BASF : Half-Year Financial Report 2022

Half-Year Financial Report 2022

H1		BASF Group
22		Half-Year Financial Report

On the cover and this page:

Catalysts are indispensable to many processes and production methods in the chemical industry: They accelerate processes, enable higher production volumes from the same amount of feedstock and reduce energy demand. That is why BASF conducts intensive research in this area and develops innovative solutions for customers in various industries. At a research center at the Ludwigshafen site in Germany, for example, BASF operates highly automated experimental facilities to develop efficient processes and test new process catalysts. The photo shows chemical laboratory technician Melanie Zier monitoring a plant during testing.

BASF Group - Half-Year Financial Report 2022

Contents

At a Glance

Key Figures: BASF Group H1 2022		4

Sales - H1 2022

Sales by segment and Other - H1 2022

Consolidated Interim Management's Report 2022							5
Significant Events														5
Results of Operations H1 2022										6
Segment sales and EBIT before special items							7
Net Assets and Financial Position								9
Net assets										9
Financial position									9
Economic Environment and Outlook						11
Information on Q2 2022			13
BASF Group				13
Chemicals			16

€46.1 billion

(H1 2021: €39.2 billion)

EBIT before special items - H1 2022

€5.2 billion

(H1 2021: €4.7 billion)

Chemicals €8.4 billion

(H1 2021: €6.2 billion)

Materials

€9.7 billion

(H1 2021: €7.2 billion)

Industrial Solutions

€5.1 billion

(H1 2021: €4.5 billion)

	Surface Technologies
	€10.9 billion
	(H1 2021: €11.8 billion)
€46.1 billion	Nutrition & Care
€4.0 billion
(H1 2021: €39.2 billion)
(H1 2021: €3.1 billion)
	Agricultural Solutions
	€5.9 billion
	(H1 2021: €4.8 billion)
	Other
	€2.1 billion
	(H1 2021: €1.6 billion)

Materials																																17
Industrial Solutions																												18
Surface Technologies																							19
Nutrition & Care																										20
Agricultural Solutions																					21
Other																									22
Regions																							23
Condensed Consolidated Half-Year Financial
Statements 2022																				24
Statement of Income																	24
Statement of Income and Expense Recognized in Equity											25
Balance Sheet															26
Statement of Cash Flows											28
Statement of Changes in Equity									29
Segment Reporting									30
Notes to the Consolidated Half-Year Financial Statements					31
Responsibility Statement					48
Selected Key Figures Excluding Precious Metals			49

Sales by region - H1 2022

EUROPE	NORTH AMERICA	ASIA PACIFIC	SOUTH AMERICA,
			AFRICA, MIDDLE
			EAST

€19.6	€13.2	€11.0	€2.3
billion	billion	billion	billion

Outlook for the BASF Group

Adjusted outlook for the 2022 business year (previous forecast from the BASF Report 2021 in parentheses):

• Sales: €86 billion to €89 billion (€74 billion to €77 billion)
• EBIT before special items: €6.8 billion to €7.2 billion (€6.6 billion to €7.2 billion)
• Return on capital employed (ROCE): 10.5% to 11.0% (11.4% to 12.6%)
• CO2 emissions: 18.4 million metric tons to 19.4 million metric tons (19.6 million metric tons to 20.6 million metric tons)

BASF Group - Half-Year Financial Report 2022		Key Figures	4

Key Figures

BASF Group H1 2022

					Q2							H1
		2022			2021		+/-	2022		2021		+/-
Sales	million €	22,974			19,753	16.3%	46,058		39,153	17.6%
Income from operations before depreciation, amortization and special items	million €	3,293			3,217	2.4%	7,036		6,398	10.0%
Income from operations before depreciation and amortization (EBITDA)	million €	3,396			3,199	6.2%	7,105		6,375	11.4%
EBITDA margin	%	14.8			16.2		−	15.4		16.3		−
Depreciation and amortizationa	million €	1,046			883	18.4%	1,970		1,748	12.7%
Income from operations (EBIT)	million €	2,350			2,316	1.5%	5,135		4,627	11.0%
Special items	million €	11			-39	.		-22	-49	54.2%
EBIT before special items	million €	2,339			2,355		-0.7%	5,157		4,676	10.3%
Income before income taxes	million €	2,658			2,189	21.4%	4,536		4,436	2.3%
Income after taxes	million €	2,179			1,794	21.5%	3,500		3,604		-2.9%
Net income	million €	2,090			1,654	26.3%	3,311		3,372		-1.8%
Earnings per shareb	€	2.31			1.80	28.3%	3.65		3.67		-0.5%
Adjusted earnings per shareb	€	2.37			2.03	16.7%	5.07		4.03	25.8%
Research and development expenses	million €	567			545	3.9%	1,136		1,056	7.6%
Personnel expenses	million €	2,964			2,924	1.4%	6,031		5,871	2.7%
Employees (June 30)		110,725			107,646	2.9%	110,725		107,646	2.9%
Assets (June 30)	million €	96,972			82,938	16.9%	96,972		82,938	16.9%
Investments including acquisitionsc	million €	970			831	16.7%	1,711		1,376	24.3%
Equity ratio (June 30)	%	47.8			45.9		−	47.8		45.9		−
Net debt (June 30)	million €	19,546			16,241	20.4%	19,546		16,241	20.4%
Cash flows from operating activities	million €	1,228			2,537		-51.6%	938		2,012		-53.4%
Free cash flow	million €	336			1,770		-81.0%		-557	789	.

1. Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)
2. Due to the current share buyback program, the weighted average number of outstanding shares was 903,147,947 in the second quarter of 2022 and 907,989,633 in the first half of 2022.
3. Additions to property, plant and equipment and intangible assets

BASF Group - Half-Year Financial Report 2022		Significant Events	5

Consolidated Interim Management's Report 2022

Significant Events

On January 4, 2022, the Board of Executive Directors of BASF SE resolved on a share buyback program with a volume of up to €3 billion. This started on January 11, 2022, and is to be completed by December 2023. The share buyback program was initially based on the authorization by the Annual Shareholders' Meeting on May 12, 2017. The program was continued after the renewed

authorization­to purchase own shares had been granted by the ­Annual Shareholders' Meeting of BASF SE on April 29, 2022. Around 18.5 million shares had been repurchased for almost €1.1 billion as of June 30, 2022.

For more information on the share buyback program, see basf.com/sharebuyback

Together with Heraeus, Hanau, Germany, BASF announced on February 11, 2022, the formation of a joint venture (BASF: 50%; Heraeus: 50%) to recover precious metals from spent automotive catalysts. BASF HERAEUS (China) Metal Resource Co., Ltd., based in Pinghu, China, was formed in early May 2022. Construction of the joint venture's recycling plant is scheduled to begin this year, with start of operations in 2023.

The following changes in responsibilities to two Board of Executive Directors departments ("Ressorts") took effect as of March 1, 2022:

• Saori Dubourg (Ressort IV) assumed responsibility for the Petro- chemicals, Intermediates, Performance Materials and Monomers divisions. She remains responsible for the region Europe.
• Michael Heinz (Ressort V) assumed responsibility for the Care Chemicals, Nutrition & Health and Agricultural Solutions divisions. He remains responsible for the regions North America and South America.

On April 12, 2022, BASF and Allianz Capital Partners (on behalf of Allianz Insurance Companies) closed the ­purchase of 25.2% of the Hollandse Kust Zuid (HKZ) offshore wind farm by Allianz Capital Partners. BASF had acquired 49.5% of HKZ from Vattenfall in the third quarter of 2021. BASF will receive most of the power produced by its originally acquired share of 49.5% of HKZ under a long-termfixed-price power purchasing agreement.

On April 29, 2022, the Annual Shareholders' Meeting of BASF SE elected Alessandra Genco (48), Chief Financial Officer of Leonardo SpA, Rome, Italy, and Professor Dr. Stefan Asenkerschbaumer (66), chairman of the supervisory board of Robert Bosch GmbH and managing partner of Robert Bosch Industrietreuhand KG, Stuttgart, Germany, to the Supervisory Board of BASF SE as new shareholder representatives. They succeed Anke Schäferkordt (59) and Franz Fehrenbach (72), who stepped down from the Supervisory Board as of the end of the Annual Shareholders' Meeting 2022 due to their many years of service on the Board. The mandates run until the end of the Annual Shareholders' Meeting 2024.

In addition, as of the end of the Annual Shareholders' Meeting 2022, Peter Zaman (53), deputy secretary of the Works Council of BASF Antwerpen NV, André Matta (51), member of the BASF Works Council Europe and the Works Council of BASF SE, and Natalie Mühlenfeld (41), district manager of the Mining, Chemical and

Energy­ Industries Union (IG BCE) for the Düsseldorf district, joined the Supervisory Board of BASF SE as new employee representa- tives. They succeed Denise Schellemans (60), Waldemar Helber (64) and Roland Strasser (46), who resigned their mandates as of the end of the Annual Shareholders' Meeting 2022. Their mandates on the Supervisory Board of BASF SE also run until the end of the ­Annual Shareholders' Meeting 2024.

As announced on April 27, 2022, BASF wound down its business activities in Russia and Belarus as of July 10, 2022. Business to support food production remains an exception. This decision was driven by recent developments in the war of aggression on Ukraine and in international law, including the fifth E.U. sanctions package. In 2021, Russia and Belarus accounted for around 1% of the BASF Group's total sales.

Following a detailed review of the impact of the decision from April 27, 2022, impairments on assets of €51 million and provisions for obligations to customers, suppliers and employees in the amount of €27 million were recognized by June 30, 2022. An impairment test was performed for Wintershall Dea's Russian assets as of June 30, 2022. This did not reveal any need for adjustment above and beyond the impairments recognized by Wintershall Dea in the first quarter.

For more information, see Note 8 to the Consolidated Half-Year Financial Statements on page 37 onward