BASF : Quarterly Statement Q3 2022

Quarterly Statement Q3 2022

Q3 BASF Group

22 Quarterly Statement

On the cover and this page:

BASF offers products for almost all sectors and applications - from important basic chemicals and a wide range of intermediates to highly specific customer solutions for the automotive, plastics, cosmetics and pharmaceutical industries or agriculture, for example. BASF ­manufactures around 8,500 products at its Ludwigshafen site in Germany alone. One of these is Xemium®. The high-performance active ingredient helps farmers around the world to control fungal diseases in various crops, contributing to food security. The photos on the cover and this page show Mesut Aslan, an operator at the Xemium® plant, on an inspection tour of the facility.

BASF Group - Q3 2022

Contents

At a Glance

Key Figures: BASF Group Q3 2022		4

Sales - Q3 2022

Sales by segment and Other - Q3 2022

Business Review														5
BASF Group																5
Significant Events										5
Results of Operations									6
Net Assets														7
Financial Position										7
Outlook											9
Chemicals						10
Materials									11
Industrial Solutions					12
Surface Technologies			13
Nutrition & Care			14

€21.9 billion

(Q3 2021: €19.7 billion)

EBIT before special items - Q3 2022

€1.3 billion

(Q3 2021: €1.9 billion)

Chemicals €3.8 billion

(Q3 2021: €3.7 billion)

Materials

€4.7 billion

(Q3 2021: €4.0 billion)

Industrial Solutions

€2.7 billion

(Q3 2021: €2.2 billion)

	Surface Technologies
	€5.3 billion
	(Q3 2021: €5.6 billion)
€21.9 billion	Nutrition & Care
€2.1 billion
(Q3 2021: €19.7 billion)
(Q3 2021: €1.6 billion)
	Agricultural Solutions
	€2.1 billion
	(Q3 2021: €1.6 billion)
	Other
	€1.2 billion
	(Q3 2021: €1.0 billion)

Agricultural Solutions											15
Other														16
Regions													17
Selected Financial Data								18
Statement of Income								18
Balance Sheet							19
Statement of Cash Flows					21
Selected Key Figures Excluding Precious Metals			22

Sales1 by region and share of total BASF Group sales - Q3 2022

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

€8.8	40%	€5.8	27%	€5.4	24%	€1.9	9%
billion	share of sales	billion	share of sales	billion	share of sales	billion	share of sales

Outlook for the BASF Group

Outlook for the 2022 business year unchanged (forecast published in the BASF Half-Year Financial Report 2022):

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

1 Sales by location of company

BASF Group - Q3 2022		Key Figures	4

Key Figures

BASF Group Q3 2022

					Q3						January-September
		2022			2021		+/-	2022	2021		+/-
Sales	million €	21,946			19,669	11.6%	68,003	58,822		15.6%
Income from operations before depreciation, amortization and special items	million €	2,325			2,771		-16.1%	9,361	9,169		2.1%
Income from operations before depreciation and amortization (EBITDA)	million €	2,255			2,729		-17.4%	9,359	9,104		2.8%
EBITDA margin	%	10.3			13.9		−	13.8	15.5		−
Depreciation and amortizationa	million €	960			907	5.9%	2,930	2,655		10.4%
Income from operations (EBIT)	million €	1,294			1,822		-29.0%	6,429	6,449		-0.3%
Special items	million €		-53	-43		-24.3%		-76		-92	17.5%
EBIT before special items	million €	1,348			1,865		-27.7%	6,505	6,541		-0.6%
Income before income taxes	million €	1,239			1,777		-30.3%	5,775	6,213		-7.1%
Income after taxes	million €	952			1,381		-31.1%	4,452	4,985		-10.7%
Net income	million €	909			1,253		-27.5%	4,220	4,625		-8.8%
Earnings per shareb	€	1.01			1.36		-25.7%	4.67	5.03		-7.2%
Adjusted earnings per shareb	€	1.77			1.56	13.5%	6.85	5.59		22.5%
Research and development expenses	million €	545			523	4.2%	1,681	1,579		6.5%
Personnel expenses	million €	2,742			2,654	3.3%	8,772	8,525		2.9%
Employees (September 30)		111,768			110,672	1.0%	111,768	110,672		1.0%
Assets (September 30)	million €	97,030			86,102	12.7%	97,030	86,102		12.7%
Investments including acquisitionsc	million €	1,155			1,792		-35.5%	2,866	3,168		-9.5%
Equity ratio (September 30)	%	50.6			47.2		−	50.6	47.2		−
Net debt (September 30)	million €	18,942			16,680	13.6%	18,942	16,680		13.6%
Cash flows from operating activities	million €	2,301			1,896	21.4%	3,239	3,908		-17.1%
Free cash flow	million €	1,295			1,077	20.2%	738	1,866		-60.5%

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 897,371,740 in the third quarter of 2022 and 904,411,442 in the period from January to September 2022.
3. Additions to property, plant and equipment and intangible assets

Due to rounding, individual figures in this quarterly statement may not add up to the totals shown and percentages may not correspond exactly to the figures shown.

BASF Group - Q3 2022		BASF Group	5

Business Review

BASF Group

Significant events

Following extensive review, BASF announced in July 2022 that final approval had been granted for the construction of the planned ­Verbund site in Zhanjiang in the southern Chinese province of Guangdong. The project remains on schedule. After the first plant for the production of engineering ­plastics started operation in early September, the heart of the Verbund­ is now being constructed. This includes a steam cracker and several downstream plants for the production of petrochemicals and intermediates, among others.

On September 30, 2022, BASF closed the divestiture of its kaolin minerals business to KaMin LLC./CADAM S.A., a global performance minerals company headquartered in Macon, Georgia, following the approval of the relevant authorities. The divestiture comprised the production hub with sites in Daveyville, Toddville, Edgar, Gordon and related mines, reserves and mills in Toomsboro and Sandersville in Georgia. The refinery catalysts operations located at the same site were not part of the divestiture. Until the divestiture, the kaolin ­minerals business was part of the Performance Chemicals division and had approximately 440 employees in North America, Europe and Asia. The disposal price was around €220 million on a debt-free basis and excluding current assets not transferred.

Both Nord Stream 1 pipelines were damaged in September 2022, with the result that Nord Stream 1 is currently not operational. The pipelines are owned and operated by Nord Stream AG, in which BASF holds an indirect 15.5% interest­ via Wintershall Dea AG. The extent of the damage, options for and the extent of repairs, ­insurance coverage and effects on existing gas transportation agreements are currently ­being investigated. Based on the information currently available and using various scenarios, which also took into account the political situation, an impairment loss of around €740 million was recognized on Wintershall­ Dea's interest in Nord Stream AG in the third quarter.

Against the background of significantly weaker earnings in Europe - especially in Germany - as well as the deteriorating framework conditions in the region, BASF has initiated a cost savings program focusing on Europe and particularly Germany to be implemented from 2023 to 2024. Cost savings that are possible in the short term will be implemented immediately. Upon completion, the pro-

gram is expected­ to generate annual cost savings of €500 million in non-production areas. More than half of the cost savings are to be realized at the Ludwigshafen site in ­Germany.

On October 20, 2022, the Supervisory Board of BASF SE extended the appointment of Dr. Martin Brudermüller (61) as BASF's Chairman of the Board of Executive Directors until the end of the 2024 Annual Shareholders' Meeting; Brudermüller's appointment was originally scheduled to end in 2023. Brudermüller has been Chairman of the Board of Executive Directors of BASF SE since 2018 and a Board member since 2006. In addition, the Supervisory Board has

appointed­ Dr. Dirk Elvermann (51) as the new Chief Financial Officer and Chief Digital Officer. He succeeds Dr. Hans-Ulrich Engel (63), whose mandate ends at the closing of the 2023 Annual Share­ holders' Meeting. Engel has been a member of the Board of ­Executive Directors since 2008, Chief Financial Officer of BASF SE since 2011 and also, since 2018, Vice Chairman of the Board of Executive Directors. Elvermann has been with the company since 2003 and has led the Corporate Finance division since 2019.