BASF's sales in the second quarter of 19.8 billion euros, a 56% increase year-on-year

Recently, Dr. Martin Brudermüller, Chairman of the Executive Board of BASF Europe, and Dr. Hans-Ulrich Engel, BASF’s Chief Financial Officer, jointly released the financial results for the second quarter.

Overall performance

BASF’s sales in the second quarter of 2021 were 19.8 billion euros, an increase of 7.1 billion euros over the same period last year. The 56% increase in sales was mainly due to the increase in sales and prices in various business areas. The price level of surface treatment technology business, chemical business and material business has increased significantly. Sales growth is mainly reflected in the surface treatment business field, the material business field and the industrial solution business field. Unfavorable currency factors have a certain offsetting effect.

The EBIT in the second quarter of 2021 excluding special items was 2.4 billion euros, a significant increase of 1 billion euros from the second quarter of 2019 before the epidemic, and an increase of more than 2 billion euros from the second quarter of 2020. This is mainly due to the substantial increase in EBIT in the chemical business field and the material business field excluding special items. The surface treatment technology business area and the industrial solution business area also saw significant increases in revenue. In contrast, the "other" business areas, the nutrition and care business areas, and the agricultural solutions business areas have seen significant declines in EBIT, excluding special items. Earnings before interest and taxes in the second quarter of 2021 were 2.3 billion euros, a significant increase from 59 million euros in the same period last year. Earnings before interest, taxes, depreciation and amortization, excluding special items, amounted to 3.2 billion euros, an increase of 2 billion euros over the same period last year. Earnings before interest, taxes, depreciation and amortization amounted to 3.2 billion euros, an increase of 2.1 billion euros over the same period last year.

The increase in upstream business prices and sales volume has resulted in a substantial increase in revenue. Thanks to strong market demand, we have also achieved an increase in sales and prices in the downstream business area. "

Cash flow situation BASF's cash flow from operating activities in the second quarter of 2021 for the second quarter of 2021 was 2.5 billion euros, an increase of 295 million euros from the same period last year. This is mainly due to the substantial increase in net income to 1.7 billion euros. Free cash flow was 1.8 billion euros, an increase of 254 million euros from the second quarter of 2020.

Income of each business area

Sales in the chemical business area increased significantly by 91% from the same period last year to 3.4 billion euros. This is mainly due to the lack of product supply leading to strong market demand, which has significantly increased the price level. Earnings before interest and taxes excluding special items were 990 million euros, a significant increase from the same period last year. This is mainly due to the substantial increase in the EBIT of the petrochemicals business department excluding special items; the EBIT of the intermediates business department also has a significant increase excluding special items.

Compared with the second quarter of 2020, the sales of the materials business in the second quarter of 2021 increased by 75% to 3.7 billion euros, mainly due to the significant increase in sales driven by market demand. The pre-interest and tax earnings of its two business units, excluding special items, increased significantly to 792 million euros.

In the second quarter of 2021, the sales of the industrial solutions business area was 2.4 billion euros, a significant increase from the same period last year, especially in the dispersions and pigments business. Almost all business sales of these two business units have increased, which has contributed to the increase in sales. The EBIT of the two business units excluding special items increased significantly from the same period last year to 307 million euros. As of July 1, 2021, as BASF has completed the divestiture of its global pigment business, the Dispersion and Pigment Business Unit has been renamed the Dispersion and Resin Business Unit.

Sales in the surface treatment technology business area were 5.9 billion euros, a significant increase from the same period last year, especially in the catalyst business. 90% of the sales growth was due to the significant increase in overall prices and sales. The EBIT of its next two business units excluding special items was 289 million euros, which was significantly higher than the same period last year, mainly due to sales growth. In addition, thanks to the contribution made by precious metals trading, the revenue performance of the catalyst business unit has increased significantly.

Sales in the nutrition and care business area increased by 2% year-on-year to 1.6 billion euros. This is mainly due to the substantial increase in sales of the care chemicals business unit, while the sales of the nutrition and health business unit have dropped significantly. The EBIT of the nutrition and care business field excluding special items was 138 million euros, a sharp drop from the same period last year. This was mainly due to the decline in profits and the increase in fixed costs of its next two business units.

The sales of the agricultural solutions business area was 2 billion euros, a significant increase from the same period last year, mainly due to the substantial increase in sales (in all regions of the world) and prices. Unfavorable currency factors have played a certain offset, especially in the South American and North American markets. Although sales increased substantially, the EBIT excluding special items was 75 million euros, which was a significant drop from the same period last year. This was mainly due to unfavorable currency factors and increased fixed costs. Sales in other business areas increased significantly from the same period last year to 793 million euros, mainly due to the increase in sales of bulk commodities. Earnings before interest and taxes excluding special items were significantly lower than the same period last year, mainly due to the strong performance in the second quarter of 2021, which led to an increase in the variable compensation component (bonus) reserve.

Full year outlook

BASF Group's 2021 fiscal year BASF's assessment of the global economic environment in 2021 is adjusted as follows (in parentheses are the forecasts of BASF's 2021 quarterly report):

Global GDP growth: 5.5% (5.0%)

Global chemical production growth: 6.5% (5.0%)

Euro to U.S. dollar: 1 Euro to 1.20 U.S. dollars (1.18 U.S. dollars)

Brent crude oil price: 65 US dollars/barrel (60 US dollars/barrel) 　 BASF expects stable industrial economic development in the second half of 2021. BASF's above forecast assumes that there will be no strict measures to control economic activities in response to the new crown epidemic in the second half of 2021.