Business development in the segments in the first quarter 2019
Sales in the Chemicals segment [comprising Petrochemicals and Intermediates] declined by 13% compared with the first quarter of 2018 to €2.5 billion. The Petrochemicals division in particular saw a considerable decline in sales, while the Intermediates division recorded a slight decrease. Sales development was driven by lower volumes and prices in both divisions.
Compared with the prior-year quarter, EBIT before special items decreased by €169 million to €306 million. Both divisions recorded lower earnings, particularly Petrochemicals. The development of EBIT before special items was largely due to lower margins in the Petrochemicals division, especially for steam cracker products, as well as the lower volumes in both divisions. In addition, fixed costs in both divisions rose slightly. In the Petrochemicals division, this was primarily attributable to higher maintenance expenses, while in the Intermediates division, the development of fixed costs was mainly negatively influenced by currency effects.
In the Materials segment [comprising Performance Materials and Monomers], sales of €2.9 billion were down by 15% compared with the first quarter of 2018. The sales decline was seen in both the Monomers and Performance Materials divisions and was primarily due to lower isocyanates prices in the Monomers division.
EBIT before special items declined considerably in both divisions, coming in at €323 million compared with €816 million in the previous first quarter.
This was mainly a result of lower isocyanates margins in the Monomers division. In the Performance Materials division, higher margins were unable to compensate for the lower volumes, primarily in the automotive sector. In addition, fixed costs in both divisions were slightly higher than in the prior-year quarter. This development was mainly due to currency effects.
In the Industrial Solutions segment [comprising Dispersions & Pigments and Performance Chemicals], sales of €2.2 billion were 2% lower than in the prior-year quarter. Sales in the Dispersions & Pigments division were on a level with the first quarter of 2018, while sales in the Performance Chemicals division declined slightly. The year-on-year decrease was primarily due to the transfer of BASF’s paper and water chemicals business, which was previously reported under Performance Chemicals, to the Solenis group.
The Industrial Solutions segment increased EBIT before special items by 15% compared with the first quarter of 2018 to €264 million. This was primarily attributable to considerably higher EBIT before special items in the Performance Chemicals division as a result of higher prices, volumes growth and positive currency effects. The Dispersions & Pigments division also slightly increased EBIT before special items, mainly due to higher prices and positive currency effects. The segment’s EBIT included special income in the Performance Chemicals division from the transfer of BASF’s paper and water chemicals business to the Solenis group.
Compared with the first quarter of 2018, sales in the Surface Technologies segment [comprising Catalysts, Coatings and Construction Chemicals] increased by 13% to €3.6 billion. There was particularly strong sales growth in the Catalysts division. Sales also rose considerably in the Construction Chemicals division and were on a level with the prior-year quarter in the Coatings division. The sales increase was attributable to higher prices in all divisions as well as positive currency effects and volumes growth in the Catalysts and Construction Chemicals divisions.
At €159 million, the segment’s EBIT before special items was on a level with the prior-year quarter. EBIT before special items in the Construction Chemicals division improved considerably, primarily due to higher margins. In the Catalysts division, earnings rose slightly as a result of sales growth. By contrast, the Coatings division recorded considerably lower EBIT before special items. This was mainly attributable to a weaker automotive business.
Sales of €1.6 billion in the Nutrition & Care segment [comprising Care Chemicals and Nutrition & Health] matched the level of the prior-year quarter. Considerably higher sales in the Nutrition & Health division were offset by slightly lower sales in the Care Chemicals division.
At €222 million, EBIT before special items was 13% below the €254 million reported in the first quarter of 2018. This was mainly attributable to higher fixed costs in the Nutrition & Health division, largely due to an insurance refund received in the prior-year quarter for production outages in 2017. In addition, margins declined in the animal nutrition business; as a result, earnings in the Nutrition & Health division decreased significantly overall. A considerable improvement in earnings in the Care Chemicals division, mainly from higher margins, had an offsetting effect.
Sales of €2.6 billion in the Agricultural Solutions segment were 53% higher compared with the first quarter of 2018. This was primarily attributable to portfolio effects from the acquisition of significant businesses and assets from Bayer in August 2018. BASF also achieved a higher price level in the legacy business while sales volumes were considerably lower year on year, mainly due to weather-related factors.
EBIT before special items of €740 million was 75% higher than in the first quarter of 2018. This was largely due to the contribution from the acquired businesses. EBIT included special income from divestitures in accordance with the conditions imposed by antitrust authorities within the scope of the acquisition of the Bayer businesses. In the first quarter of 2019, these exceeded the special charges for the integration of the acquired businesses.
Sales in Other increased considerably compared with the prior-year quarter. This was mainly due to the remaining activities of BASF’s paper and water chemicals business, which were not part of the transfer to Solenis and have since been reported under Other. EBIT before special items was considerably below the figure for the first quarter of 2018. This was largely attributable to foreign currency results and valuation effects for our long-term incentive program.
Source: BASF
