First-Quarter Results
April 30, 2002
Business improves in March
Cost-reduction measures start to take effect
EBIT up 3% on previous year due to lower special items
BASF Group
<Table>
<Caption>
1st Quarter Change
Million euro 2002 2001 in %
Sales 8,239 9,289 (11.3)
Income from operations before special items 818 962 (15.0)
Income from operations (EBIT) 814 789 3.2
Income from operations
before depreciation and amortization (EBITDA) 1,432 1,408 1.7
Extraordinary income - 6,010 -
Income before taxes and minority interests 838 6,641 (87.4)
Net income 556 6,193 (91.0)
Earnings per share
- ordinary (euro) 0.95 0.53 79.2
- extraordinary (euro) - 9.66 -
</Table>
Sales and earnings
Sales: Following a tentative start to the year in the first two months, business
picked up significantly in March. Compared with the first quarter of the
previous year, sales declined 11.3% to euro 8,239 million. When first-quarter
sales of euro 364 million from Pharmaceuticals in 2001 are excluded, the decline
is 7.7%, mainly due to a further decrease in selling prices.
Factors influencing sales in comparison with previous year:
<Table>
<Caption>
in % 1st Quarter
Volumes + 0.7
Prices (8.8)
Currency + 0.5
Acquisitions / divestitures* (3.7)
Total (11.3)
</Table>
*) Including discontinued operations
Earnings: Income from operations before special items was 15% lower than in the
first quarter of 2001. This decline is primarily due to lower earnings
contributions from the Oil & Gas and Agricultural Products & Nutrition segments.
In the other segments, however, costs have been reduced
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through the restructuring measures started last year. Raw material costs
were generally lower. Nevertheless, pressure on margins intensified in some
divisions.
Income from operations of euro 814 million was up 3.2% compared to
the same period in 2001. However, the previous years figure was burdened with
special items of euro 173 million.
The financial result improved by euro 182 million and was positive. This was due
to special income of euro 114 million from the sale of securities and lower
interest expense as a result of reduced financial indebtedness. Excluding the
extraordinary income of euro 6,010 million from the sale of our pharmaceuticals
business in the first quarter of 2001, income before taxes and minority
interests increased euro 207 million, or 32.8%, to euro 838 million.
Net income increased to euro 556 million compared with euro 323 million
excluding the effects of extraordinary income. This disproportional increase
compared with the change in income before taxes and minority interests is
partially due to lower foreign income taxes on oil-producing operations.
Ordinary earnings per share in the first quarter were euro 0.95 compared with
euro 0.53 in the same period of 2001.
<Table>
<Caption>
Special items 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Million euro 2002 2001 2002 2001 2002 2001 2002 2001
Special items
- - in income from operations (4) (173) (447) (14) (442)
- - in financial result 114 - - (5) (68)
Total 110 (173) (447) (19) (510)
</Table>
Outlook
Important indicators for business development generally improved in March.
Capacity utilization at important sites increased. In the second quarter, we
therefore expect to be able to maintain the first quarters level of sales and
earnings. For 2002 as a whole, we continue to expect sales at the previous years
level and improved income from operations.
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<Page>
Segments 1st Quarter
<Table>
<Caption>
Sales Income from Income from
operations before operations
special items
Change Change Change
Million euro 2002 2001 *in % 2002 2001 *in % 2002 2001 *in %
1st Quarter
Chemicals 1,203 1,122 7.2 111 109 1.8 109 101 7.9
Plastics & Fibers 1,975 2,154 (8.3) 98 93 5.4 95 75 26.7
Performance Products 1,983 2,087 (5.0) 115 125 (8.0) 119 107 11.2
Agricultural Products & Nutrition 1,542 2,088 (26.1) 234 299 (21.7) 231 224 3.1
Oil & Gas 1,226 1,443 (15.0) 284 376 (24.5) 284 376 (24.5)
Other 310 395 (21.5) (24) (40) 40.0 (24) (94) 74.5
thereof
exploratory/biotechnology research costs 49 67 (26.9) 49 67 (26.9)
8,239 9,289 (11.3) 818 962 (15.0) 814 789 3.2
</Table>
*) Previous year's figures adjusted to take account of organizational
changes.
Chemicals
Sales in this segment increased 7.2% in the first quarter of 2002 to euro 1,203
million.
Income from operations before special items of euro 111 million was at the
previous years level.
Despite a lower level of sales in the Inorganics division, earnings improved in
particular due to business with inorganic specialties and electronic grade
chemicals. In the Petrochemicals division, high capacity utilization of steam
crackers in Europe and the increasing capacity utilization of the new cracker in
Port Arthur, Texas, resulted in a 24% increase in sales to
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euro 610 million. Earnings were reduced by lower margins for cracker products as
a result of high naphtha prices.
Sales in the Intermediates division did not quite reach the previous years
level, but earnings were improved, above all as a result of higher capacity
utilization and cost savings.
Sales by division
<Table>
<Caption>
1st Quarter Change
Million euro 2002 2001* in %
Inorganics 169 191 (11.5)
Petrochemicals 610 492 24.0
Intermediates 424 439 (3.4)
</Table>
*) Previous year's figures adjusted to take account of organizational changes.
Plastics & Fibers
In the first quarter, sales in the Plastics & Fibers segment decreased 8.3% to
euro 1,975 million. This change is primarily due to a severe decline in selling
prices.
Compared with the same period in 2001, income from operations before special
items increased 5.4% in the first quarter to euro 98 million. In the Styrenics
division, sales were down 13.4% at euro 742 million. Compared with the previous
year, earnings declined due to unsatisfactory margins.
Sales in the Performance Polymers division declined 11.5%. Earnings improved
primarily as a result of higher capacity utilization and positive effects from
last years restructuring measures.
Sales and earnings were stable in the Polyurethanes division.
Sales by division
<Table>
<Caption>
1st Quarter Change
Million euro 2002 2001* in %
Styrenics 742 857 (13.4)
Performance Polymers 541 611 (11.5)
Polyurethanes 692 686 0.9
</Table>
*) Previous year's figures adjusted to take account of organizational changes
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Performance Products
First-quarter sales in this segment declined 5% to euro 1,983 million; income
from operations before special items was 8% lower at euro 115 million. Positive
influences came from the implementation of cost-reduction measures and higher
sales volumes in various product lines, but were insufficient to offset
valuation allowances to receivables in Argentina.
In the Performance Chemicals division, sales and earnings were almost at the
previous years level. A 7.3% decline in sales in the Coatings division to euro
531 million was largely due to lower automotive production in Europe, and
earnings were reduced correspondingly. First-quarter sales in the Functional
Polymers division were down 7.4%. Following a weak start to the year, business
picked up considerably in March. The cost-saving measures we implemented had a
positive effect on earnings.
Sales by division
<Table>
<Caption>
1st Quarter Change
Million euro 2002 2001* in %
Performance Chemicals 848 862 (1.6)
Coatings 531 573 (7.3)
Functional Polymers 604 652 (7.4)
</Table>
*) Previous year's figures adjusted to take account of organizational changes.
Agricultural Products & Nutrition
<Table>
<Caption>
Sales Income from Income from
operations before operations
special items
Change Change Change
Million euro 2002 2001 in % 2002 2001 in % 2002 2001 in %
1st Quarter
Agricultural Products 1,038 1,232 (15.7) 213 285 (25.3) 213 209 1.9
Fine Chemicals 504 492 2.4 21 13 61.5 18 (15) .
Pharmaceuticals* - 364 - - 1 - - 30 -
1,542 2,088 (26.1) 234 299 (21.7) 231 224 3.1
</Table>
*) The pharmaceuticals business was sold to Abbott Laboratories
on March 2, 2001.
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Agricultural Products: First-quarter sales of euro 1,038 million were almost 16%
lower than in 2001. This is due primarily to the efforts to further optimize
inventories that we have undertaken together with our customers. We expect that
this will lead to a shift in sales into the second quarter and thus closer to
the period of application. The 25% decline in income from operations before
special items is a consequence of these measures. Cost savings related to the
integration of the acquired business had a positive effect.
Fine Chemicals: Sales rose slightly to euro 504 million. Income from operations
before special items was euro 21 million, which was considerably higher than in
2001. Positive growth was seen in the area of pharmaceutical active ingredients
in particular.
Oil & Gas
Sales of euro 1,226 million in this segment in the first quarter were 15% lower
compared with the same period in 2001. At approximately $21 per barrel, the
average price of crude oil in the first quarter of 2002 was $4.7 per barrel
lower than in the first quarter of 2001. In view of the current price situation,
we have increased the average oil price used in our planning to $22 per barrel
for 2002.
Income from operations was euro 284 million. Lower crude oil prices were
partially offset by growth in natural gas trading. Foreign income taxes for oil
production, which are non-compensable with German taxes, amounted to euro 82
million in the first quarter of 2002 and euro 121 million in the first quarter
of 2001. These are included in tax expenses.
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<Table>
<Caption>
Regions 1st Quarter
Location of company Sales Income from Income from
operations before operations
special items
Change Change Change
Million euro 2001 2000 in % 2001 2000 in % 2001 2000 in %
1st Quarter
Europe 4,900 5,859 (16.4) 767 949 (19.2) 767 923 (16.9)
- - thereof
Germany 3,505 4,039 (13.2) 568 627 (9.4) 568 613 (7.3)
North America
(NAFTA) 2,120 2,206 (3.9) 28 (13) - 24 (157) -
South America 309 428 (27.8) (6) 11 - (6) 8 -
Asia,
Pacific Area,
Africa 910 796 14.3 29 15 93.3 29 15 93.3
8,239 9,289 (11.3) 818 962 (15.0) 814 789 3.2
</Table>
The table above shows regional sales based on location of the Group company
performing the sale. The following explanations to sales trends are based on
regional sales according to location of customer.
In Europe, sales in the first quarter were euro 4,565 million. The decline of
16.2% compared with the previous year reflects the persistently weak economic
environment. This region still made the largest contribution to the Groups
income from operations. Lower sales resulted in a decline in income from
operations before special items by euro 182 million or 19.2%. Excluding the
effects of the sale of our pharmaceuticals business, we achieved slightly higher
sales in the NAFTA region. Income from operations before special items was
positive, partially as a result of the measures we implemented last year to
reduce costs and improve structures. In South America, sales in the first
quarter were down 27.5% to euro 380 million; sales were particularly negatively
affected in Brazil and in Argentina. Income from operations was burdened by
valuation allowances to receivables from customers in Argentina, which amounted
to euro 40 million. In the Asia, Pacific Area, Africa region, sales increased by
3.6% to euro 1,206 million and income from operations improved.
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Employees
Since the end of 2001, the number of employees has decreased by 942 as a result
of the restructuring measures decided on last year.
<Table>
<Caption>
Number of employees
1st Quarter Year
2002 2001 2001
End of period 91,603 92,364 92,545
Average 91,929 99,479 94,744
</Table>
Finance
Cash provided by operating activities was euro 128 million, euro 530 million
more than in the same period in 2001. Cash outflows were related to payments for
fines and claims for damages relating to antitrust violations in the vitamins
business which occurred several years ago. At the end of the first quarter,
seasonal effects resulted in a considerably higher level of trade accounts
receivable than at the end of 2001. These additional funds employed were only
partially offset by a reduction in inventories. Overall, additional funds
employed included in net current assets of euro 795 million were considerably
lower than in the previous year.
Cash used in investing activities amounted to euro 312 million. As planned,
expenditures for tangible and intangible fixed assets of euro 473 million
were approximately euro 100 million lower than in 2001. There was a cash
inflow from the sale of securities. Financing requirements were covered by
the issue of commercial paper. At euro 862 million, liquid funds were euro
119 million higher at the end of the first quarter than at the end of 2001.
We did not buy back any shares in the first quarter of 2002.
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Consolidated Statements of Cash Flow 1st Quarter
<Table>
<Caption>
Million euro 2002 2001
Net income* 556 323
Depreciation of fixed assets 618 630
Changes in net current assets (795) (1,135)
Miscellaneous items (251) (220)
Cash provided by operating activities 128 (402)
Expenditures for tangible and
intangible fixed assets (473) (574)
Acquisitions/divestitures, net - 6,039
Financial investments and other items 161 54
Cash provided (used) by investing activities (312) 5,519
Proceeds from capital increases 15 (2)
Changes in financial indebtedness 424 (3,140)
Dividends (30) (17)
Cash provided (used) by financing activities 409 (3,159)
Net changes in cash and cash equivalents 225 1,958
Cash and cash equivalents as of beginning
of year and other changes 355 576
Cash and cash equivalents 580 2,534
Securities held as current assets 282 334
Liquid funds 862 2,868
</Table>
*) Excluding extraordinary income
Forward-looking statements
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 BASFs Form 20-F filed with
the Securities and Exchange Commission. [The Annual Report on Form 20-F is
available on the Internet at www.basf.com.] We do not assume any obligation to
update the forward- looking statements contained in this report.
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Financial Statement of BASF Group (abridged version)
Consolidated Statements of Income
<Table>
<Caption>
1st Quarter Change
Million euro 2002 2001 in %
Sales, net of natural gas taxes 8,239 9,289 (11.3)
Cost of sales 5,477 6,131 (10.7)
Gross profit on sales 2,762 3,158 (12.5)
Selling expenses 1,210 1,386 (12.7)
General and administrative expenses 171 183 (6.6)
Research and development expenses 312 377 (17.2)
Other operating income 185 319 (42.0)
Other operating expenses 440 742 (40.7)
Income from operations 814 789 3.2
Expense/income from financial assets 0 (32) -
Interest result 24 (126) -
Financial result 24 (158) -
Income from ordinary activities 838 631 32.8
Extraordinary income - 6,010 -
Income before taxes and minority interests 838 6,641 (87.4)
Income taxes 263 435 (39.5)
Minority interests 19 13 46.2
Net income 556 6,193 (91.0)
Earnings per share
- ordinary (euro) 0.95 0.53 79.2
- extraordinary
income (euro) - 9.66 -
Number of shares in millions (weighted) 583 608 (4.0)
</Table>
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Consolidated Balance Sheets
<Table>
<Caption>
Assets March 31 Change Dec. 31 Change
Million euro 2002 2001 in % 2001 in %
Intangible assets 3,854 4,222 (8.7) 3,943 (2.3)
Property, plant and equipment 14,140 13,730 3.0 14,190 (0.4)
Financial assets 3,442 3,249 5.9 3,360 2.4
Fixed assets 21,436 21,201 1.1 21,493 (0.3)
Inventories 4,783 5,000 (4.3) 5,007 (4.5)
Accounts receivable, trade 7,226 7,230 (0.1) 5,875 23.0
Miscellaneous receivables 2,275 4,558 (50.1) 2,384 (4.6)
Deferred taxes 1,434 1,151 24.6 1,373 4.4
Liquid funds 862 2,868 (69.9) 743 16.0
Current assets 16,580 20,807 (20.3) 15,382 7.8
Total assets 38,016 42,008 (9.5) 36,875 3.1
<Caption>
Stockholders' equity and liabilities March 31 Change Dec. 31 Change
Million euro 2002 2001 in % 2001 in %
Subscribed capital and capital surplus 4,408 4,315 2.2 4,408 0.0
Retained earnings and other equity 13,311 15,443 (13.8) 12,754 4.4
Minority interests 364 376 (3.2) 360 1.1
Stockholders' equity 18,083 20,134 (10.2) 17,522 3.2
Provisions for pensions and similar obligations 3,929 3,906 0.6 3,953 (0.6)
Provisions for taxes and other provisions 5,861 6,088 (3.7) 6,188 (5.3)
Provisions 9,790 9,994 (2.0) 10,141 (3.5)
Financial indebtedness 3,222 4,563 (29.4) 2,835 13.7
Accounts payable, trade 2,623 2,934 (10.6) 2,491 5.3
Other liabilities 4,298 4,383 (1.9) 3,886 10.6
Liabilities 10,143 11,880 (14.6) 9,212 10.1
Total stockholders' equity and liabilities 38,016 42,008 (9.5) 36,875 3.1
</Table>
The interim financial statements have not been audited.
Publisher:
BASF Aktiengesellschaft
Corporate Department Communications
67056 Ludwigshafen
Germany
You can find HTML versions of this and other publications from BASF on our
homepage at www.basf.com.
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You can also order reports:
- - by telephone: +49 62160-0
- - by fax: +49 6021 704-431
- - by e-mail: medien-service@basf-ag.de
- - on the Internet: www.basf.com
Important dates
August 8, 2002
Interim Report Second Quarter 2002
November 14, 2002
Interim Report Third Quarter 2002
March 18, 2003
Financial Results 2002
April 29, 2003
Interim Report First Quarter 2003
May 6, 2003
Annual Meeting, Mannheim
Contacts
Corporate Media Relations:
Michael Grabicki
Phone: +49 621 60-99938
Fax: +49 621 60-20129
Investor Relations:
Carolin Weitzmann
Phone: +49 621 60-48230
Fax: +49 621 60-22500
General inquiries:
Phone: +49 621 60-0
Fax: +49 621 60-42525
Internet: www.basf.de/annual-report
BASF Aktiengesellschaft
67056 Ludwigshafen
Germany
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