
year's values adjusted following purchase price allocation for
Engelhard Corp.
(2) Property, plant and equipment and intangible assets
(3) Property, plant and equipment, intangible assets, inventories
and business-related receivables
EBIT BEFORE
SALES SPECIAL ITEMS
1ST HALF 2007 EUR 29.3bn EUR 4.1bn
CHANGES COMPARED
WITH 1ST HALF 2006 +18% +10%
News from Our Innovation Centers
Self-cleaning effect for textiles: The innovative finishing
material Mincor(R) TX TT provides technical textiles for awnings,
sunshades, sails and tents with a self-cleaning effect based on
nanostructured surfaces.
Nature's lotus effect shows that it is not the smoothest possible
surfaces that are most effective at repelling dirt and water, but
those with structures in the nanometer range. The principle sounds
simple, but its practical implementation on textiles posed a challenge
to BASF's nanotechnologists. The solution they came up with is a
composite material in which nanoparticles are firmly embedded in a
carrier matrix.
Tiny nubs on the surface of the leaves of the lotus plant keep
water droplets and dirt at bay. On textiles finished with Mincor TX
TT, innumerable embedded particles measuring less than 100 nanometers
have the same function. Because of the minimal contact that is
confined to the outmost tips of the particles, the adhesive forces
that would otherwise cause a droplet to spread are very weak. Surface
tension causes the droplet to form a spherical globule, and the water
simply rolls off. Specks of dirt, which, because of the embedded
particles, also have hardly any contact with the treated textile, are
carried along by the water droplets and washed away.
Last year, polyester awning fabrics finished with Mincor TX TT
successfully made the transition from the laboratory to practical
application. Treated fabrics for sunshades and sails are now also
undergoing trials. This type of finishing is an ideal solution for
fabrics that are continuously exposed to the elements. The next shower
or a quick spray from the garden hose simply washes off the dirt.
Polyester fabrics finished with Mincor TX TT are the first
products to meet the stringent standards for self-cleaning textiles
established by the Denkendorf Institute of Textile and Process
Engineering (ITV). They have therefore received the ITV quality seal
"Selfcleaning inspired by nature."
BASF's experts are working on various applications for Mincor TX TT:
-- Following self-cleaning awnings made from polyester, sunshades,
flags and sails finished with Mincor to be launched shortly
-- Cotton with a washable layer of Mincor would be especially suitable
for high-quality textiles and for heavy duty work clothes
-- Use for dirt-repellant wallpaper, curtains and kitchen units also
feasible
The next generation of lighting: Organic light-emitting diodes
open up new design possibilities for lighting systems and consume
considerably less energy than conventional alternatives.
Color emitters for the production of OLEDs are purified in special
glass tubes. The temperature declines continuously from one end of the
tube to the other. The individual components of the organic mixture
condense from the gas phase at different points in the tube. Further
processing steps follow this separation.
Organic light-emitting diodes (OLEDs) are luminescent components
composed of organic semiconducting materials. Once assembled, OLEDs
are as thin as a film of plastic and are thus suitable for making
flexible lighting elements - a real revolution in the lighting
industry. For example, they can be used in the form of transparent
lighting tiles, wall covering and even curtains. Such systems are
expected to consume less than half as much electricity as conventional
energy-saving bulbs and should also last longer.
BASF has extensive know-how in the area of dyes and in
synthesizing and manufacturing complex organic compounds. Our Research
Verbund also offers a broad spectrum of analytical techniques. In the
area of OLEDs, we have strengthened our patent position with regard to
dark blue phosphorescent emitters.
Together with partners from industry, universities and research
institutes, experts from BASF conduct research into new materials for
OLED applications for the lighting segment at the Joint Innovation Lab
(JIL) at our site in Ludwigshafen. BASF Future Business GmbH, a
subsidiary of BASF, manages the development of these organic
semiconductors, which consist of thin layers measuring 5 to 150
nanometers. With our technology partners Osram and Philips, we aim to
present initial lighting prototypes by the end of 2009.
Strong growth expected for OLEDs for (graph omitted: OLED
lighting and signage: market for lighting and
signage - please see
www.basf.com or
-- Goal: OLEDs that consume about 50% less corporate.basf.com for
electricity than conventional low-energy graphs.)
bulbs
-- Cooperation with Osram and Philips to
bring products to market
BASF First-Half Results 2007
Contents
2 BASF Group Business Review 20 Outlook
6 BASF Shares 21 Consolidated Statements of
7 Significant Events and Economic Income
Environment 22 Consolidated Balance Sheets
8 Chemicals 23 Consolidated Statements of Cash
10 Plastics Flows
12 Performance Products 24 Consolidated Statements of
14 Agricultural Products & Recognized Income and Expense
Nutrition 25 Consolidated Statements of
16 Oil & Gas Stockholders' Equity
18 Regions 26 Segment Reporting
19 Overview of Other Topics 28 Notes to the Interim Financial
Statements
Front cover: Overview 2nd Quarter and 1st Half 2007 News from Our
Innovation Centers
Back cover: Important Dates Contacts
Cover photo: Lourival Batista Filho (left) and Cleiton Luiz dos
Santos, production employees,
at the BASF S. A. coatings plant in Sao Bernardo do Campo, Brazil.
EARNINGS PER SHARE CASH PROVIDED BY
OPERATING ACTIVITIES
1ST HALF 2007 EUR 4.16 EUR 2.7bn
CHANGES COMPARED +13% +24%
WITH 1ST HALF 2006
BASF Group Business Review 2nd Quarter 2007
Sales
Compared with the second quarter of 2006, sales rose by 19% to
approximately EUR 14.7 billion. All segments posted higher sales with
the exception of Oil & Gas. In addition to the acquired businesses,
this was due above all to higher sales volumes. Sales prices were
increased, in particular in the Chemicals and Plastics segments.
Disregarding currency effects, primarily due to the depreciation of
the U.S. dollar, sales increased by 22%.
Factors influencing sales
% of sales 2nd Quarter
Volumes 7
Prices 2
Acquisitions/divestitures 13
Currencies (3)
19
The Chemicals segment posted the strongest sales growth, in
particular due to the catalysts and Materials Services business
acquired last year. All divisions achieved higher sales volumes and
prices.
In the Plastics segment too, all divisions contributed to the rise
in sales. Sales prices and volumes increased especially in the
Styrenics division.
The strong sales growth in the Performance Products segment was
due mainly to acquisitions in 2006. The Construction Chemicals
division grew strongly, in particular in Europe.
Both divisions in the Agricultural Products & Nutrition segment
recorded higher sales. The Agricultural Products division benefited
especially from strong demand for fungicides in Europe and for
insecticides in South America. In the Fine Chemicals division, higher
sales from the acquired personal care business more than offset the
decline in the lysine and premix businesses.
In the Oil & Gas segment, sales were lower than in the very strong
second quarter of 2006 due to the lower oil price and the weaker
dollar.
Second-quarter segment sales
Million EUR
Chemicals 2007 3,660 +50%
2006 2,443
Plastics 2007 3,480 +10%
2006 3,168
Performance 2007 3,010 +37%
Products 2006 2,197
Agricultural Products 2007 1,429 +3%
& Nutrition 2006 1,389
Oil & Gas 2007 2,269 (9)%
2006 2,481
BASF GROUP 2ND QUARTER 2007
-- Sales up 19%
-- EBIT before special items up 6%
-- Strongest sales and earnings growth in the Chemicals segment
-- Earnings jump in Agricultural Products & Nutrition thanks to cost
reduction measures
-- Decline in sales and earnings in Oil & Gas due to lower oil prices
and currency effects
Earnings
Compared with the second quarter of 2006, we increased income from
operations (EBIT) before special items by approximately 6% to EUR
2,030 million. All segments posted significantly higher earnings with
the exception of Oil & Gas.
Earnings growth was strongest in the Chemicals segment. All
divisions, in particular Petrochemicals, contributed to this.
Second-quarter earnings also increased in the Plastics segment.
Earnings were especially improved in the Styrenics division.
In the Performance Products segment, earnings rose considerably
due to the contribution from the acquired businesses, above all
Construction Chemicals. The earnings growth was achieved despite a
decline in the Functional Polymers division.
Both divisions in the Agricultural Products & Nutrition segment
posted significantly higher EBIT before special items, among other
things due to cost reductions. In the Agricultural Products division,
earnings also grew thanks to the expansion of the business. In the
Fine Chemicals division, restructuring measures proved successful.
In the Oil & Gas segment, earnings declined compared with the very
strong second quarter of 2006 due to the lower oil price, the weak
dollar and a decline in margins in the gas trading business.
Earnings of "Other" declined by EUR 150 million to EUR
(166) million, in particular due to BASF's stock option program (BOP).
These charges, which were due to the rise in BASF's share price, will
be assigned to the segments in the second half of the year. Higher
research and development expenses in our growth clusters also reduced
the earnings of "Other." Foreign currency results that are not
allocated to the segments declined and were negative in the second
quarter.
Compared with the second quarter of 2006, EBIT climbed 12% to EUR
2,007 million. Special items in income from operations were related to
integration costs for the acquisitions made in 2006.
The financial result declined by EUR 88 million to EUR
(65) million. Interest expenses rose in connection with the
acquisitions made in mid-2006. The previous year's second quarter
contained gains from the sale of securities.
Income before taxes and minority interests rose by 7% to EUR
1,942 million.
The tax rate declined from 48% to 45% as a result of the lower
contribution to the BASF Group's earnings from the Oil & Gas segment.
In the second quarter, foreign taxes for oil production that are
noncompensable with German corporate income tax amounted to EUR
331 million compared with EUR 383 million in the same period of 2006.
Net income rose by 11% to EUR 1,024 million. Earnings per share
were EUR 2.08 compared with EUR 1.82 in the second quarter of 2006.
Second-quarter EBIT before special items
Million EUR
Chemicals 2007 602 +72%
2006 351
Plastics 2007 362 +15%
2006 315
Performance 2007 260 +24%
Products 2006 209
Agricultural Products 2007 264 +44%
& Nutrition 2006 183
Oil & Gas 2007 708 (18)%
2006 868
Second-quarter
special items
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Full Year
Million EUR 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
- Income from
operations (106) (16) (23) (113) (177) (201) (507)
- Financial
result - - - - - - -
(106) (16) (23) (113) (177) (201) (507)
BASF Group Business Review 1st Half 2007
Sales
Compared with the first half of 2006, first-half sales rose by 18%
to EUR 29.3 billion. All segments contributed to the sales growth with
the exception of the Oil & Gas segment. The increase in sales was due
in particular to the acquisitions made toward the middle of 2006, as
well as higher volumes and sales prices in the chemical businesses.
Disregarding currency effects, primarily due to the depreciation of
the U.S. dollar, sales increased by 21%.
Factors influencing sales
% of sales 1st Half
Volumes 4
Prices 3
Acquisitions/divestitures 14
Currencies (3)
18
Sales growth was highest in the Chemicals segment at more than
50%. This was due to the acquisition of the catalysts business in June
2006. Sales also rose in the other divisions, especially in
Petrochemicals.
All divisions in the Plastics segment posted higher sales. In
particular, the Styrenics division achieved significantly higher sales
prices and volumes.
In the Performance Products segment, sales increased in all
divisions. The strong sales growth was due in particular to the
acquired businesses in Performance Chemicals and to the Construction
Chemicals division.
In the Agricultural Products & Nutrition segment, sales in the
Agricultural Products division were at the same level as in the first
half of 2006. In this division, stronger demand offset negative
currency effects and the sales decline due to the divestitures in
2006. Higher volumes despite the discontinuation of the lysine
business together with the contribution from the personal care
business acquired from Engelhard led to sales growth in the Fine
Chemicals division.
Compared with the first half of 2006, sales in the Oil & Gas
segment declined due to lower volumes and a decrease in oil prices.
First-half sales by segment
Million EUR
Chemicals 2007 7,149 +53%
2006 4,682
Plastics 2007 6,828 +9%
2006 6,259
Performance 2007 5,836 +34%
Products 2006 4,344
Agricultural Products 2007 2,804 +1%
& Nutrition 2006 2,765
Oil & Gas 2007 5,239 (4)%
2006 5,466
BASF GROUP 1ST HALF 2007
-- Sales up 18%
-- EBIT before special items up 10%
-- Significant sales and earnings growth in the Chemicals segment
-- Cost reduction measures pay off in Agricultural Products &
Nutrition
-- Decline in sales and earnings in Oil & Gas due to lower oil prices
and currency effects
Earnings
Compared with the first half of 2006, we increased income from
operations (EBIT) before special items by 10% to EUR 4,146 million.
Earnings in the Chemicals segment rose by more than 80%. This was
due in particular to improved margins in the Petrochemicals division
and the new Catalysts operating division.
In the Plastics segment, earnings were higher than in the first
half of 2006. This was due especially to improved earnings in the
Styrenics division.
The rise in earnings in the Performance Products segment was
primarily due to the contribution from the new Construction Chemicals
division; persistent pressure on margins for acrylic monomers in the
Functional Polymers division had a negative impact on earnings.
In the Agricultural Products & Nutrition segment, EBIT before
special items rose significantly in both divisions. This was mainly
the result of successful measures to reduce costs.
Earnings declined in the Oil & Gas segment, but remained at a high
level. The contribution from the exploration and production business
decreased, primarily due to lower prices, while the contribution from
natural gas trading rose thanks to a very strong first quarter.
Earnings of "Other" declined by EUR 214 million to EUR
(334) million, in particular due to charges associated with BASF's
stock option program (BOP). Higher research and development expenses
in the growth clusters also reduced earnings. Foreign currency results
that are not allocated to the segments declined and were negative in
the first half.
Compared with the first half of 2006, EBIT rose 10% to EUR
4,017 million. Special items in income from operations were related to
integration costs for the acquisitions made in 2006 as well as costs
for restructuring measures.
The financial result declined by EUR 203 million to EUR
(159) million. Interest expenses rose in connection with the
acquisitions made in mid-2006. The first and second quarters of 2006
contained gains from the sale of securities.
Income before taxes and minority interests rose by 5% to EUR
3,858 million.
The tax rate declined from 47% to 43% as a result of the
acquisitions and the lower contribution to the BASF Group's earnings
from the Oil & Gas segment. In the first half, foreign taxes for oil
production that are noncompensable with German corporate income tax
amounted to EUR 589 million compared with EUR 655 million in the same
period of 2006.
Net income rose by 10% to EUR 2,059 million. Earnings per share
were EUR 4.16 compared with EUR 3.69 in the first half of 2006.
First-half EBIT before special items
Million EUR
Chemicals 2007 1,230 +84%
2006 668
Plastics 2007 687 +6%
2006 647
Performance 2007 489 +7%
Products 2006 457
Agricultural Products 2007 521 +28%
& Nutrition 2006 407
Oil & Gas 2007 1,553 (9)%
2006 1,716
First-half special items
1st Half 2nd Half Full Year
Million EUR 2007 2006 2007 2006 2007 2006
- Income from operations (129) (129) (378) (507)
- Financial result - - - -
(129) (129) (378) (507)
BASF Shares
Overview BASF shares 2nd 1st Half
Quarter
2007 2007
Performance (with dividends reinvested)
BASF % 19.3 36.2
DAX 30 % 15.8 21.4
DJ EURO STOXX 50 % 9.5 11.3
DJ Chemicals % 11.3 19.1
MSCI World Chemicals % 10.5 17.4
Share prices and trading (XETRA)
Average EUR 89.67 82.77
High EUR 97.24 97.24
Low EUR 84.17 71.95
Close (end of period) EUR 97.24 97.24
Average daily trade Million 3.4 3.6
Market capitalization (end of period) Billion
EUR 48.7 48.7
BASF shares perform very strongly
BASF shares increased in value by 36% in the first half of 2007.
As a result, our shares performed significantly better than the German
and European stock markets, whose key DAX 30 and DJ EURO STOXX 50
indices rose by approximately 21% and 11%, respectively, in the same
period. In the first half, BASF shares also outperformed the global
industry indices DJ Chemicals and MSCI World Chemicals, which
increased by 19% and 17%, respectively.
Inclusion in FTSE4Good sustainability index
In May, BASF was again included in the FTSE4Good Index. The index,
which is published annually by the Financial Times and the London
Stock Exchange, focuses on companies with good records with regard to
commitment to environmental protection, promotion of dialogue with
stakeholders, and compliance with safety, environmental and social
standards.
Further share buybacks
In the second quarter of 2007, we bought back shares for EUR
372 million under the EUR 3 billion buyback program scheduled to run
until the end of 2008. As a result, BASF repurchased 9.2 million
shares for a total of EUR 753 million or an average price of EUR 81.86
per share in the first six months of the year. Together with an
additional 1.4 million shares that were repurchased in 2006, these
shares were cancelled in July 2007. The total number of shares thus
declined to 490,485,000. The goal of the share buyback program is to
increase earnings per share and further optimize our balance sheet
structure.
Awards for investor relations
In May, BASF was presented with the German Investor Relations
Award 2007 in the category of DAX companies. In June, BASF took first
place among EURO STOXX 50 companies in the Capital Investor Relations
Prize 2007.
Up-to-date information on BASF shares is available on the Internet
at www.corporate.basf.com/share.
BASF SHARES (graph omitted:
Change in value of
an investment in
-- BASF shares increase in value by 36% in the BASF shares First
first half of 2007 half 2007)- please
-- Shares bought back for EUR 753 million in see www.basf.com or
the first six months of 2007 corporate.basf.com
for graphs.)
Significant Events and Economic Environment
Significant events
-- On April 26, the Annual Meeting of BASF Aktiengesellschaft
approved the proposal of the Board of Executive Directors and
the Supervisory Board to transform BASF Aktiengesellschaft
into a European Company (Societas Europaea, SE) with the name
BASF SE. In the course of the transformation, the constituent
assembly of the special negotiating body of employees was held
on June 12 and elected Robert Oswald, chairman of the joint
works council of the BASF Group, as its chairman.
-- On July 6, 2007, the Supervisory Board of BASF
Aktiengesellschaft appointed two new members to the Board of
Executive Directors: Dr. Harald Schwager and Dr. Wolfgang
Buchele. The appointments will take effect on January 1, 2008
and were due to the retirement of three current members.
Klaus-Peter Lobbe will retire for health reasons effective
July 31, 2007. Peter Oakley will leave at the beginning of
2008 and Eggert Voscherau will retire following the Annual
Meeting on April 24, 2008. The contracts of Dr. Kurt Bock and
Dr. Andreas Kreimeyer were extended until the Annual Meeting
in 2012. The Board of Executive Directors has decided to
reassign responsibilities within the Board with a series of
changes that will be made stepwise until the Annual Meeting on
April 24, 2008. Effective August 1, 2007, Chief Financial
Officer Dr. Kurt Bock will be permanently appointed Chairman
and CEO of BASF Corporation in the United States in addition
to his current duties.
-- On July 17, BASF Aktiengesellschaft announced that it is
evaluating strategic options for selected parts of its
styrenics activities. BASF has received an initial offer for
these activities and has started discussions with the
interested party. BASF's activities under consideration
include its styrene monomer (SM), polystyrene (PS), styrene
butadiene copolymer (SBC) and acrylonitrile butadiene styrene
(ABS) businesses with plants in Antwerp, Belgium; Altamira,
Mexico; Sao Jose dos Campos, Brazil; Ulsan, South Korea; and
Dahej, India. These activities posted sales of about EUR 3.2
billion in 2006 and have approximately 1,000 employees.
-- BASF Aktiengesellschaft has decided to file for voluntary
delisting of its ADSs (American Depositary Shares) from the
New York Stock Exchange (NYSE) and deregistration and
termination of its reporting obligations under the Securities
and Exchange Act of 1934. The decision by the Board of
Executive Directors was announced on July 30.
Economic environment
The global economy in mid-2007 remains robust despite further
increases in raw material prices, in particular oil prices. Interest
rates have also risen, but are still at a relatively low level. We
expect the economic growth to continue in the second half of the year.
In the first half of 2007, the global gross domestic product grew
slightly slower at approximately 3.5% (2006: 4.0%). Global industrial
production growth also slowed slightly to about 4% compared with 5.3%
in 2006.
This was mainly due to slower growth in the industrialized
countries, in particular in the United States, but was largely offset
by strong production growth in developing and transition countries,
especially in China. Demand for industrial goods remains high in Asia
and Europe.
SIGNIFICANT EVENTS AND ECONOMIC ENVIRONMENT
-- Annual Meeting approves transformation of BASF Aktiengesellschaft
into a European Company with the name BASF SE
-- New team on BASF's Board of Executive Directors as of 2008
-- BASF reviews strategic options for parts of its styrenics
activities
-- Global economic conditions remain robust in mid-2007
Chemicals
Second-quarter segment data
Million EUR Change
2007 2006 in %
Sales 3,660 2,443 50
Thereof Inorganics 301 285 6
Catalysts 1,226 259 373
Petrochemicals 1,524 1,324 15
Intermediates 609 575 6
Sales including intersegmental transfers 4,873 3,499 39
EBITDA 754 409 84
EBIT before special items 602 351 72
EBIT before special items in percent of sales 16.4 14.4 -
EBIT 593 263 125
Assets 10,632 10,903 (2)
Research and development expenses 49 35 40
Additions to property, plant and equipment and
intangible assets 181 3,011 (94)
Sales in the Chemicals segment climbed 50% (volumes 12%, prices
8%, portfolio 34%, currencies -4%). In addition to higher sales
volumes and prices, this was due in particular to the acquired
catalysts business. Earnings increased significantly.
Inorganics
Strong demand, especially in Europe and Asia, resulted in higher
volumes and sales, in particular for inorganic specialties, glues and
impregnating resins, as well as basic inorganic chemicals. Earnings
increased significantly thanks to higher volumes and improved margins.
Catalysts
Sales amounted to over EUR 1.2 billion due to stable demand and
high prices for precious metals. We achieved higher sales of
emission-control catalysts in Asia and Europe. Sales of process
catalysts were negatively impacted by weaker demand for polyolefin
catalysts. The business with oil refinery catalysts and adsorbents
developed positively. Before and after special items, the division
contributed significantly to earnings.
Petrochemicals
Higher prices and volumes led to significantly higher sales.
Cracker products benefited from strong demand and higher margins in
Europe. In almost all regions, demand for solvents and plasticizers
was robust and margins increased. Overall, the division's earnings
rose significantly.
Starting in the third quarter, the crackers in Port Arthur, Texas,
and Antwerp, Belgium, will be shut down temporarily for scheduled
maintenance and to expand capacity in Antwerp.
Intermediates
The division posted higher sales in almost all product lines
thanks to strong growth in demand, in particular in Asia. Earnings
rose significantly as a result of improved margins and restructuring
measures.
CHEMICALS SALES EBIT
before special
items
-- Significantly higher sales and
earnings Q2 2007 Q2 2007
-- Earnings rise considerably in compared with compared with Q2
Petrochemicals Q2 2006 2006
-- Negative impact on sales and
earnings due to plant turnarounds +50% +72%
starting in the third quarter
Chemicals
First-half segment data
Million EUR Change
2007 2006 in %
Sales 7,149 4,682 53
Thereof Inorganics 593 570 4
Catalysts 2,426 280 .
Petrochemicals 2,908 2,698 8
Intermediates 1,222 1,134 8
Sales including intersegmental transfers 9,609 6,788 42
EBITDA 1,540 861 79
EBIT before special items 1,230 668 84
EBIT before special items in percent of sales 17.2 14.3 -
EBIT 1,211 580 109
Assets 10,632 10,903 (2)
Research and development expenses 95 66 44
Additions to property, plant and equipment and
intangible assets 311 3,173 (90)
In the first half of 2007, sales rose by more than 50% (volumes
9%, prices 5%, portfolio 43%, currencies -4%). This was due above all
to the acquired catalysts business in addition to higher sales volumes
and prices. Earnings increased significantly, in particular thanks to
the contribution from the Petrochemicals division.
Inorganics
Volumes and sales rose, in particular for inorganic specialties as
well as glues and impregnating resins. In Asia especially, sales of
electronic chemicals were negatively impacted by the appreciation of
the euro. Overall, earnings increased considerably thanks to higher
margins.
Catalysts
In the first half, sales amounted to more than EUR 2.4 billion as
a result of stable demand and high prices for precious metals. Sales
of emission-control catalysts grew in Europe and Asia. In the process
catalysts business, demand was weaker for polyolefin catalysts, but
stronger for refinery catalysts. Even after special items, the
division contributed to the significant rise in the segment's
earnings.
Petrochemicals
Higher prices and volumes led to an increase in sales. Demand was
strong both for cracker products as well as for solvents and
plasticizers. Earnings rose significantly thanks to higher margins. In
the second half, earnings will be negatively impacted by the scheduled
turnarounds of the crackers in Port Arthur, Texas, and Antwerp,
Belgium.
Intermediates
In the first half of 2007, sales increased worldwide in almost all
product lines compared with the same period of 2006. Strong demand
made it possible to increase prices and improve margins for a number
of products. Earnings rose significantly. Lower fixed costs as a
result of restructuring measures contributed significantly to the
increase in earnings.
CHEMICALS SALES EBIT
before special items
-- Record sales and 1st Half 2007 1st Half 2007
earnings compared with 1st compared with 1st half
-- Higher volumes half 2006 2006
and prices in all
divisions
-- Positive +53% +84%
contribution from
the catalysts
business acquired
in June 2006
Plastics
Second-quarter segment data
Million EUR Change
2007 2006 in %
Sales 3,480 3,168 10
Thereof Styrenics 1,418 1,232 15
Performance Polymers 778 738 5
Polyurethanes 1,284 1,198 7
Sales including intersegmental transfers 3,638 3,294 10
EBITDA 491 442 11
EBIT before special items 362 315 15
EBIT before special items in percent of sales 10.4 9.9 -
EBIT 361 314 15
Assets 6,974 6,867 2
Research and development expenses 35 32 9
Additions to property, plant and equipment and
intangible assets 128 116 10
Second-quarter sales in the Plastics segment were higher than in
the same period of 2006 thanks to higher volumes and prices (volumes
8%, prices 6%, currencies -4%). Earnings increased compared with the
second quarter of the previous year. This was due to significantly
improved earnings in the Styrenics division.
Styrenics
Higher volumes and prices resulted in double-digit sales growth.
In Europe, demand for foams was strong, especially for thermal
insulation applications. Second-quarter sales were also higher
compared with the same period of 2006 in Asia and South America.
Earnings were significantly higher compared with the weak second
quarter of 2006, in particular due to the positive business
development in Europe.
Performance Polymers
Sales increased compared with the same period of 2006. This was
due in particular to higher volumes in Europe and Asia. In addition,
prices were increased in some product lines. Earnings were at the same
level as in the second quarter of 2006 as a result of currency effects
and high raw material costs.
On May 18, BASF inaugurated a world-scale compounding plant for
engineering plastics in Shanghai, China. This plant will enable us to
strengthen our position as a leading supplier of engineering plastics
in the Asian growth markets.
Polyurethanes
Sales rose in the second quarter, in particular due to higher
sales volumes in Europe and Asia. Earnings were at the excellent level
of the previous year's second quarter, although high raw material
costs and reduced plant availability negatively impacted earnings.
On June 13, BASF opened its new site for polyurethane specialties
in Shanghai, China. It comprises a polyurethane system house, a
Technical Research & Development Center and a production plant for
thermoplastic polyurethanes (TPU).
PLASTICS SALES EBIT
before special items
-- Higher sales and earnings Q2 2007 compared Q2 2007 compared
-- Significant improvement in with Q2 2006 with Q2 2006
earnings in the Styrenics
division
-- Startup of sites for +10% +15%
engineering plastics and
polyurethane specialties in
China
Plastics
First-half segment data
Million EUR 2007 2006 Change in %
Sales 6,828 6,259 9
Thereof Styrenics 2,757 2,383 16
Performance Polymers 1,563 1,488 5
Polyurethanes 2,508 2,388 5
Sales including intersegmental transfers 7,127 6,506 10
EBITDA 943 898 5
EBIT before special items 687 647 6
EBIT before special items in percent of sales 10.1 10.3 -
EBIT 686 645 6
Assets 6,974 6,867 2
Research and development expenses 71 73 (3)
Additions to property, plant and equipment and
intangible assets 220 334 (34)
In the first half of 2007, sales in the Plastics segment increased
compared with the same period of the previous year due to higher
volumes and prices (volumes 6%, prices 7%, currencies -4%). Earnings
also increased thanks to significantly higher earnings in the
Styrenics division.
Styrenics
Higher volumes and prices resulted in double-digit sales growth.
The strongest increase was posted in Europe. Sales in Asia and South
America were also higher than in the first half of 2006. The
division's earnings increased significantly compared with the previous
year's weak first half, with a major contribution being provided by
the foams business.
BASF is currently reviewing strategic options for parts of its
styrenics business and has received an initial purchase offer.
Performance Polymers
Sales in the first half of 2007 rose thanks to higher sales
volumes and prices. Earnings increased compared with the same period
of 2006 despite significantly higher raw material costs.
In order to optimize raw material supplies for the engineering
plastic polyamide 6,6, we will obtain adipodinitrile (ADN) from
INVISTA starting at the beginning of 2009. We plan to close the ADN
plant at our site in Seal Sands, United Kingdom, in due course.
Polyurethanes
Sales increased compared with the first half of 2006 despite
unscheduled plant shutdowns, in particular for TDI (toluene
diisocyanate) in North America. The excellent earnings level posted in
the first half of the previous year was not achieved as a result of
these shutdowns and due to significantly higher raw material costs.
The capacity of the MDI (diphenylmethane diisocyanate) plant in
Antwerp, Belgium, was expanded from 450,000
to 560,000 metric tons per year.
BASF is considering the construction of a new MDI plant in
Chongqing municipality, Western China. The startup is planned from
2010 onward, and the plant is expected to have a capacity of 400,000
metric tons per year of crude MDI.
PLASTICS SALES EBIT
before special items
-- Rise in sales and earnings 1ST HALF 2007 1ST HALF 2007
compared with first half of compared with compared with
2006 1st half 2006 1st half 2006
-- Significant improvement in
earnings in the Styrenics
division +9% +6%
-- BASF and INVISTA sign supply
agree-ment for ADN
Performance Products
Second-quarter segment data
Million EUR 2007 2006 Change in %
Sales 3,010 2,197 37
Thereof Construction Chemicals 558 - -
Coatings 656 576 14
Functional Polymers 901 848 6
Performance Chemicals 895 773 16
Sales including intersegmental transfers 3,111 2,295 36
EBITDA 377 298 27
EBIT before special items 260 209 24
EBIT before special items in percent of
sales 8.6 9.5 -
EBIT 251 209 20
Assets 10,001 5,884 70
Research and development expenses 78 59 32
Additions to property, plant and equipment
and intangible assets 118 1,002 (88)
The businesses acquired in June and July 2006 resulted in
significant sales growth (volumes 3%, prices 1%, portfolio 35%,
currencies -2%). Higher volumes and prices were offset to some extent
by negative currency effects. Second-quarter earnings were higher than
in the same period of 2006 as a result of the acquisitions.
Construction Chemicals
Second quarter sales were high at EUR 558 million. We achieved
strong growth rates, in particular in Europe. In North America, there
were signs of an upturn in business following a weaker first quarter
due to unfavorable weather conditions. The division contributed
significantly to earnings, even after integration costs. The
operational integration of the business is largely complete.
Coatings
Volumes and sales rose. The activities of the RELIUS group
resulted in expansion of the industrial coatings and architectural
coatings businesses in Europe. In addition, we posted higher sales of
automotive (OEM) coatings in Europe and China as well as architectural
coatings in South America. In North America, business was weaker due
to a decline in automobile production. Earnings were higher than in
the second quarter of 2006.
Functional Polymers
Sales increased compared with the previous year's second quarter
thanks to the contribution from the kaolin pigment business acquired
as part of Engelhard. High raw material costs and fierce competition,
especially in Asia, put persistent pressure on margins for acrylic
monomers, resulting in a significant decline in earnings.
Performance Chemicals
Double-digit sales growth in the second quarter was due above all
to the acquired businesses with water-based resins and effect
pigments. Earnings increased compared with the same period of 2006
thanks to higher margins, fixed cost reductions and a positive
contribution to earnings from the acquired activities.
PERFORMANCE PRODUCTS SALES EBIT
before special items
-- Significantly higher sales Q2 2007 Q2 2007
and earnings compared compared
-- Construction Chemicals with Q2 2006 with Q2 2006
business develops positively
-- Operational integration of +37% +24%
acquired businesses largely
completed
Performance Products
First-half segment data
Million EUR 2007 2006 Change in %
Sales 5,836 4,344 34
Thereof Construction Chemicals 1,016 - -
Coatings 1,277 1,167 9
Functional Polymers 1,753 1,640 7
Performance Chemicals 1,790 1,537 16
Sales including intersegmental transfers 6,051 4,538 33
EBITDA 732 627 17
EBIT before special items 489 457 7
EBIT before special items in percent of
sales 8.4 10.5 -
EBIT 470 456 3
Assets 10,001 5,884 70
Research and development expenses 157 119 32
Additions to property, plant and equipment
and intangible assets 205 1,083 (81)
Strong sales growth in the first half of 2007 was due above all to
the businesses acquired in mid-2006 (volumes 3%, prices 1%, portfolio
34%, currencies -4%). Earnings also rose as a result of the
acquisitions, but were negatively impacted by persistent pressure on
margins for acrylic monomers.
Construction Chemicals
First-half sales amounted to EUR 1.0 billion thanks to strong
growth rates, in particular in Europe. Brisk construction activity in
the Middle East and in China also had a positive impact on sales. In
North America, there were signs of an upturn in business following a
slowdown due to unfavorable weather conditions in the first quarter.
The division contributed to the segment's higher earnings even after
integration costs.
Coatings
The activities of the RELIUS group, which is primarily active in
Europe, are reported as part of the Coatings division since January 1,
2007. These activities with industrial and architectural coatings were
acquired as part of Degussa's construction chemicals business. In
addition, we posted higher sales of automotive (OEM) coatings, in
particular in China, and architectural coatings in South America.
Sales in North America were lower due to a decline in automobile
production. Overall, earnings were at the same level as in the first
half of 2006.
Functional Polymers
Sales were higher than in the same period of 2006 as a result of
the acquisitions. High raw material costs and competitive pressure due
to high capacities, in Asia especially, had a negative impact on
margins for acrylic monomers. Earnings were significantly lower than
in the first half of 2006.
Performance Chemicals
Sales rose in particular due to the acquired activities with
water-based resins and effect pigments. The business with oilfield
chemicals was also strengthened as a result of the acquisitions.
Earnings were higher than in the same period of 2006 due to the
acquisitions, higher margins and cost reductions.
PERFORMANCE PRODUCTS SALES EBIT
before special items
-- Higher sales and
earnings 1ST HALF 2007 1ST HALF 2007
-- Acquisitions made in compared with 1st half compared with 1st half
2006 strongly influence 2006 2006
business development in
first half of 2007 +34% +7%
-- Persistent pressure
on margins for acrylic
monomers
Agricultural Products & Nutrition
Second-quarter overview Agricultural
Products
Million EUR 2007 2006 Change in %
Sales 957 924 4
Sales including intersegmental transfers 960 929 3
EBITDA 284 217 31
EBIT before special items 235 165 42
EBIT before special items in percent of
sales 24.6 17.9 -
EBIT 235 164 43
Assets 4,725 5,025 (6)
Research and development expenses 80 83 (4)
Additions to property, plant and equipment
and intangible assets 18 37 (51)
Sales in the Agricultural Products division were higher than in
the second quarter of 2006. Negative currency effects were more than
offset by stronger demand, in particular for fungicides for specialty
crops in Europe and for insecticides for sugar cane in Brazil (volumes
4%, prices 2%, currencies -2%). Sales in North America declined due to
unfavorable weather conditions.
Despite negative currency effects, second-quarter earnings
improved considerably due to higher demand, an improved product mix
and cost reductions.
Second-quarter overview Fine Chemicals
Million EUR 2007 2006 Change in %
Sales 472 465 2
Sales including intersegmental transfers 473 469 1
EBITDA 59 96 (39)
EBIT before special items 29 18 61
EBIT before special items in percent of
sales 6.1 3.9 -
EBIT 30 63 (52)
Assets 1,523 1,760 (13)
Research and development expenses 17 16 6
Additions to property, plant and
equipment and intangible assets 17 318 (95)
Sales in the Fine Chemicals division increased slightly. Higher
sales resulting from the inclusion of Engelhard's personal care
business more than compensated for weaker business with premixes, the
discontinuation of the lysine business as well as negative currency
effects (volumes 2%, prices -1%, portfolio 4%, currencies -3%).
EBIT before special items was significantly higher compared with
the second quarter of 2006. This was primarily due to lower costs
resulting from restructuring measures. The second quarter of 2006
contained special income of EUR 66 million resulting from the
reduction of a fine imposed by the E.U. EBIT was therefore
significantly lower.
AGRICULTURAL SALES EBIT
PRODUCTS before special items
& NUTRITION Q2 2007 Q2 2007
compared with Q2 2006 compared with Q2 2006
-- Agricultural Agricultural Agricultural Products
Products: Products +42%
Stronger demand +4%
for fungicides Fine Chemicals
for specialty Fine Chemicals +61%
crops and +2%
insecticides for
sugar cane
-- Fine
Chemicals:
Efficiency and
restructuring
program produces
tangible results
Agricultural Products & Nutrition
First-half overview Agricultural
Products
Million EUR 2007 2006 Change in %
Sales 1,854 1,852 0
Sales including intersegmental transfers 1,860 1,863 0
EBITDA 552 550 0
EBIT before special items 460 378 22
EBIT before special items in percent of
sales 24.8 20.4 -
EBIT 455 444 2
Assets 4,725 5,025 (6)
Research and development expenses 155 163 (5)
Additions to property, plant and
equipment and intangible assets 35 52 (33)
First-half sales in the Agricultural Products division were at the
same level as in 2006. Negative currency effects and divestitures in
2006 were offset by a rise in demand (volumes 5%, portfolio -2%,
currencies -3%). The stronger demand resulted from better seasonal
conditions as well as greater use of crop protection products as a
result of increased cultivation of crops for energy production.
Earnings improved due to cost reductions. EBIT increased only slightly
because the previous year contained special income from the
divestiture of parts of the generics business in North America.
First-half overview Fine Chemicals
Million EUR 2007 2006 Change in %
Sales 950 913 4
Sales including intersegmental transfers 958 922 4
EBITDA 114 136 (16)
EBIT before special items 61 29 110
EBIT before special items in percent of
sales 6.4 3.2 -
EBIT 58 73 (21)
Assets 1,523 1,760 (13)
Research and development expenses 33 33 0
Additions to property, plant and equipment
and intangible assets 28 340 (92)
Sales rose in the Fine Chemicals division as a result of higher
volumes, for example for aroma chemicals and UV filters, as well as
the contribution of the acquired personal care business (volumes 3%,
prices -2%, portfolio 6%, currencies -3%).
EBIT before special items more than doubled, in particular due to
a reduction in fixed costs. EBIT declined compared with the first half
of 2006, which contained special income resulting from the reduction
of a fine imposed by the E.U. Lysine production in Gunsan, South
Korea, was shut down in May as announced in the first quarter.
AGRICULTURAL SALES EBIT before special items
PRODUCTS 1ST HALF 2007 1ST HALF 2007
& NUTRITION compared with 1st half 2006 compared with 1st half 2006
-- Agricultural Products Agricultural Products
Agricultural 0% +22%
Products:
Improved Fine Chemicals Fine Chemicals
earnings +4% +110%
thanks to
cost
reductions
-- Fine
Chemicals:
EBIT before
special
items more
than doubles
Oil & Gas
Second-quarter segment data
Million EUR 2007 2006 Change in %
Sales 2,269 2,481 (9)
Thereof Exploration and production 1,144 1,219 (6)
Natural gas trading 1,125 1,262 (11)
Sales including intersegmental transfers 2,547 2,770 (8)
EBITDA 836 973 (14)
Thereof Exploration and production 746 835 (11)
Natural gas trading 90 138 (35)
EBIT before special items 708 868 (18)
Thereof Exploration and production 653 766 (15)
Natural gas trading 55 102 (46)
EBIT before special items in percent of sales 31.2 35.0 -
Thereof Exploration and production 57.1 62.8 -
Natural gas trading 4.9 8.1 -
EBIT 708 868 (18)
Thereof Exploration and production 653 766 (15)
Natural gas trading 55 102 (46)
Assets 4,597 4,802 (4)
Thereof Exploration and production 2,228 2,232 0
Natural gas trading 2,369 2,570 (8)
Exploration expenses 57 31 84
Additions to property, plant and equipment
and intangible assets 100 115 (13)
Segment sales declined due to a significantly lower oil price in
euro terms and significantly lower sales prices in the natural gas
trading business (volumes 3%, prices/currencies -12%). Due to the
price effect, earnings were considerably lower than in the second
quarter of 2006.
Volumes in the exploration and production business were stable
despite the withdrawal from oil production in Dubai. Compared with the
second quarter of 2006, the average price of Brent crude declined by
approximately $1/barrel to approximately $69/barrel. In euro terms,
this corresponds to a decrease of more than EUR 4/barrel to EUR
51/barrel. Sales and earnings were therefore lower than in the second
quarter of 2006.
Sales in the natural gas trading business were negatively
impacted, in particular by a decline in oil price-indexed sales
prices. At the same time, purchase prices for natural gas rose
compared with the same period of the previous year. Margins and
earnings were therefore significantly below the very high level of the
second quarter of 2006.
OIL & GAS SALES EBIT
before special items
-- Significant decline Q2 2007 Q2 2007
in prices in compared with Q2 2006 compared with Q2 2006
exploration
and production and
natural gas -9% -18%
trading
-- Segment sales
and earnings below
level
of very strong
second quarter
2006
Oil & Gas
First-half segment data
Million EUR 2007 2006 Change in %
Sales 5,239 5,466 (4)
Thereof Exploration and production 2,116 2,300 (8)
Natural gas trading 3,123 3,166 (1)
Sales including intersegmental
transfers 5,803 6,030 (4)
EBITDA 1,805 1,926 (6)
Thereof Exploration and production 1,369 1,542 (11)
Natural gas trading 436 384 14
EBIT before special items 1,553 1,716 (9)
Thereof Exploration and production 1,186 1,404 (16)
Natural gas trading 367 312 18
EBIT before special items in percent
of sales 29.6 31.4 -
Thereof Exploration and production 56.0 61.0 -
Natural gas trading 11.8 9.9 -
EBIT 1,553 1,716 (9)
Thereof Exploration and production 1,186 1,404 (16)
Natural gas trading 367 312 18
Assets 4,597 4,802 (4)
Thereof Exploration and production 2,228 2,232 0
Natural gas trading 2,369 2,570 (8)
Exploration expenses 100 60 67
Additions to property, plant and
equipment and intangible assets 179 190 (6)
Segment sales were lower than in the very strong first half of
2006 due to a decline in volumes and prices (volumes -2%,
prices/currencies -2%). Earnings remained high but declined compared
with the first half of the previous year.
Volumes declined in the exploration and production business. This
was due in particular to lower volumes of natural gas produced in
Germany as well as the withdrawal from oil production in Dubai.
Compared with the first half of 2006, the average price of Brent crude
declined by more than $2/barrel to approximately $63/barrel. In euro
terms, this corresponds to a decrease of about EUR 6/barrel to
approximately EUR 48/barrel. As a result, the contribution to earnings
from the exploration and production business decreased, primarily due
to price and currency effects.
Volumes and sales in the natural gas trading business were lower
than in the first half of 2006 due to the milder temperatures in
Europe. Average sales prices and margins improved slightly compared
with the same period of the previous year thanks to the extremely
strong first quarter of 2007. The contribution of the natural gas
trading business to earnings therefore increased overall in the first
half of 2007.
OIL & GAS SALES EBIT
before special items
-- Sales and earnings 1ST HALF 2007 1ST HALF 2007
down from very strong compared with first compared with first
first half 2006 half 2006 half 2006
-- Higher contribution to
earnings from natural
gas trading due to a - 4% -9%
strong first quarter
Regions
Overview Sales by Sales by EBIT before
Regions location of company location of customer special items
Million Change Change Change
EUR 2007 2006 in % 2007 2006 in % 2007 2006 in %
2nd
Quarter
Europe 8,568 7,499 14 8,009 7,051 14 1,520 1,513 0
Thereof
Germany 5,796 5,544 5 2,661 2,439 9 1,092 1,125 (3)
North
America
(NAFTA) 3,302 2,720 21 3,276 2,738 20 279 263 6
Asia
Pacific 2,144 1,707 26 2,411 1,871 29 173 125 38
South
America,
Africa,
Middle
East 642 396 62 960 662 45 58 9 .
14,656 12,322 19 14,656 12,322 19 2,030 1,910 6
1st Half
Europe 17,428 15,285 14 16,450 14,466 14 3,111 2,933 6
Thereof
Germany12,340 11,301 9 6,052 5,411 12 2,291 2,140 7
North
America
(NAFTA) 6,338 5,357 18 6,325 5,355 18 544 561 (3)
Asia
Pacific 4,255 3,355 27 4,639 3,648 27 380 240 58
South
America,
Africa,
Middle
East 1,267 840 51 1,874 1,368 37 111 41 171
29,288 24,837 18 29,288 24,837 18 4,146 3,775 10
Sales by location of company in Europe increased by 14% in the
first half of 2007. EBIT before special items rose by EUR 178 million
to EUR 3,111 million. The improvement was primarily due to the
acquired businesses and organic growth in the chemical businesses, in
particular in Petrochemicals.
Companies in North America increased sales by 26% in dollar terms
and by 18% in euro terms. EBIT before special items declined by EUR 17
million in the first half of 2007 to EUR 544 million. Earnings were
negatively affected by the shutdown of the TDI plant in Geismar,
Louisiana, for several weeks in the first quarter, as well as by
currency effects and divestitures in the Agricultural Products
division. The acquired businesses and strong earnings in the
Petrochemicals division were unable to offset this fully.
In Asia Pacific, we increased sales by 34% in local currency terms
and by 27% in euro terms. EBIT before special items climbed by EUR
140 million to EUR 380 million. The Petrochemicals division made a
significant contribution to the rise in earnings thanks to high
capacity utilization rates of the plants at our Verbund sites in
Nanjing, China, and Kuantan, Malaysia.
First-half sales in South America, Africa, Middle East rose by 57%
in local currency terms and by 51% in euro terms. EBIT before special
items increased by EUR 70 million to EUR 111 million. In particular,
the Agricultural Products division's activities in South America
contributed to the increase in sales and earnings in this region.
Sales in Brazil rose above all due to stronger demand for insecticides
for sugar cane, as well as a gradual recovery in the export-oriented
market for soybeans. In Africa and the Middle East, sales rose in
particular thanks to the contribution of the Catalysts and
Construction Chemicals divisions.
FROM THE REGIONS
-- Europe: Acquisitions and organic growth contribute to strong
earnings
-- North America: Earnings negatively impacted by shutdown of the TDI
plant for several weeks and divestitures in Agricultural Products
-- Asia: Higher earnings, especially in the Chemicals segment
-- South America: Strong earnings, in particular due to contribution
of the Agricultural Products division
Overview of Other Topics
Research and development
BASF and IBM have entered into an agreement to jointly develop
electronic chemicals required to produce the most advanced
high-performance chips based on 32-nanometer technology. The
technology as well as its related chemicals and materials are expected
to be commercialized by the semiconductor industry as early as 2010.
A further cooperation in the area of semiconductors has been
started by BASF Future Business GmbH with the U.S. company Polyera
Corporation. The goal is to develop and commercialize new organic
semiconductors and dielectrics for use in printed circuits. Typical
applications of printed electronics will be RFID (radio frequency
identification) tags, memory units and flexible displays (e-paper).
BASF and Bosch are cooperating in the area of organic
photovoltaics. Together with Merck, Schott and the German Ministry of
Education and Research, the two companies have launched an initiative
to promote this technology by investing in research. The aim is to
make the production of solar cells more cost effective and to increase
the number of applications. Last year, photovoltaic modules had a
global market volume of EUR 8 billion. The segment is expected to grow
by more than 20% annually until 2020.
BASF is opening up new applications for nanotechnology, for
example with our innovative nanobinder COL.9(R). This product forms
the basis for a facade coating from Akzo Nobel named
Herbol-Symbiotec(TM). The symbiosis between organic and inorganic
components makes the coating extremely dirt repellent.
Our finishing product Mincor(R) TX TT provides technical textiles
with a self-cleaning effect based on nanostructured surfaces. In June,
it received an innovation prize in the category "new applications" at
the Techtextil International Trade Fair for Engineering Textiles and
Nonwovens in Frankfurt.
You can find more detailed information about Mincor TX TT(R)
inside the front cover of this report.
In the first half of 2007, we spent EUR 682 million on research
and development compared with EUR 583 million in the same period of
2006.
Employees
Compared with the end of 2006, the number of BASF Group employees
declined by 539 to 94,708 as of June 30, 2007. As of June 30, 2007,
the regional distribution of BASF's employees was as follows: 64% in
Europe; 16% in North America; 14% in Asia Pacific; and 6% in South
America, Africa, Middle East.
Compared with the same period of 2006, personnel costs in the
first half of 2007 rose by 15.9% to EUR 3,272 million. This was
primarily due to the effect of last year's acquisitions.
RESEARCH AND DEVELOPMENT EMPLOYEES
Employees by June 30, Dec. 31, Change
-- Cooperation with IBM in region 2007 2006 in %
the area of semiconductor Europe 60,816 61,444 (1)
technology North America
-- Cooperation with Bosch (NAFTA) 15,381 15,513 (1)
in the area of organic Asia Pacific 12,898 12,788 1
photovoltaics South America,
-- Research and development Africa, Middle
spending increased by East 5,613 5,502 2
approximately EUR 100 94,708 95,247 (1)
million in the first half
of 2007
Outlook
Opportunities
Four strategic guidelines govern the way in which we act. Rigorous
value-based management, a strong customer focus, the best team in
industry and sustainable development form the foundations of our
corporate strategy and offer major opportunities for BASF.
Innovations are an important basis for BASF's profitable growth.
We have therefore increased the budget for our five growth clusters -
energy management, nanotechnology, white (industrial) biotechnology,
plant biotechnology and raw material change - to more than EUR
900 million for the period 2006 through 2008. By 2015, we expect
annual sales of between EUR 2 billion and EUR 4 billion from
innovations based on research and development in these growth
clusters.
Investments in existing high-growth areas also open up
opportunities for BASF. For example, we are considering the
construction of a new plant for MDI (diphenylmethane diisocyanate) in
Chongqing, China; startup is planned from 2010 onward. In addition, we
are expanding existing Verbund sites. In Ludwigshafen we are expanding
production capacity for our innovative insulation material Neopor(R).
We are also planning to expand the successful Verbund site in Nanjing,
China, which we operate with our Chinese joint venture partner Sinopec
Corp.
By expanding global partnerships, BASF is in a position to respond
flexibly in world markets. In Gazprom we have a reliable partner in
the transport, storage and marketing of natural gas in Europe. In the
area of plant biotechnology, the U.S. company Monsanto is our partner
in the research, development and commercialization of stress tolerant
and higher yielding crops.
We will continue to optimize our portfolio through acquisitions,
divestitures, restructuring measures and cost reduction programs. In
our Fine Chemicals division, for example, we are implementing a
program to increase efficiency that has already helped to
significantly improve earnings.
Risks
The statements on risks made in the Financial Report 2006 remain
valid.
Based on currently available information, there are no significant
individual risks at the present time or in the foreseeable future.
Neither does the total sum of individual risks pose a threat to the
continued existence of the BASF Group.
Detailed information is available on pages 72 to 75 of the
Financial Report 2006, "Risk Management System and Risks of Future
Development."
Forecast
Our forecast for 2007 is now based on the following conditions:
- Global economic growth of 3.5%
- An average oil price (Brent) of $65/barrel
- An average dollar/euro exchange rate of $1.35/EUR
We want to continue to grow faster than the market. In 2007, we
expect significantly higher sales than in 2006. Scheduled plant
turnarounds, in particular in the Petrochemicals division, are likely
to reduce earnings by EUR 150 million in the second half of 2007. In
addition, we plan to further increase spending on research and
development. We nevertheless expect full-year EBIT before special
items to at least match the previous year's record level.
OPPORTUNITIES FORECAST
-- Investments in innovative -- Significantly higher sales
technologies compared with 2006
-- Expansion of Verbund sites -- EBIT before special items to
-- Portfolio optimization at least match the previous
RISKS year's record level
-- No significant individual risks
Interim Financial Statements
Consolidated Statements of Income
2nd Quarter 1st Half
Million EUR Change Change
2007 2006 in % 2007 2006 in %
Sales 14,656 12,322 18.9 29,288 24,837 17.9
Cost of sales 10,519 8,658 21.5 20,874 17,546 19.0
Gross profit on sales 4,137 3,664 12.9 8,414 7,291 15.4
Selling expenses 1,385 1,143 21.2 2,710 2,246 20.7
General and administrative
expenses 276 207 33.3 522 393 32.8
Research and development
expenses 337 278 21.2 682 583 17.0
Other operating income 183 168 8.9 339 418 (18.9)
Other operating expenses 315 407 (22.6) 822 841 (2.3)
Income from operations 2,007 1,797 11.7 4,017 3,646 10.2
Income from participations 53 30 76.7 71 45 57.8
Interest result (125) (55) . (237) (103) .
Other financial result 7 48 (85.4) 7 102 (93.1)
Financial result (65) 23 . (159) 44 .
Income before taxes and
minority interests 1,942 1,820 6.7 3,858 3,690 4.6
Income taxes 871 866 0.6 1,646 1,719 (4.2)
Income before minority
interests 1,071 954 12.3 2,212 1,971 12.2
Minority interests 47 34 38.2 153 101 51.5
Net income 1,024 920 11.3 2,059 1,870 10.1
Earnings per share (EUR )
Undiluted 2.08 1.82 14.3 4.16 3.69 12.7
Diluted 2.08 1.82 14.3 4.16 3.69 12.7
Consolidated Balance Sheets
Assets
Million EUR June June Change Dec. Change
30, 30, in % 31, in %
2007 2006 2006
Long-term assets
Intangible assets 8,597 6,938 23.9 8,922 (3.6)
Property, plant and equipment 14,799 14,782 0.1 14,902 (0.7)
Investments accounted for using the
equity method 663 261 154.0 651 1.8
Other financial assets 1,358 1,099 23.6 1,190 14.1
Deferred taxes 563 899 (37.4) 622 (9.5)
Other long-term assets 1,615 557 189.9 612 163.9
27,595 24,536 12.5 26,899 2.6
Short-term assets
Inventories 6,530 6,122 6.7 6,672 (2.1)
Accounts receivable, trade 9,089 7,825 16.2 8,223 10.5
Other receivables and miscellaneous
short-term assets 2,785 5,492 (49.3) 2,607 6.8
Marketable securities 80 104 (23.1) 56 42.9
Cash and cash equivalents 734 392 87.2 834 (12.0)
19,218 19,935 (3.6) 18,392 4.5
Total assets 46,813 44,471 5.3 45,291 3.4
Stockholders' equity and
liabilities
Million EUR June June Change Dec. Change
30, 30, in % 31, in %
2007 2006 2006
Stockholders' equity
Subscribed capital 1,256 1,289 (2.6) 1,279 (1.8)
Capital surplus 3,168 3,130 1.2 3,141 0.9
Retained earnings 13,798 12,337 11.8 13,302 3.7
Other comprehensive income 465 356 30.6 325 43.1
Minority interests 593 476 24.6 531 11.7
19,280 17,588 9.6 18,578 3.8
Long-term liabilities
Provisions for pensions and similar
obligations 1,252 1,193 4.9 1,452 (13.8)
Other provisions 3,151 2,749 14.6 3,080 2.3
Deferred taxes 1,825 1,203 51.7 1,441 26.6
Financial indebtedness 6,718 5,920 13.5 5,788 16.1
Other long-term liabilities 984 1,323 (25.6) 972 1.2
13,930 12,388 12.4 12,733 9.4
Short-term liabilities
Accounts payable, trade 4,258 3,215 32.4 4,755 (10.5)
Provisions 2,562 2,856 (10.3) 2,848 (10.0)
Tax liabilities 1,218 1,178 3.4 858 42.0
Financial indebtedness 3,282 5,037 (34.8) 3,695 (11.2)
Other short-term liabilities 2,283 2,209 3.3 1,824 25.2
13,603 14,495 (6.2) 13,980 (2.7)
Total stockholders' equity and
liabilities 46,813 44,471 5.3 45,291 3.4
Consolidated Statements of Cash Flows
1st Half
Million EUR 2007 2006
Net income 2,059 1,870
Depreciation and amortization of long-term assets 1,319 1,129
Changes in net working capital (663) (611)
Miscellaneous items 28 (180)
Cash provided by operating activities 2,743 2,208
Payments related to intangible assets and property,
plant and equipment (1,056) (983)
Acquisitions/divestitures (17) (6,987)
Financial investments and other items (15) 268
Cash using in investing activities (1,088) (7,702)
Proceeds from capital increases/repayments (753) (663)
Changes in financial liabilities 556 6,772
Dividends (1,568) (1,124)
Cash provided by/used in financing activities (1,765) 4,985
Net changes in cash and cash equivalents (110) (509)
Cash and cash equivalents as of beginning of year and
other changes 844 901
Cash and cash equivalents as shown on the balance
sheet 734 392
Cash provided by operating activities
At EUR 2,743 million, cash provided by operating activities in the
first half of 2007 was EUR 535 million higher than in the same period
of 2006. The improvement in earnings and the higher depreciation and
amortization of long-term assets contained therein contributed to the
24% increase. The considerable expansion of the business led to higher
net working capital, in particular for trade accounts receivable. In
the first half of 2006, miscellaneous items primarily reflects the
reclassification of gains on the sale of securities as cash used in
investing activities.
Cash used in investing activities
In the first six months of 2007, cash used in investing activities
amounted to EUR 1,088 million. Thereof, EUR 1,080 million was spent on
property, plant and equipment. The first half of 2006 contained
expenditures of approximately EUR 7 billion for acquisitions.
Cash provided by/used in financing activities
Financing activities led to a cash outflow of EUR 1,765 million.
Dividends amounting to EUR 1,484 million were paid to shareholders of
BASF Aktiengesellschaft and EUR 84 million to minority shareholders in
Group companies.
We spent EUR 753 million on share buybacks in the first six months
of 2007, thereof EUR 372 million in the second quarter.
Cash and cash equivalents amounted to EUR 734 million as of June
30, 2007 compared with EUR 834 million at the end of 2006. In the same
period, financial indebtedness rose by EUR 517 million to EUR 10.0
billion. Compared with year-end 2006, net debt increased by EUR
617 million to EUR 9,266 million. Compared with December 31, 2006, the
equity ratio was unchanged at 41%. With an AA-/A-1+/outlook stable
rating from Standard and Poor's and an Aa3/P-1/outlook negative rating
from Moody's, BASF has significantly stronger ratings than its
competitors in the chemical industry.
Consolidated Statements of Recognized Income and Expense
Income and expense items
1st Half
Million EUR 2007 2006
Net income before minority interests 2,212 1,971
Fair value changes in available-for-sale securities 144 (2)
Cash-flow hedges 47 23
Change in foreign currency translation adjustments (32) (360)
Actuarial gains/losses from pensions and other obligations 1,049 368
Deferred taxes (390) (132)
Minority interests (7) (15)
Total income and expense recognized directly in equity 811 (118)
Total income and expense for the period 3,023 1,853
Thereof BASF 2,877 1,767
Thereof minority interests 146 86
Development of income and expense recognized directly in equity
Total
income
and expense
recognized
Retained directly
earnings Other comprehensive income in equity
Fair
value
changes
in Total of
Foreign available other
Actuarial currency -for- Cash- comprehen-
gains/ translation sale flow sive
losses adjustments securities hedges income
Million
EUR
As of
January
1, 2007 (782) 26 341 (42) 325 (457)
Additions 1,049 - 144 47 191 1,240
Releases - (32) - - (32) (32)
Deferred
taxes (371) 1 (3) (17) (19) (390)
As of
June 30,
2007 (104) 5 482 (12) 465 361
As of
January
1, 2006 (894) 475 258 (37) 696 (198)
Additions 368 - - 23 23 391
Releases - (360) (2) - (362) (362)
Deferred
taxes (131) 7 1 (9) (1) (132)
As of
June 30,
2006 (657) 122 257 (23) 356 (301)
Consolidated Statements of Stockholders' Equity
1st Half 2007 Number of
subscribed
shares Subscribed Capital Retained
outstanding capital surplus earnings
Million EUR
As of January
1, 2007 499,680,000 1,279 3,141 13,302
Share buy-back
and
cancellation
of own
shares
including own
shares
intended to
be cancelled (9,195,000) (23) 27 (753)
Capital
injection by
minority
interests - - - -
Dividends paid - - - (1,484)
Net income - - - 2,059
Income and
expense
recognized
directly
in equity - - - 678
Change in
scope of
consolidation
and
other changes - - - (4)
As of June 30,
2007 490,485,000 1,256 3,168 13,798
1st Half 2007 Other Stock-
comprehensive Minority holders'
income interests equity
Million EUR
As of January
1, 2007 325 531 18,578
Share buy-back
and
cancellation
of own
shares
including own
shares
intended to
be cancelled - - (749)
Capital
injection by
minority
interests - - -
Dividends paid - (84) (1,568)
Net income - 153 2,212
Income and
expense
recognized
directly
in equity 140 (7) 811
Change in
scope of
consolidation
and
other changes - - (4)
As of June 30,
2007 465 593 19,280
1st Half 2006 Number of
subscribed
shares Subscribed Capital Retained
outstanding capital surplus earnings
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
1st Half 2006 Other Stock-
comprehensive Minority holders'
income interests 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
Segment Reporting
2nd Quarter
Sales EBITDA
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 3,660 2,443 49.8 754 409 (84.4)
Plastics 3,480 3,168 9.8 491 442 11.1
Performance Products 3,010 2,197 37.0 377 298 26.5
Agricultural
Products
& Nutrition 1,429 1,389 2.9 343 313 9.6
Thereof
Agricultural
Products 957 924 3.6 284 217 30.9
Fine Chemicals 472 465 1.5 59 96 (38.5)
Oil & Gas 2,269 2,481 (8.5) 836 973 (14.1)
Other(1) 808 644 25.5 (138) (61) .
14,656 12,322 18.9 2,663 2,374 12.2
2nd Quarter
Income from
operations before Income from
special items operations (EBIT)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 602 351 71.5 593 263 125.5
Plastics 362 315 14.9 361 314 15.0
Performance Products 260 209 24.4 251 209 20.1
Agricultural
Products
& Nutrition 264 183 44.3 265 227 16.7
Thereof
Agricultural
Products 235 165 42.4 235 164 43.3
Fine Chemicals 29 18 61.1 30 63 (52.4)
Oil & Gas 708 868 (18.4) 708 868 (18.4)
Other(1) (166) (16) . (171) (84) .
2,030 1,910 6.3 2,007 1,797 11.7
2nd Quarter
Research and
development
expenses Assets(2)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 49 35 40.0 10,632 10,903 (2.5)
Plastics 35 32 9.4 6,974 6,867 1.6
Performance Products 78 59 32.2 10,001 5,884 70.0
Agricultural
Products
& Nutrition 97 99 (2.0) 6,248 6,785 (7.9)
Thereof
Agricultural
Products 80 83 (3.6) 4,725 5,025 (6.0)
Fine Chemicals 17 16 6.3 1,523 1,760 (13.5)
Oil & Gas 1 - - 4,597 4,802 (4.3)
Other(1) 77 53 45.3 8,361 9,230 (9.4)
337 278 21.2 46,813 44,471 5.3
2nd Quarter
Additions to Amortization and
fixed assets(3) depreciation(4)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 181 3,011 (94.0) 161 146 10.3
Plastics 128 116 10.3 130 128 1.6
Performance Products 118 1,002 (88.2) 126 89 41.6
Agricultural
Products
& Nutrition 35 355 (90.1) 78 86 (9.3)
Thereof
Agricultural
Products 18 37 (51.4) 49 53 (7.5)
Fine Chemicals 17 318 (94.7) 29 33 (12.1)
Oil & Gas 100 115 (13.0) 128 105 21.9
Other(1) 35 185 (81.1) 33 23 43.5
597 4,784 (87.5) 656 577 13.7
(1) "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
macrohedged (EUR (17) million in the second quarter of 2007 (EUR 38
million in the second quarter 2006)).
(2) The assets of "Other" include the assets of the fertilizers
business and other businesses as well as assets that are not allocated
to the segments (financial assets, cash and cash equivalents,
financial receivables, deferred taxes; second quarter 2007: EUR 6,106
million, second quarter 2006: EUR 7,189 million).
(3) Property, plant and equipment and intangible assets; previous
year's values adjusted following the purchase price allocation for
Engelhard Corp.
(4) Property, plant and equipment and intangible assets
Segment Reporting
1st Half
Sales EBITDA
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 7,149 4,682 52.7 1,540 861 78.9
Plastics 6,828 6,259 9.1 943 898 5.0
Performance Products 5,836 4,344 34.3 732 627 16.7
Agricultural
Products
& Nutrition 2,804 2,765 1.4 666 686 (2.9)
Thereof
Agricultural
Products 1,854 1,852 0.1 552 550 0.4
Fine Chemicals 950 913 4.1 114 136 (16.2)
Oil & Gas 5,239 5,466 (4.2) 1,805 1,926 (6.3)
Other(1) 1,432 1,321 8.4 (350) (223) (57.0)
29,288 24,837 17.9 5,336 4,775 11.7
1st Half
Income from
operations before Income from
special items operations (EBIT)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 1,230 668 84.1 1,211 580 108.8
Plastics 687 647 6.2 686 645 6.4
Performance Products 489 457 7.0 470 456 3.1
Agricultural
Products
& Nutrition 521 407 28.0 513 517 (0.8)
Thereof
Agricultural
Products 460 378 21.7 455 444 2.5
Fine Chemicals 61 29 110.3 58 73 (20.5)
Oil & Gas 1,553 1,716 (9.5) 1,553 1,716 (9.5)
Other(1) (334) (120) . (416) (268) (55.2)
4,146 3,775 9.8 4,017 3,646 10.2
1st Half
Research and
development expenses Assets(2)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 95 66 43.9 10,632 10,903 (2.5)
Plastics 71 73 (2.7) 6,974 6,867 1.6
Performance Products 157 119 31.9 10,001 5,884 70.0
Agricultural
Products
& Nutrition 188 196 (4.1) 6,248 6,785 (7.9)
Thereof
Agricultural
Products 155 163 (4.9) 4,725 5,025 (6.0)
Fine Chemicals 33 33 - 1,523 1,760 (13.5)
Oil & Gas 1 - - 4,597 4,802 (4.3)
Other(1) 170 129 31.8 8,361 9,230 (9.4)
682 583 17.0 46,813 44,471 5.3
1st Half
Additions to Amortization and
fixed assets(3) depreciation(4)
Change Change
Million EUR 2007 2006 in % 2007 2006 in %
Chemicals 311 3,173 (90.2) 329 281 17.1
Plastics 220 334 (34.1) 257 253 1.6
Performance Products 205 1,083 (81.1) 262 171 53.2
Agricultural
Products
& Nutrition 63 392 (83.9) 153 169 (9.5)
Thereof
Agricultural
Products 35 52 (32.7) 97 106 (8.5)
Fine Chemicals 28 340 (91.8) 56 63 (11.1)
Oil & Gas 179 190 (5.8) 252 210 20.0
Other(1) 58 212 (72.6) 66 45 46.7
1,036 5,384 (80.8) 1,319 1,129 16.8
(1) "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
macrohedged (EUR (14) million in the first half of 2007 (EUR 93
million in the first half of 2006)).
(2) The assets of "Other" include the assets of the fertilizers
business and other businesses as well as assets that are not allocated
to the segments (financial assets, cash and cash equivalents,
financial receivables, deferred taxes; first half 2007: EUR 6,106
million, first half 2006: EUR 7,189 million).
(3) Property, plant and equipment and intangible assets; previous
year's values adjusted following the purchase price allocation for
Engelhard Corp.
(4) Property, plant and equipment and intangible assets
Notes to the Interim Financial Statements
1. BASIS OF PRESENTATION
The Consolidated Financial Statements of BASF Group for the year
ended December 31, 2006 were prepared according to the International
Financial Reporting Standards (IFRS) valid as of the balance sheet
date. The current interim financial statements as of June 30, 2007
were prepared using the same accounting policies.
BASF's Financial Report for fiscal 2006 is available on the
Internet at corporate.basf.com/financial-report.
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
subsidiaries on a fully consolidated basis. Material jointly operated
companies are proportionally consolidated. The number of fully and
proportionally consolidated companies has developed as follows:
Scope of consolidation
2007 2006
As of January 1 328 180
Thereof proportionally consolidated 19 15
First-time consolidations 15 151
Thereof proportionally consolidated - 4
Thereof changes in the consolidation
method - -
Deconsolidations 20 3
Thereof proportionally consolidated - -
As of June 30/December 31 323 328
Thereof proportionally consolidated 19 19
Fifteen companies, thereof 12 companies due to changes in the
structuring of participating interests and three companies due to
their increased importance, have been included in the scope of
consolidation since January 1, 2007.
Twenty companies have been deconsolidated since the beginning of
2007 because they were merged with other BASF companies or sold.
Mergers of Group companies in the first half of 2007 were primarily
associated with the integration of Engelhard Corp. and the
construction chemicals business acquired in 2006.
3. FINANCIAL RESULT
Financial Result 2nd Quarter 1st Half
2007 2006 2007 2006
Income from companies accounted for using
the equity method 24 7 42 17
Other income from participations 29 23 29 28
Income from participations 53 30 71 45
Interest expenses 159 117 303 209
Interest income 34 62 66 106
Interest result (125) (55) (237) (103)
Income from write-ups/write-downs and from
the disposal of securities
and receivables . 38 . 84
Net financing income/(expense) from defined
benefit plans and other
long-term personnel provisions 8 9 17 22
Interest accrued on other interest-bearing
liabilities (10) (11) (19) (23)
Construction interest 13 9 24 16
Other financial expenses and income (4) 3 (15) 3
Other financial result 7 48 7 102
Financial result (65) 23 (159) 44
Interest expenses rose due to the acquisitions that were made in
mid-2006.
Detailed information on financial indebtedness is provided in Note
12.
Income from companies accounted for using the equity method
increased primarily due to the shares in associated companies
resulting from the acquisition of Engelhard Corp.
In the first and second quarters of 2006, the financial result
contained proceeds from the disposal of securities.
4. INCOME TAXES
Income before taxes and minority interests is broken down into
domestic and foreign income as follows:
Income before taxes and minority interests 2nd Quarter 1st Half
Million EUR 2007 2006 2007 2006
Germany 478 641 1,114 1,217
Foreign oil production branches of German
companies 497 543 854 922
Other foreign 967 636 1,890 1,551
1,942 1,820 3,858 3,690
Income taxes are broken down into domestic and foreign income
taxes as follows:
Income taxes 2nd Quarter 1st Half
Million EUR 2007 2006 2007 2006
Germany 193 209 483 457
Foreign oil production branches of German
companies 458 504 790 855
Thereof noncompensable 331 383 589 655
Other foreign 220 153 373 407
871 866 1,646 1,719
Tax rate (%) 44.9 47.6 42.7 46.6
On July 6, 2007 the Business Tax Reform 2008 was approved by the
Federal Council of Germany. Among other things, as of the beginning of
2008, this tax reform will reduce corporate income tax to 15% and
trade income tax will be treated as a non-deductible business expense.
Taking into account all changes, the average corporate tax rate will
be reduced to 29%. The tax reform will therefore also affect the
calculation of the deferred taxes shown in the Consolidated Financial
Statements.
Because the tax reform was approved in July and hence after the
end of the second quarter, deferred taxes will be recalculated in
compliance with international accounting standards in the interim
report for the third quarter of 2007.
5. MINORITY INTERESTS
Minority interests 2nd Quarter 1st Half
Million EUR 2007 2006 2007 2006
Minority interests in profits 50 38 161 112
Minority interests in losses (3) (4) (8) (11)
47 34 153 101
Minority interests in profits related primarily to the Group
companies engaged in natural gas trading as well as to the operating
company for the steam cracker in Port Arthur, Texas. Minority
interests in losses were mainly related to BASF Plant Science.
6. EARNINGS PER SHARE
Earnings per share 2nd Quarter 1st Half
2007 2006 2007 2006
Net income (Million
EUR ) 1,024 920 2,059 1,870
Number of outstanding shares
(weighted average)
(Thousand) 492,452 505,600 494,901 507,332
Earnings per share (EUR ) 2.08 1.82 4.16 3.69
The calculation of earnings per share is based on the weighted
average number of common shares outstanding. The calculation of
diluted earnings per common share reflects all possible outstanding
common shares and their effect on income.
In the first half of 2007 and in the first half of 2006, the
potentially dilutive instruments were antidilutive and should not be
considered.
7. LONG-TERM ASSETS
Developments 1st Half 2007
Million EUR Investments
accounted
for using
the
equity
method and
Property, other
Intangible plant and financial
assets equipment assets
Acquisition costs
Balance as of January 1 10,624 46,631 2,127
Additions 78 1,080 236
Disposals 167 212 45
Exchange differences (129) (231) (19)
Balance as of June 30 10,406 47,268 2,299
Amortization and depreciation
Balance as of January 1 1,702 31,729 286
Additions 268 1,055 .
Disposals 149 184 8
Exchange differences (12) (131) .
Balance as of June 30 1,809 32,469 278
Net book value as of June 30 8,597 14,799 2,021
Additions to property, plant and equipment in the first half of
2007 related to a number of capital expenditure projects. The most
important were as follows: at the site in Antwerp, Belgium, the
expansion of the steam cracker, plants for acrylic acid and
superabsorbents, as well as MDI production capacity, and the
construction of an HPPO plant; in Geismar, Louisiana, the expansion of
polyol production; in Port Arthur, Texas, investments to increase
availability of the steam cracker; and in Freeport, Texas, the startup
of a plant for superabsorbents.
Additions in the first half of 2006 were primarily related to the
acquisition of Engelhard Corp.
The purchase price allocations for Engelhard Corp. and for the
construction chemicals business acquired from Degussa AG were
completed in the first half of 2007.
8. INVENTORIES
Inventories
Million EUR June 30, 2007 Dec. 31, 2006
Raw materials and factory supplies 1,795 1,656
Work-in-process, finished goods and
merchandise 4,627 4,962
Advance payments and services-in-process 108 54
6,530 6,672
Work-in-process and finished goods and merchandise are combined
into one item due to the production conditions in the chemical
industry. Services-in-process relate primarily to inventory not
invoiced at the balance sheet date. Inventories are valued using the
weighted average cost method.
9. STOCKHOLDERS' EQUITY
Subscribed capital
Outstanding Subscribed Capital
Million EUR shares capital reserves
Outstanding shares as of June 30, 2007 499,680,000 1,279 3,141
Repurchased shares intended to be
cancelled (9,195,000) (23) 27
Outstanding shares as disclosed in the
financial statements 490,485,000 1,256 3,168
The Board of Executive Directors received approval at the Annual
Meeting on April 26, 2007, to buy back BASF's shares to a maximum
amount of 10% of subscribed capital by October 25, 2008. The shares
shall be purchased on the stock exchange or through a public purchase
offer addressed to all shareholders. If BASF shares are purchased on a
stock exchange, the price paid for the shares may not be higher than
the highest market price on the buying day and may not be lower than
25% of that market price. In the case of a public purchase offer, the
price offered by BASF may be a maximum of 10% higher than the highest
market price on the third trading day prior to the publishing of the
public purchase offer. This authorization supersedes the prior
authorization to repurchase BASF shares granted by the Annual Meeting
on May 4, 2006.
The Board of Executive Directors is authorized to cancel the
repurchased shares without the approval of a further resolution at the
Annual Meeting. A sale of treasury shares is only authorized after a
corresponding resolution at the Annual Meeting, except when, with the
approval of the Supervisory Board, the shares are used to acquire
companies, parts of companies or participations in companies in return
for shares.
In the first half of 2007, a total of 9,195,000 shares, or 1.84%
of the issued shares, were acquired. The average purchase price was
EUR 81.86 per share. BASF spent a total of EUR 753 million on the
share buyback program in the first half of 2007. As of June 30, 2007,
10,605,000 shares of BASF stock were held by BASF Aktiengesellschaft.
Therein were included 1,410,000 shares that were acquired in 2006.
These shares were acquired for the purpose of cancellation.
Therefore, these shares reduce the subscribed capital as of June 30,
2007.
On July 10, 2007, the Board of Executive Directors of BASF
Aktiengesellschaft approved the cancellation of 10,605,000 BASF
shares. The shares were cancelled by the end of July 2007. The total
number of outstanding shares thus declined to 490,485,000.
Reserves
Million EUR June 30, 2007 Dec. 31, 2006
Legal reserves 345 311
Other retained earnings 13,453 12,991
13,798 13,302
Changes in the scope of consolidation led to an increase in the
legal reserves of EUR 3.1 million in the first half of 2007. Transfers
from other retained earnings increased legal reserves by EUR
29.3 million. The offsetting of actuarial gains and losses resulted in
an increase in retained earnings of EUR 677.8 million.
10. PROVISIONS FOR PENSIONS
The valuations using the projected unit credit method per IAS 19
were carried out under the following assumptions:
Assumptions used to determine the defined benefit obligation
(weighted average)
Germany Foreign
June Dec. June Dec.
30, 31, 30, 31,
% 2007 2006 2007 2006
Discount rate 5.00 4.50 5.81 5.31
Projected increase of wages and salaries 2.50 2.50 4.46 4.46
Projected pension increase 1.75 1.75 0.56 0.56
Assumptions used to determine expenses for pension benefits
(from January 1 through June 30 of the respective year; weighted
average)
Germany Foreign
% 2007 2006 2007 2006
Discount rate 4.50 4.25 5.31 5.42
Projected increase of wages and salaries 2.50 2.50 4.46 4.48
Projected pension increase 1.75 1.50 0.56 0.49
Expected return on plan assets 4.93 4.92 7.35 7.71
The assumptions regarding the overall expected long-term rate of
return are based on the desired portfolio structure and forecasts of
expected individual asset class returns. The forecasts are based on
long-term historical average returns and take into consideration the
current yield level and the inflation trend. In the first half of
2007, the interest rate was adjusted to take account of developments
in the capital markets. The resulting actuarial gains led to a
significant increase in other long-term assets and to a decline in
provisions for pensions and similar obligations.
11. OTHER PROVISIONS
Other provisions
June 30, June 30, Dec. 31,
Million EUR 2007 2006 2006
Other long-term
provisions 3,151 2,749 3,080
Other short-term
provisions 2,562 2,856 2,848
5,713 5,605 5,928
In natural gas trading provisions are established for outstanding
invoices related to gas supplies that have not been priced as of the
balance sheet date. These provisions declined in the first half of
2007 compared with December 31, 2006. Provisions for bonuses and
severance payments declined in the first half of 2007 as a result of
usage.
On the other hand, provisions for BASF's stock option program
(BOP) increased in the first half of 2007 due to the rise in BASF's
share price.
12. LIABILITIES
Liabilities June 30, June 30, Dec. 31,
2007 2006 2006
Less More Less More Less More
than than than than than than
one one one one one one
Million EUR year year year year year year
Accounts payable, trade 4,258 - 3,215 - 4,755 -
Bonds and other liabilities to the
capital market 2,887 5,984 4,454 5,002 3,219 5,000
Liabilities to credit institutions 395 734 583 918 476 788
Financial indebtedness 3,282 6,718 5,037 5,920 3,695 5,788
Tax liabilities 1,218 - 1,178 - 858 -
Advances received on orders 42 - 39 - 109 -
Liabilities on bills 60 11 34 3 47 3
Liabilities related to social
security 132 27 108 1 136 18
Miscellaneous liabilities 1,815 763 1,741 1,129 1,405 755
Deferred income 234 183 287 190 127 196
Other liabilities 2,283 984 2,209 1,323 1,824 972
Carrying amounts
Financial indebtedness based on
effective interest
method
Effective June June Dec.
Nominal interest 30, 30, 31,
Million EUR volumerate 2007 2006 2006
3.5% Euro Bond 2003/2010 1,000 3.63% 996 995 996
3.375% Euro Bond 2005/2012 1,400 3.42% 1,397 1,397 1,397
4% Euro Bond 2006/2011 1,000 4.05% 998 998 998
4.5% Euro Bond 2006/2016 500 4.62% 496 495 495
3-Month EURIBOR Bond 2006/2009 500 variable 500 500 500
Extendible floating rate notes
2007/2010 ($1,350 million) 1,000 variable 1,000 - -
Other bonds 597 694 614
Commercial paper 2,887 4,377 3,219
Bonds and other liabilities to
the capital markets 8,871 9,456 8,219
Liabilities to credit
institutions 1,129 1,501 1,264
10,000 10,957 9,483
13. RELATED-PARTY TRANSACTIONS
Material supply relationships exist for the supply of oil and gas
between companies of the BASF Group and the proportionally
consolidated joint venture companies Wintershall Erdgas Handelshaus
GmbH & Co. KG, Berlin, and Wintershall Erdgas Handelshaus Zug AG, Zug,
Switzerland. These transactions are conducted at arm's length prices
and business terms. The unconsolidated portion of these supplies
amounted to EUR 300.1 million in the first half of 2007 and EUR
388.3 million in the first half of 2006.
Several members of the Supervisory Board and Board of Executive
Directors also serve on the boards of executive directors or
supervisory boards of companies with which BASF maintains business
relations. These transactions are conducted at arm's length prices and
business terms.
BASF has not issued loans to members of the Board of Executive
Directors or the Supervisory Board.
Statement in accordance with Section 37y No. 1 of the German
Securities Trading Act
To the best of our knowledge, and in accordance with the
applicable reporting principles for interim financial reporting, the
interim consolidated financial statements give a true and fair view of
the assets, liabilities, financial position and profit or loss of the
group, and the interim management report of the group includes a fair
review of the development and performance of the business and the
position of the group, together with a description of the principal
opportunities and risks associated with the expected development of
the group for the remaining months of the financial year.
Ludwigshafen, July 30, 2007
BASF Aktiengesellschaft
Board of Executive Directors
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 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
Interim Report Third Quarter 2007: October 30, 2007
Annual Results 2007: February 21, 2008
Interim Report First Quarter 2008
and Annual Meeting: April 24, 2008
Interim Report First Half 2008: July 31, 2008
CONTACTS
Corporate Media Relations
Michael Grabicki: Phone: +49 621 60-99938, Fax: +49 621 60-92693
Investor Relations
Magdalena Moll: Phone: +49 621 60-48230, Fax: +49 621 60-22500
General Inquiries
Phone: +49 621 60-0, Fax: +49 621 60-42525
FURTHER INFORMATION
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
This report is printed on certified Galaxi Supermat paper from
sustainable forestry.
BASF Aktiengesellschaft, 67056 Ludwigshafen, Germany
CONTACT: BASF Aktiengesellschaft
Michael Grabicki
Phone: +49 621 60-99938
Fax: +49 621 60-92693
michael.grabicki@basf.com
or
Corporate Media Relations
Phone: +49 621 60-20916
Fax:: +49 621 60-92693
presse.kontakt@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 1, 2007 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