Exhibit 99
A Dynamic BASF Moves Forward into the Second Half
LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--Aug. 7, 2003--BASF
(NYSE:BF) (FWB:BAS) (LSE:BFA):
-- Good performance in the second quarter of 2003: EBIT before
special items up slightly on 2002
-- Agricultural Products & Nutrition segment improves
significantly
-- Additional restructuring program to strengthen profitability
in the NAFTA region
-- Full year 2003: major efforts needed to match last year's
earnings
BASF is continuing to perform well in a persistently difficult
environment. Thanks to the success of its timely cost-reduction
program, the company achieved second-quarter EBIT before special items
of EUR832 million - an increase of 1.2 percent compared with the same
period of 2002. Sales declined by 1.6 percent to EUR8.2 billion. This
was mainly due to the drop in the value of the U.S. dollar by more
than 20 percent compared with the previous year. BASF increased sales
volumes by 3.2 percent and prices by 3.0 percent. Disregarding the
translation effect of the weaker dollar, the company would have posted
sales of EUR8.8 billion, or 4.4 percent more than in the second
quarter of 2002. "You can rely on BASF's strength, even when we have
to operate in an economic climate that offers very few encouraging
signs," explained Dr. Jurgen Hambrecht, Chairman of the Board of
Executive Directors of BASF Aktiengesellschaft, during his
presentation of the interim results for the second quarter of 2003.
Second-quarter EBIT after special items was EUR774 million, or 5.3
percent lower compared with the previous year. Special charges of
EUR58 million in the second quarter were associated with provisions
for restructuring measures in the NAFTA region and the integration of
BASF's latest acquisition in the Agricultural Products division. Net
income fell by 61 percent to EUR195 million as a result of higher
income taxes, mainly due to a one-time effect of EUR124 million
related to corporate income tax. Earnings per share were therefore
EUR0.35 in the second quarter compared with EUR0.86 in the same period
of 2002.
Thanks to the very good first quarter, cumulative sales for the
first half of 2003 were more than EUR17 billion or 2.8 percent higher
than in the first half of 2002. Adjusted for currency effects, sales
would have been EUR18 billion or an increase of 8.3 percent.
EBIT before special items for the first half of 2003 was almost
EUR1.8 billion or 8.3 percent higher than in the same period of 2002.
All operating divisions were in the black.
In the first half of the year, cash provided by operating
activities increased significantly to EUR1.9 billion, exceeding the
amount for the same period in 2002 by EUR1 billion. This increase is
the result of the substantially lower additional financing
requirements for net current assets.
Outlook for full year 2003: major efforts needed to match last
year's earnings
BASF's Chairman does not expect there to be an upturn in the
economic climate until the fourth quarter of 2003 at the earliest
"High unemployment rates, which continue to rise in the eurozone and
in the United States, suggest that growth triggered by private
consumption is unlikely. The signals from our customers also fail to
show any signs of an upturn in the short term," said Hambrecht.
In the second quarter, the level of orders and the number of
incoming orders have been lower than in the same period in 2002.
Hambrecht is therefore not particularly optimistic with regard to
sales and earnings development in the third quarter. "We expect sales
at the same level as in 2002 and lower EBIT before special items. It
is even more difficult to give a prognosis for the full year because
of the continuing uncertainties. Considerable risks must be overcome
if we are to achieve the same level of sales and earnings as in 2002.
In particular, these risks are associated with volatile oil prices,
the uncertain development of the U.S. dollar and persistent stagnation
in important economies. Major efforts are therefore needed to match
last year's achievements," he said.
Two-phase restructuring program for the NAFTA region
The company aims to make additional savings by reducing its fixed
costs through a two-phase restructuring program for the NAFTA region.
In the first phase, BASF wants to optimize the effectiveness and
efficiency of service functions such as human resources, IT,
purchasing, finance and legal with the goal of saving $100 million.
These measures are expected to incur one-time costs of $55 million, of
which $41 million has already been accounted for as special charges in
the first half of 2003.
In the second phase of the NAFTA restructuring program focuses on
further optimizing product portfolio and site structures. The goal is
to concentrate on business areas with high growth and profit
potential. At the same time, BASF's will sharpen the customer focus of
its business processes and exploit market potential more fully. The
second phase is expected to result in total cost savings of at least
$150 million, which are to be realized by 2006.
The goal of this two-phase program is to earn the cost of capital
in the NAFTA region.
Segment overview: Agricultural Products & Nutrition improves
significantly
In the Chemicals segment, sales volumes remained healthy even
though customers reduced their inventory. Second-quarter sales rose
2.5 percent to EUR1.4 billion.
EBIT before special items was burdened by scheduled shutdowns of
the steam cracker in Ludwigshafen and other downstream plants. At
EUR134 million, it was 16.8 percent lower than in 2002.
Compared with the same period in 2002, second-quarter sales in the
Plastics segment declined 2.9 percent to EUR2.2 billion, partially due
to weak demand in Asia. Oversupply, especially of styrenics, led to
further pressure on prices and margins.
At EUR76 million, EBIT before special items fell by 64 percent
compared with 2002. This figure contains integration costs for the
engineering plastics business acquired from Honeywell as well as
startup costs for our new 140,000 metric ton plant for TDI and
precursors in Yeosu, South Korea.
Sales in the Performance Products segment declined compared with
2002 due to currency effects. Volumes were slightly lower. Sales were
8 percent lower at EUR1.9 billion; EBIT before special items dropped
31 percent to EUR145 million.
Business improved considerably in the Agricultural Products &
Nutrition segment. In euro terms, second-quarter sales of EUR1.5
billion were at approximately the same level as in 2002. However,
because about 60 percent of the company's business is conducted
dollars, considerable increases are partially disguised by the
significant rise in the value of the euro. Despite negative currency
effects, EBIT before special items climbed by almost EUR80 million or
61 percent to EUR209 million. Both divisions in the segment
contributed to this positive development.
The market for crop protection products shrank once again in the
key markets of Europe and North America. Even so, the Agricultural
Products division was able to increase sales by approximately 5
percent and, in dollar terms, by almost 30 percent. This increase was
due to new product launches, the acquisition of the fipronil business
and efforts to conduct business closer to the application period. The
increase in EBIT before special items by almost 60 percent to EUR171
million exceeded our expectations and is a consequence of structural
measures and the increased volume of business. The EBITDA margin
before special items in the first half of 2003 was 29.4 percent.
Measures to reduce in-channel inventory are now nearly completed in
the United States and South America. The one-time costs of EUR31
million in the first half of 2003 resulted almost entirely from
step-ups on inventories following the fipronil acquisition. Despite
the persistently difficult market conditions, BASF has set itself the
goal of improving earnings in the second half of 2003 compared with
the previous year.
Despite slightly higher volumes, the Fine Chemicals division was
unable to achieve the previous year's level of sales as a result of
the strong euro. At EUR38 million, second-quarter EBIT before special
items was up 73 percent on 2002. Thanks to the further implementation
of a restructuring program, BASF succeeded in significantly increasing
the division's EBIT margin.
The Oil & Gas segment posted the strongest increase in sales.
Compared with the same period in 2002, we increased sales in the
second quarter by 5.6 percent to EUR928 million. This increase was due
primarily to higher volumes in our natural gas trading activities (+22
percent). EBIT before special items remained at a high level but
declined by 4.8 percent compared with 2002 to EUR278 million.
BASF is the world's leading chemical company, offering its
customers a range of high-performance products, including chemicals,
plastics, performance products, agricultural products, fine chemicals
as well as crude oil and natural gas. Its distinctive approach to
integration, known in German as "Verbund," is its strength. It enables
BASF to achieve cost leadership and gives the company a competitive
advantage. BASF conducts its business in accordance with the
principles of sustainable development. In 2002, BASF had sales of
EUR32 billion (circa $34 billion) and over 89,000 employees worldwide.
Further information on BASF is available on the Internet at
www.basf.com.
Forward-looking statements
This release 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 BASF's Form 20-F filed with the Securities and Exchange
Commission. We do not assume any obligation to update the
forward-looking statements contained in this release.
You can also obtain further information from the Internet at the
following address:
www.basf.de/PK (German)
www.basf.de/pcon (English)
07:30 a.m. CEST
Second Quarter 2003 Interim Report
Press Release
Photos
10:00 a.m. CEST
Speech Dr. Jurgen Hambrecht (live transmission)
11:00 a.m. CEST Speech Dr. Jurgen Hambrecht (printed version)
Second-Quarter Results 2003
April - June 2003 (January - June 2003), published on August 7,
2003
Good performance in second quarter
-- Sales slightly below previous year's level due to currency
effects
-- Income from operations before special items up slightly
compared with 2002
-- Agricultural Products & Nutrition segment improves
significantly
-- Special factors reduce net income
-- Substantial improvement in cash provided by operating
activities
-- Outlook for third quarter: sales at the same level as in
2002, lower income from operations before special items
Dear shareholders and friends of BASF,
The facts and figures for the second quarter of 2003 demonstrate
that we continued to perform well in a persistently difficult
environment. Conditions in the past three months did not make things
easy for BASF. Oil prices remain volatile at a high level. Currency
effects - in particular due to the weak U.S. dollar - have had a
negative impact on sales. Even so, we posted income from operations
before special items that was slightly higher than in the same quarter
of 2002.
This is proof that our timely cost-reduction programs and measures
to further improve our product portfolio and regional positioning are
showing their effects. For example, we have significantly improved
sales and earnings in our Agricultural Products & Nutrition segment.
In the NAFTA region, we have started a two-phase restructuring program
through which we want to save at least $250 million.
But we're not just cutting costs. We're also expanding high-growth
businesses. Through the acquisition of Callery Chemical in the United
States we will become a leading supplier of important inorganic
specialties for the pharmaceutical industry. Our cooperation with
Gazprom to develop gas reserves in western Siberia through the newly
established joint venture Achimgaz will strengthen our backward
integration in the Oil & Gas segment.
Stock market trends in the first half of 2003 give grounds for
optimism. Investors seem to have regained their confidence and BASF's
shares have performed well in this environment.
The remaining months in 2003 will continue to be difficult. In the
second quarter, the level of orders and the number of incoming orders
have been lower than in the same period in 2002. We are therefore not
very optimistic about sales and earnings development in the third
quarter. We expect sales at the same level as in 2002 and lower income
from operations before special items. It is even more difficult to
give a prognosis for the full year because of the continuing
uncertainties. We need to make major efforts if we are to achieve the
same level of sales and earnings as in 2002. Key measures include
making further improvements to our product portfolio, implementing
rigorous cost management, ensuring even more efficient processes and
maintaining strict capital discipline.
I cannot claim to predict the future, but I can promise you that
BASF and its employees are setting the right course in good time and
will - as in the past - make every effort to increase the value of
your investment in BASF.
Yours sincerely,
Jurgen Hambrecht
Dr. Jurgen Hambrecht
Chairman of the Board of Executive Directors
BASF Group Business Review and Analysis
Sales and earnings 2nd Quarter 1st Half
Change Change
Million euro 2003 2002 in % 2003 2002 in %
Sales 8,249 8,379 (1.6) 17,081 16,618 2.8
Income from operations
before special items 832 822 1.2 1,776 1,640 8.3
Income from operations
(EBIT) 774 817 (5.3) 1,716 1,631 5.2
Income from operations before
interest, taxes,
Depreciation and
amortization (EBITDA) 1,348 1,411 (4.5) 2,844 2,843 0.0
Income before taxes and
minority interests 686 825 (16.8) 1,525 1,663 (8.3)
Net income 195 502 (61.2) 637 1,058 (39.8)
Earnings per share (euro) 0.35 0.86 (59.3) 1.13 1.81 (37.6)
Sales: In a difficult economic environment, sales in the second
quarter of 2003 almost reached the level of the previous year (- 1.6
%). Increases in volumes (+ 3.2 %) and sales prices (+ 3.0 %) were
outweighed by negative currency effects (- 8.9 %) resulting from the
rise of the euro, particularly against the U.S. dollar. Portfolio
measures increased sales by 1.1 %.
Due to much higher raw material costs, our sales prices remain at
a level that is still unsatisfactory.
Factors influencing sales in comparison with previous year
in % 2nd Quarter 1st Half
Volumes 3.2 6.8
Prices 3.0 3.6
Currencies (8.9) (8.5)
Acquisitions/divestitures 1.1 0.9
Total (1.6) 2.8
Earnings: Second-quarter income from operations before special
items rose 1.2 % compared with the same quarter of 2002. This was
primarily due to an increased contribution to earnings by the
Agricultural Products & Nutrition segment. In additions, gains from
currency hedging as shown under "Other" in the Segments table had a
positive effect. Special charges were associated with further
restructuring measures in the NAFTA region and the integration of the
fipronil crop protection business. Second-quarter income from
operations after special items was down 5.3 % compared with 2002.
Income before taxes and minority interests declined by 16.8 % in
the second quarter to euro 686 million, mainly due to a negative
financial result.
Net income in the second quarter fell by 61.2 % to euro 195
million as a result of higher income taxes. The increase in income
taxes is due mainly to a change in German tax law regarding corporate
income tax credit on dividends. In the second quarter, this resulted
in one-time additional tax expense of euro124 million. We have
appealed the first tax assessment relating to this change in the law.
In the second quarter, income taxes for oil production that are
non-compensable with German taxes amounted to euro 104 million
(previous year euro 101 million).
Earnings per share were euro 0.35 in the second quarter compared
with euro 0.86 in 2002.
Special 1st 2nd 3rd 4th
items Quarter Quarter Quarter Quarter
Million
euro 2003 2002 2003 2002 2003 2002 2003 2002
Special items
- - in income
from
operations (2) (4) (58) (5) (124) (107)
- - in
financial
result - 114 (3) - 130 57
Total (2) 110 (61) (5) 6 (50)
Outlook: We do not expect there to be an economic upturn until the
fourth quarter of 2003 at the earliest. Due to the continuing strength
of the euro, we expect third-quarter sales to be at the same level as
in 2002 and anticipate lower income from operations before special
items.
With the continuing uncertainties, it will require considerable
efforts to achieve the previous year's level of sales and earnings for
the full year.
Segments
Income
from
operations
before
special
Sales items
Change
Million euro 2003 2002 in % 2003
2nd Quarter
Chemicals 1,433 1,398 2.5 134
Plastics 2,177 2,243 (2.9) 76
Performance Products 1,911 2,077 (8.0) 145
Agricultural Products & Nutrition 1,505 1,495 0.7 209
Oil & Gas 928 879 5.6 278
Other(a) 295 287 2.8 (10)
Thereof costs of exploratory/
biotechnological research - - - 40
8,249 8,379 (1.6) 832
1st Half
Chemicals 2,952 2,601 13.5 279
Plastics 4,460 4,218 5.7 186
Performance Products 3,818 4,060 (6.0) 287
Agricultural Products & Nutrition 2,801 3,037 (7.8) 446
Oil & Gas 2,411 2,105 14.5 682
Other(a) 639 597 7.0 (104)
Thereof costs of exploratory/
biotechnological research - - - 85
17,081 16,618 2.8 1,776
Income
from
operations
Change Change
Million euro 2002 in % 2003 2002 in %
2nd Quarter
Chemicals 161 (16.8) 127 161 (21.1)
Plastics 211 (64.0) 67 211 (68.2)
Performance Products 210 (31.0) 136 210 (35.2)
Agricultural Products &
Nutrition 130 60.8 181 127 42.5
Oil & Gas 292 (4.8) 278 292 (4.8)
Other(a) (182) 94.5 (15) (184) 91.8
Thereof costs of exploratory/
biotechnological research 50 (20.0) 40 50 (20.0)
822 1.2 774 817 (5.3)
1st Half
Chemicals 272 2.6 271 270 0.4
Plastics 309 (39.8) 176 306 (42.5)
Performance Products 325 (11.7) 279 329 (15.2)
Agricultural Products &
Nutrition 364 22.5 417 358 16.5
Oil & Gas 576 18.4 682 576 18.4
Other(a) (206) 49.5 (109) (208) 47.6
Thereof costs of exploratory/
biotechnological research 99 (14.1) 85 99 (14.1)
1,640 8.3 1,716 1,631 5.2
Income from
operations
before
interest,
taxes,
depreciation Capital
and expenditures
amortization (including
(EBITDA) acquisitions)
Change
Million euro 2003 2002 in % 2003 2002
2nd Quarter
Chemicals 243 289 (15.9) 128 154
Plastics 187 338 (44.7) 256 158
Performance Products 235 335 (29.9) 57 66
Agricultural Products & Nutrition 319 260 22.7 55 52
Oil & Gas 355 353 0.6 58 32
Other(a) 9 (164) . 123 88
1,348 1,411 (4.5) 677 550
1st Half
Chemicals 503 516 (2.5) 254 286
Plastics 417 568 (26.6) 342 278
Performance Products 479 579 (17.3) 98 135
Agricultural Products & Nutrition 668 627 6.5 1,186 94
Oil & Gas 836 714 17.1 97 69
Other(a) (59) (161) 63.4 231 142
2,844 2,843 0.0 2,208 1,004
Assets
Change Change
Million euro in % 2003 2002 in %
2nd Quarter
Chemicals (16.9) 4,964 5,010 (0.9)
Plastics 62.0 6,292 6,394 (1.6)
Performance Products (13.6) 5,140 5,550 (7.4)
Agricultural Products & Nutrition 5.8 7,828 7,388 6.0
Oil & Gas 81.3 3,339 2,760 21.0
Other(a) 39.8 8,496 9,180 (7.5)
23.1 36,059 36,282 (0.6)
1st Half
Chemicals (11.2)
Plastics 23.0
Performance Products (27.4)
Agricultural Products & Nutrition .
Oil & Gas 40.6
Other(a) 62.7
119.9
(a) "Other" includes sales and earnings of other businesses
including the Fertilizers business as well as expenses, income
and assets (e. g., the construction of infrastructure for new
sites) not allocated to the segments. This item also includes
foreign currency results from financial indebtedness that are
not allocated to the segments as well as from currency
positions that are macro-hedged (2nd quarter: euro 13
million/previous year euro (95) million), cumulative euro 16
million/previous year euro (85) million).
Chemicals
Compared with the second quarter of 2002, sales rose 2.5 % to euro
1,433 million (volumes 4.8 %, prices/currency - 2.9 %).
At euro 134 million, income from operations before special items
was 16.8 % lower than in 2002. Income from operations before special
items declined in all three divisions, partially due to scheduled
plant shutdowns.
Sales in the Inorganics division increased 1.1 % in the second
quarter. Sales volumes declined slightly, while sales prices improved.
Sales volumes in the Petrochemicals division increased and sales
climbed 5.2 %.
In the Intermediates division, sales declined 1.6 % compared with
the same period in 2002.
Volumes were higher than in the previous year. Price increases
were possible only in individual product groups and were outweighed by
currency effects.
Sales by division 2nd Quarter 1st Half
Change Change
Million euro 2003 2002 in % 2003 2002 in %
Inorganics 184 182 1.1 367 351 4.6
Petrochemicals 806 766 5.2 1,680 1,376 22.1
Intermediates 443 450 (1.6) 905 874 3.5
Plastics
Second-quarter sales declined 2.9 % compared with the same period
of 2002 (volumes 1.3 %, prices/currency - 2.5 %). Sales volumes
increased in the Polyurethanes division as a result of new capacities.
In the Styrenics and Performance Polymers divisions, sales volumes
were negatively impacted due to inventory reduction, in particular by
customers in Asia.
At euro76 million, income from operations before special items was
64 % lower than in the second quarter of 2002. Weak demand meant that
it was not possible to increase prices to the necessary extent to pass
on raw material prices, which in some cases have risen considerably.
Nevertheless, sales in the Styrenics division were at approximately
the same level as in the second quarter of 2002. Income declined
primarily due to significant increases in raw material costs.
In the Performance Polymers division, second-quarter sales were
12.1 % lower than in 2002. This was due to a considerable decline in
sales volumes in Asia, in particular for fiber intermediates. Income
was significantly lower.
Sales in the Polyurethanes division increased 1 % in the second
quarter due to higher sales volumes, in particular in Europe and Asia.
Income was down on 2002 as a result of higher raw material costs and
the startup costs for the new TDI plant in South Korea.
Sales by division 2nd Quarter 1st Half
Change Change
Million euro 2003 2002 in % 2003 2002 in %
Styrenics 891 888 0.3 1,888 1,630 15.8
Performance Polymers 552 628 (12.1) 1,120 1,169 (4.2)
Polyurethanes 734 727 1.0 1,452 1,419 2.3
Performance Products
Sales declined by 8 % in the second quarter (volumes - 0.6 %,
prices/currency - 7.6 %).
Income from operations before special items dropped 31 % to
euro145 million. Neither price increases nor our continuing cost
reduction measures were able to compensate for high raw material
costs.
In the Performance Chemicals division, volumes were constant, but
sales were down 7.5 % on 2002, mainly as a result of negative currency
effects. Income did not achieve the previous year's level.
Sales in the Coatings division were 10.9 % lower than in the same
period in 2002 mainly due to currency effects, but sales volumes were
stable overall. The previous year's income was not achieved.
As a result of currency effects and lower sales volumes for
acrylic monomers and paper dispersions, sales in the Functional
Polymers division were 6.1 % lower than in the second quarter of 2002.
Increasing pressure on margins due to high raw material costs reduced
income.
Sales by division 2nd Quarter 1st Half
Change Change
Million euro 2003 2002 in % 2003 2002 in %
Performance Chemicals 792 856 (7.5) 1,598 1,704 (6.2)
Coatings 505 567 (10.9) 1,009 1,098 (8.1)
Functional Polymers 614 654 (6.1) 1,211 1,258 (3.7)
Agricultural Products & Nutrition
Sales in the Agricultural Products & Nutrition segment increased
in the second quarter by 0.7 % to euro1,505 million (volumes 6.4 %,
prices/currency - 11.8 %).
Agricultural Products: Despite negative currency effects,
second-quarter sales rose 4.8 % compared with the same quarter of
2002. The increase in sales was due in part to the planned shift of
sales from the first quarter into the application period in the second
quarter and to the successful launch of new, innovative products. The
fipronil business, which was acquired toward the end of the first
quarter, has now been successfully integrated and also had a positive
effect on sales.
Income from operations before special items climbed 58.3 % to
euro171 million due to higher sales and the success of cost reduction
measures initiated last year. The EBITDA margin before special items
was 29.4 % in the first half of 2003.
Fine Chemicals: Sales were 7.7 % lower than in 2002, primarily as
a result of currency effects. Higher sales volumes were unable to
offset this.
At euro38 million, income from operations before special items was
euro16 million higher thanks to our cost reduction measures.
Sales and earnings by division
Income from
operations
before
special
Sales items
Change Change
Million euro 2003 2002 in % 2003 2002 in %
2nd Quarter
Agricultural Products 1,051 1,003 4.8 171 108 58.3
Fine Chemicals 454 492 (7.7) 38 22 72.7
1,505 1,495 0.7 209 130 60.8
1st Half
Agricultural Products 1,884 2,041 (7.7) 367 321 14.3
Fine Chemicals 917 996 (7.9) 79 43 83.7
2,801 3,037 (7.8) 446 364 22.5
Income from
operations
Change
Million euro 2003 2002 in %
2nd Quarter
Agricultural Products 144 108 33.3
Fine Chemicals 37 19 94.7
181 127 42.5
1st Half
Agricultural Products 336 321 4.7
Fine Chemicals 81 37 118.9
417 358 16.5
Oil & Gas
Sales in the Oil & Gas segment rose by 5.6 % to euro928 million
(volumes + 9.4 %, prices/currency - 6.4 %). Volumes increased
significantly in our natural gas trading activities. Production of oil
and natural gas also increased, although these production increases
did not result in higher sales because of the weak U.S. dollar.
The average price of oil (Brent) of approximately $26 per barrel
was slightly higher than in the same quarter of 2002 ($25). At euro278
million, income from operations before special items remained at a
high level.
Regions
Regions
Sales Sales
(location of (location of
customer) company)
Change Change
Million euro 2003 2002 in % 2003 2002 in %
2nd Quarter
Europe 4,638 4,428 4.7 4,966 4,826 2.9
Thereof Germany 1,549 1,686 (8.1) 3,364 3,297 2.0
North America (NAFTA) 1,998 2,251 (11.2) 1,979 2,261 (12.5)
South America 368 405 (9.1) 302 331 (8.8)
Asia, Pacific Area,
Africa 1,245 1,295 (3.9) 1,002 961 4.3
8,249 8,379 (1.6) 8,249 8,379 (1.6)
1st Half
Europe 9,879 8,993 9.9 10,505 9,726 8.0
Thereof Germany 3,648 3,580 1.9 7,268 6,802 6.9
North America (NAFTA) 3,936 4,339 (9.3) 3,939 4,381 (10.1)
South America 690 785 (12.1) 560 640 (12.5)
Asia, Pacific Area,
Africa 2,576 2,501 3.0 2,077 1,871 11.0
17,081 16,618 2.8 17,081 16,618 2.8
Regions
Income from
operations
before
special
items
(location of
company)
Change
Million euro 2003 2002 in %
2nd Quarter
Europe 698 679 2.8
Thereof Germany 498 483 3.1
North America (NAFTA) 52 77 (32.5)
South America 51 (29) .
Asia, Pacific Area, Africa 31 95 (67.4)
832 822 1.2
1st Half
Europe 1,524 1,446 5.4
Thereof Germany 1,142 1,051 8.7
North America (NAFTA) 81 105 (22.9)
South America 83 (35) .
Asia, Pacific Area, Africa 88 124 (29.0)
1,776 1,640 8.3
In the second quarter, sales by location of company in Europe
increased 2.9 %. In particular, sales were higher in the Chemicals,
Oil & Gas, and Agricultural Products & Nutrition segments. Income from
operations before special items rose by euro19 million to euro698
million.
In the NAFTA region, sales by location of company declined by 12.5
% compared with 2002 as a result of a weak dollar. Sales in euros were
almost at the level of the previous year only in the Agricultural
Products & Nutrition segment. In local currency terms, sales in the
region increased about 9 %. At euro52 million, income from operations
before special items was euro25 million lower than in the same quarter
of 2002. Income from operations before special items decreased
particularly in the Plastics and Chemicals segments. The increase in
income in the Agricultural Products & Nutrition segment could not
compensate for this.
In South America, second-quarter sales by location of company were
8.8 % lower compared with 2002, primarily due to currency translation
effects. In local currencies, sales increased by about 9 %. The
Agricultural Products & Nutrition segment posted higher sales in
euros. Income from operations before special items of euro51 million
was considerably higher than in 2002, when income was significantly
reduced due to the economic crises in Brazil and Argentina.
Second-quarter sales in the Asia, Pacific Area, Africa region by
location of company increased by 4.3 %. The production of propylene
oxide and styrenic monomers by the Ellba Eastern plant, which came on
stream in mid-2002, made a major contribution to higher sales in the
Plastics segment. Sales in the other segments declined due to the
change in currency exchange rates as well as lower demand due to the
SARS problem, which has now been overcome. In local currency terms,
sales increased by approximately 20 %. Income from operations before
special items dropped to euro31 million, in particular due to lower
income in the Plastics and Performance Products segments as well as
foreign currency translation effects.
Employees
Since the end of 2002, the number of BASF Group employees,
including those with limited-term contracts, declined by 924 or 1.0 %,
thereof 920 in Europe, 157 in the NAFTA region, and 70 in South
America. The number of employees in Asia increased by 223.
Personnel costs in the second quarter of 2002 sank by 7.5 % to
euro1,412 million. In the first half of 2003, personnel costs amounted
to euro2,804 million compared with euro3,005 in the same period of
2002.
Number of employees
2nd Quarter 1st Half Year
2003 2002 2003 2002 2002
End of period 88,465 90,713 88,465 90,713 89,389
Average 88,576 90,941 88,716 91,435 90,899
Finance
Cash provided by operating activities increased significantly to
euro1,878 million, exceeding the amount for the same period in 2002 by
euro1,055 million. This increase is the result of the substantially
lower additional financing requirements for net current assets.
Cash used in investing activities totaled euro2,343 million. The
purchase of the fipronil crop pro-tection business and the acquisition
of Honeywell's global business with engineering plastics with the
simultaneous sale of our nylon fibers business to Honeywell required
euro1,398 million. At euro967 million, additions to tangible and
intangible fixed assets were 5.3 % lower than in 2002 and
significantly lower than depreciation and amortization.
In the first half of 2003, we bought back 6.9 million shares for
euro226 million or an average of euro32.54 per share. Our goal of
buying back shares for a total of euro500 million in 2003 remains
unaltered. After deducting the dividend paid for fiscal year 2002,
cash provided by financing activities was euro505 million.
Liquid funds remained at the same level as at the end of 2002.
Consolidated Statements of Cash Flows
1st Half
Million euro 2003 2002
Net income 637 1,058
Depreciation and amortization of fixed assets 1,136 1,222
Change in net current assets (56) (1,287)
Miscellaneous items 161 (170)
Cash provided by operating activities 1,878 823
Additions to tangible and intangible fixed assets (967) (1,021)
Acquisitions/divestitures, net (1,398) -
Financial investments and other items 22 183
Cash used in investing activities (2,343) (838)
Proceeds from capital increases/(decreases) (226) 38
Changes in financial indebtedness 1,553 1,448
Dividends (822) (802)
Cash provided by financing activities 505 684
Net changes in cash and cash equivalents 40 669
Cash and cash equivalents as of beginning of year and
other changes 228 338
Cash and cash equivalents 268 1,007
Marketable securities 127 287
Liquid funds 395 1,294
Interim Financial Statements of BASF Group
(abridged version)
The interim financial statements have not been audited. The
valuation methods used in the Consolidated Financial Statements for
2002 remained unchanged. Changes in the scope of consolidation were
negligible. The acquisition of crop protection products from Bayer on
March 21, 2003 is taken into account from this date onward. The sale
of the fibers business to Honeywell and the simultaneous acquisition
of their engineering plastics business is taken into account as of the
beginning of May 2003.
Consolidated Statements of Income
2nd 1st
Quarter Half
Change Change
Million euro 2003 2002 in % 2003 2002 in %
Sales, net of natural gas
taxes 8,249 8,379 (1.6) 17,081 16,618 2.8
Cost of sales 5,680 5,536 2.6 11,753 11,013 6.7
Gross profit on sales 2,569 2,843 (9.6) 5,328 5,605 (4.9)
Selling expenses 1,127 1,231 (8.4) 2,244 2,442 (8.1)
General and
administrative expenses 173 177 (2.3) 336 348 (3.4)
Research and development
expenses 262 282 (7.1) 538 594 (9.4)
Other operating income 88 148 (40.5) 192 333 (42.3)
Other operating expenses 321 484 (33.7) 686 923 (25.7)
Income from operations 774 817 (5.3) 1,716 1,631 5.2
(Expense)/income from
financial assets (34) 77 . (53) 77 .
Interest result (54) (69) 21.7 (138) (45) .
Financial result (88) 8 . (191) 32 .
Income before taxes and
minority interests 686 825 (16.8) 1,525 1,663 (8.3)
Income taxes 484 294 64.6 852 557 53.0
Minority interests 7 29 (75.9) 36 48 (25.0)
Net income 195 502 (61.2) 637 1,058 (39.8)
Earnings per share (euro) 0.35 0.86 (59.3) 1.13 1.81 (37.6)
Number of shares in
millions (weighted) 563 583 (3.4) 565 583 (3.1)
Consolidated Balance Sheets
June June Dec.
30, 30, Change 31, Change
Million euro 2003 2002 in % 2002 in %
Assets
Intangible assets 4,155 3,441 20.7 3,464 19.9
Property, plant and equipment 13,534 13,512 0.2 13,745 (1.5)
Financial assets 3,163 3,322 (4.8) 3,249 (2.6)
Fixed assets 20,852 20,275 2.8 20,458 1.9
Inventories 4,848 4,421 9.7 4,798 1.0
Accounts receivable, trade 5,619 6,341 (11.4) 5,316 5.7
Miscellaneous receivables 3,191 2,742 16.4 2,947 8.3
Deferred taxes 1,154 1,209 (4.5) 1,204 (4.2)
Liquid funds 395 1,294 (69.5) 363 8.8
Current assets 15,207 16,007 (5.0) 14,628 4.0
Total assets 36,059 36,282 (0.6) 35,086 2.8
Stockholders' equity and liabilities
Suscribed capital and capital
surplus 4,408 4,408 0.0 4,408 0.0
Retained earnings and other
equity 11,442 12,549 (8.8) 12,138 (5.7)
Minority interests 396 395 0.3 396 0.0
Stockholders' equity 16,246 17,352 (6.4) 16,942 (4.1)
Provisions for pensions and
similar obligations 3,892 3,858 0.9 3,910 (0.5)
Provisions for taxes and other
provisions 5,332 5,066 5.3 5,087 4.8
Provisions 9,224 8,924 3.4 8,997 2.5
Financial indebtedness 5,097 3,976 28.2 3,610 41.2
Accounts payable, trade 2,260 2,417 (6.5) 2,376 (4.9)
Other liabilities 3,232 3,613 (10.5) 3,161 2.2
Liabilities 10,589 10,006 5.8 9,147 15.8
Total liabilities 19,813 18,930 4.7 18,144 9.2
Total stockholders' equity and
liabilities 36,059 36,282 (0.6) 35,086 2.8
Changes in Equity Items
Currency
Retained translation Minority
Million euro earnings adjustment interests
As of January 1, 2003 12,468 (330) 396
Net income 637 - 36
Share buy-back (226) - -
Dividends paid (789) - (33)
(Decrease)/increase of foreign currency
translation adjustments - (316) (5)
Capital injection by minority interests - - -
Changes in scope of consolidation and
other changes (2) - 2
As of June 30, 2003 12,088 (646) 396
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 BASF's 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.
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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Important dates
-- November 13, 2003
Interim Report Third Quarter 2003
-- March 17, 2004
Financial Results 2003
-- April 29, 2004
Annual Meeting, Mannheim
Interim Report First Quarter 2004
-- August 4, 2004
Interim Report Second Quarter 2004
CONTACT: BASF
Michael Grabicki, +49 621 60-99938
Fax: +49 621 60-92693
michael.grabicki@basf-ag.de
or
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or
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Fax: +49 621 60-22500
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