A Dynamic BASF Moves Forward into the Second Half.Business Editors LUDWIGSHAFEN Lud·wigs·ha·fen A city of southwest Germany on the Rhine River opposite Mannheim. Founded as a fortress in the early 17th century, it is now a leading center of the country's chemical industry. Population: 162,000. , Germany--(BUSINESS WIRE)--Aug. 7, 2003 BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida (NYSE NYSE See: New York Stock Exchange :BF) (FWB (Fixed Wireless Broadband) See fixed wireless. :BAS BAS abbr. 1. Bachelor of Agricultural Science 2. Bachelor of Applied Science ) (LSE LSE - Language Sensitive Editor :BFA BFA abbr. Bachelor of Fine Arts BFA abbr BFA, B.F.A Bachelor of Fine Arts; first degree in Fine Arts. ): -- Good performance in the second quarter of 2003: EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). before special items up slightly on 2002 -- Agricultural Products & Nutrition nutrition, study of the materials that nourish an organism and of the manner in which the separate components are used for maintenance, repair, growth, and reproduction. Nutrition is achieved in various ways by different forms of life. segment improves significantly -- Additional restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). program to strengthen profitability in the NAFTA NAFTA in full North American Free Trade Agreement Trade pact signed by Canada, the U.S., and Mexico in 1992, which took effect in 1994. Inspired by the success of the European Community in reducing trade barriers among its members, NAFTA created the world's region -- Full year 2003: major efforts needed to match last year's earnings BASF is continuing to perform well in a persistently per·sis·tent adj. 1. Refusing to give up or let go; persevering obstinately. 2. Insistently repetitive or continuous: a persistent ringing of the telephone. 3. difficult environment. Thanks to the success of its timely cost-reduction program, the company achieved second-quarter EBIT before special items of EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 832 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 dis·re·gard tr.v. dis·re·gard·ed, dis·re·gard·ing, dis·re·gards 1. To pay no attention or heed to; ignore. 2. To treat without proper respect or attentiveness. n. 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 Jurgen regaining his lost youth, he has strange “adventures with a host of mythical persons. [Am. Lit.: Jurgen in Magill I, 464] See : Fantasy Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft Aktiengesellschaft (IPA: ['aktsiəngəzεlʃaft]; abbreviated AG) is a German term that refers to a corporation that is limited by shares, i.e., owned by shareholders. , 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 one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. 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 Net current assets The difference between current assets and current liabilities, also known as working capital. net current assets See working capital. . 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 Eurozone Noun same as Euroland Eurozone n → eurozona, zona euro Eurozone n → zona euro and in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 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 Incoming is a 3-D shooter developed by Rage Software and published by Interplay. The PC version was released in late 1998, and the Dreamcast version, a launch title for the console, was released in 1998 in Japan and in 1999 in the rest of the world. orders have been lower than in the same period in 2002. Hambrecht is therefore not particularly optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op 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 prognosis /prog·no·sis/ (prog-no´sis) a forecast of the probable course and outcome of a disorder.prognos´tic prog·no·sis n. pl. prog·no·ses 1. 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 volatile oil n. A rapidly evaporating oil of plant derivation, especially an essential oil, that is capable of distillation and that does not leave a stain. Also called ethereal oil. prices, the uncertain development of the U.S. dollar and persistent Permanent. See persistent data, persistent name and persistent object. persistent - persistence stagnation Stagnation A period of little or no growth in the economy. Economic growth of less than 2-3% is considered stagnation. Sometimes used to describe low trading volume or inactive trading in securities. Notes: A good example of stagnation was the U.S. economy in the 1970s. in important economies. Major efforts are therefore needed to match last year's achievements," he said. Two-phase two-phase adj. Electricity Relating to two alternating currents with phases differing by 90°. restructuring program for the NAFTA region The company aims to make additional savings by reducing its fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). through a two-phase restructuring program for the NAFTA region. In the first phase, BASF wants to optimize optimize - optimisation the effectiveness and efficiency of service functions such as human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , IT, purchasing, finance and legal with the goal of saving $100 million. These measures are expected to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. 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 sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp 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 (1) A person who breaks into a computer system without authorization, whose purpose is to do damage (destroy files, steal credit card numbers, plant viruses, etc.). Because a cracker uses low-level hacker skills to do cracking, the terms "cracker" and "hacker" have become in Ludwigshafen and other downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). 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 o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies , 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 In 1927, the Minneapolis Honeywell Regulator Company was formed as a merger of Alfred Butz' temperature control company (1885) and Mark Honeywell's water heater company (1906). In 1957, Honeywell, along with Ratheon, introduced one of the first computers in the U.S., the Datamatic 1000. as well as startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. costs for our new 140,000 metric ton plant for TDI TDI - Transport Driver Interface and precursors precursors, (prēkur´s  rz),n.pl particles or compounds that precede something. in Yeosu Yeosu or Yosu (yô`s  `), city (1995 pop. 183,559), South Jeolla (Cholla) prov., S South Korea, on the Korea Strait. , South Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. .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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. the same level as in 2002. However, because about 60 percent of the company's business is conducted dollars, considerable increases are partially disguised dis·guise tr.v. dis·guised, dis·guis·ing, dis·guis·es 1. a. To modify the manner or appearance of in order to prevent recognition. b. To furnish with a disguise. 2. 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 shrank v. A past tense of shrink. shrank Verb a past tense of shrink shrank shrink once again in the key markets of Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . 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 fipronila reversible GABA-receptor inhibitor that acts on the nervous system of insects. Used topically in flea control programs. business and efforts to conduct business closer to the application period. The increase in EBIT before special items by almost 60 percent to EUR117 million exceeded our expectations and is a consequence of structural measures and the increased volume of business. The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 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 South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . 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 Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" 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 Verbund is the largest producer and transporter of electricity in Austria, and one of the largest in Europe. The company produced in 2006 around 28.1 billion kWh mainly from hydropower plants (85%), thermal plants (10%) and eco power plants (5%). ," is its strength. It enables BASF to achieve cost leadership and gives the company a competitive advantage. BASF conducts its business in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the principles of sustainable development Sustainable development is a socio-ecological process characterized by the fulfilment of human needs while maintaining the quality of the natural environment indefinitely. The linkage between environment and development was globally recognized in 1980, when the International Union . In 2002, BASF had sales of EUR32 billion (circa circa prep. Abbr. ca In approximately; about. $34 billion) and over 89,000 employees worldwide. Further information on BASF is available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.basf.com. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains forward-looking statements under the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is ) 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 June: see month. 2003 (January January: see month. - 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 With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. 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 we're Contraction of we are. we're we are 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 inorganic /in·or·gan·ic/ (in?or-gan´ik) 1. having no organs. 2. not of organic origin. in·or·gan·ic n. 1. specialties for the pharmaceutical industry. Our cooperation with Gazprom JSC Gazprom (RTS:B>GAZP MICEX:B>GAZP LSE: OGZD; Russian: ОАО Газпром, sometimes transcribed as Gasprom[1] to develop gas reserves in western Siberia Western Siberia is a part of Siberia located between the Ural mountains and a watershed of the rivers Ob and Yenisei. Politically-administratively the territory of Western Siberia is divided into Kemerovo, Novosibirsk, Omsk, Tomsk, and Tümen Provinces, Hunty-Mansi Autonomous through the newly established joint venture Achimgaz will strengthen our backward integration Backward Integration A form of vertical integration that involves the purchase of suppliers in order to reduce dependency. Notes: A good example would be if a bakery business bought a wheat farm in order to reduce the risk associated with the dependency on flour. in the Oil & Gas segment. Stock market trends in the first half of 2003 give grounds for optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. . 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 hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. 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 polyurethanes (pŏl'ēy r`əthānz), group of plastics that may be either thermosetting or thermoplastic. Polyurethane can be made into both flexible and rigid foams. 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 acrylic, artificial fiber made from a special group of vinyl compounds, primarily acrylonitrile. Acrylic fibers are thermoplastic (i.e., soften when heated, reharden upon cooling), have low moisture regain, are low in density, and can be made into bulky fabrics. monomers and paper dispersions, sales in the Functional Polymers Functional polymers are polymers with advanced optic and/or electronic properties. Advantages of functional polymers are low cost, ease of processing and a range of attractive mechanical characteristics for functional organic molecules. 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 Brent, outer borough (1991 pop. 226,100) of Greater London, SE England. The area is a rail and industrial center. Its manufactures include automobile parts, clocks and watches, and electrical equipment. ) of approximately $26 per barrel barrel: see English units of measurement. 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 Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. . Second-quarter sales in the Asia, Pacific Area, Africa region by location of company increased by 4.3 %. The production of propylene oxide propylene oxide a gas used to disinfect animal feeds. and styrenic monomers by the Ellba Eastern plant, which came on stream in mid- mid- pref. Middle: midbrain. 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 nylon, synthetic thermoplastic material characterized by strength, elasticity, resistance to abrasion and chemicals, low moisture absorbency, and capacity to be permanently set by heat. After 10 years of research E. I. fibers business to Honeywell required euro1,398 million. At euro967 million, additions to tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. and intangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → 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 Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for 2002 remained unchanged. Changes in the scope of consolidation were negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . . The acquisition of crop protection products from Bayer on March 21, 2003 is taken into account from this date onward on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. . 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 Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). You can find HTML HTML in full HyperText Markup Language Markup language derived from SGML that is used to prepare hypertext documents. Relatively easy for nonprogrammers to master, HTML is the language used for documents on the World Wide Web. versions of this and other publications from BASF on our homepage See home page. at www.basf.com. You can also order reports: -- by telephone: +49 62160-0 -- by e-mail: medien-service@basf-ag.de -- on the Internet: www.basf.com Important dates -- November November: see month. 13, 2003 Interim Report Third Quarter 2003 -- March 17, 2004 Financial Results 2003 -- April 29, 2004 Annual Meeting, Mannheim Mannheim (män`hīm), city (1994 pop. 318,025), Baden-Württemberg, W central Germany, on the right bank of the Rhine River and at the mouth of the Neckar River. A bridge connects it with Ludwigshafen, on the opposite bank of the Rhine. Interim Report First Quarter 2004 -- August 4, 2004 Interim Report Second Quarter 2004 |
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