BASF Interim Report First Half; Continued Gratifying Earnings Trend in 2nd Quarter.

LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--Aug. 4, 1998--

Earnings in Plastics & Fibers Segment up 78%

Further Increase in Returns Expected for 1998

BASF-Group and BASF Aktiengesellschaft

Million DM     2nd Quarter   Change     1st Half     Change   Year
              1998     1997   in %    1998    1997    in %    1997

BASF Group

Sales(a)     14,301  14,358  -0.4    28,738  27,797  +3.4   55,780
 Germany      3,561   3,615  -1.5     7,345   7,136  +2.9   14,380
 Outside
  Germany    10,740  10,743   --     21,393  20,661  +3.5   41,400
Income from
 operations   1,415   1,337  +5.8     2,752   2,497 +10.2    5,342
Profit
 before
 taxes        1,497   1,295 +15.6     2,815   2,458 +14.5    5,331
Capital
 expenditures 1,138     977 +16.5     2,030   1,612 +25.9    4,359
Personnel
 expense(b)   2,823   2,647  +6.6     5,535   5,234  +5.8   10,803
Number of
 employees
 (June 30/
 Dec. 31)(c)                        104,954 105,306  -0.3  104,979


Million DM    2nd Quarter   Change     1st Half     Change   Year
               1998    1997  in %     1998    1997   in %    1997

BASF Aktiengesellschaft

Sales         5,507   6,233 -11.6    11,381  11,950  -4.8   23,527
 Germany      1,796   1,900  -5.5     3,583   3,580  +0.1    7,040
 Outside
  Germany     3,711   4,333 -14.4     7,798   8,370  -6.8   16,487
Income from
 operations     609     495 +23.0       951     758 +25.5    1,786
Profit
 before
 taxes          747     686  +8.9     1,347   1,225 +10.0    2,582
Capital
 expenditures   221     229  -3.5       442     393 +12.5      942
Personnel
 expense(b)   1,292   1,234  +4.7     2,536   2,443  +3.8    5,066
Number of
 employees
 (June 30/
 Dec. 31)(c)                         43,763  44,883  -2.5   44,850

(a) Without petroleum and natural gas taxes

(b) Not including pension benefits

(c) Including employees on limited-term contracts

Sales
The 1st quarter saw the year off to a good start, and sales in the 2nd
quarter sustained the same high level, although volume growth weakened
somewhat and the impact of falling selling prices increased.  In the
1st half, we achieved higher sales of 3.4% over the previous year,
which breaks down as follows:

                           %

Volumes                  +3.4
Prices                   -3.5
Currency and translation +1.5
Scope of consolidation   +2.0
Total                    +3.4

     In Europe, our home market, the segments that made the greatest
contributions to the 1st half's increase in sales were Plastics &
Fibers, especially through the Targor and Elenac joint ventures, and
Health & Nutrition.  In Europe, the pattern of growth varied from
country to country.  We were able to expand our business in Spain and
France, and sales in Eastern Europe were up by 7%.
     In North America, the strong increase in sales, nearly 11%, is
largely attributable to exchange rate factors. Sales expressed in
dollars were up by 3%, contributions being made by the Chemicals,
Plastics & Fibers and Health & Nutrition segments.
     In South America, sales rose in Brazil, Chile and Venezuela.  The
Health & Nutrition segment did particularly well, with higher sales of
pharmaceuticals and crop protection products.
     In Asia, Pacific Area, Africa, higher sales in national
currencies failed to compensate for the decline in value of several
of them. Sales decreased especially in Indonesia, Korea, Thailand and
Malaysia. We expanded our business in western Asia. Colorants &
Finishing Products, in particular, recorded lower sales, while Health
& Nutrition improved. This is partly attributable to the first time
consolidation of Hokuriku Seiyaku, Japan.
     At BASF Aktiengesellschaft, sales in the 1st half were 4.8% lower
than in the same period last year. Adjusted to allow for structural
changes, especially the transfer of the polypropylene and
polyethylene businesses into the Targor and Elenac joint ventures, the
decline in sales is only 0.9%. Volumes declined in May and June,
leaving only a slight gain in volumes for the 1st half as a whole. The
impact of declining selling prices increased. Exports accounted for
68.5% of sales (1997: 70.0%).

   Segments

     Virtually all segments contributed to the increase in income from
operations, and no operating division recorded a loss.
     Health & Nutrition played a major part in the increased Group
sales. The Pharmaceuticals Division made strong gains, partly as a
result of the wider scope of consolidation and partly thanks to our
pharmaceuticals Meridia(R) and Vicoprofen(R) which were launched in
the North American market. The Crop Protection Division again made a
substantial contribution to increasing this segment's earnings.
     In Colorants & Finishing Products, sales declined by 3.7%, a
consequence partly of divestitures and restructuring operations and
partly of the difficult business conditions in Asia. Sales in the
Dispersions Division increased further. The Coatings and Colorants
Divisions increased their earnings considerably. Earnings in the
segment as a whole made very gratifying progress, partly as a
consequence of the restructuring measures implemented.
     In Chemicals, we increased sales by 5.1%, though the trend was
uneven across the individual divisions. Falling selling prices for
basic and industrial chemicals resulted in declines in sales and
earnings. Intermediates, already successful, improved further, and the
Specialty Chemicals Division recorded vigorous growth.
     As in the first quarter, the sharpest increase in sales came in
the Plastics & Fibers segment. This is mainly attributable to the
restructuring of the polyolefin operations with the founding of the
Targor and Elenac joint ventures. The contribution to Group earnings
improved strongly, especially in the Engineering Plastics Division.
     In Oil & Gas, sales declined, mainly as a result of the impact of
lower crude oil prices, and increased sales in natural gas trading
failed to compensate for this. Income from operations, especially oil
production, declined more sharply than sales, though the reduction in
income from operations does not reflect the segment's contribution to
the BASF Group's net income after taxes. Oil production taxes, payable
in some production regions on a revenue-related basis, are not charged
to income from operations; in line with the crude oil price trend they
too declined sharply and reduced the tax burden.

 BASF Group

Sales of the segments(a) in the 1st half of 1998.

 Million DM               1st half of 1998            Change

Health & Nutrition                  6,562            + 8.2%
Colorants & Finishing Products      6,191            - 3.7%
Chemicals                           4,384            + 5.1%
Plastics & Fibers                   7,743            +12.6%
Oil & Gas                           2,821            - 6.8%
Other                               1,037            -15.8%

(a) Without petroleum and natural gas taxes

Income from operations of the segments

                           1st half          Change       Year
Million DM               1998     1997      Mill. DM      1997

Health & Nutrition       718      678          + 40        753
Colorants & Finishing
 Products                570      411          +159        939
Chemicals                851      817          + 34      2,130
Plastics & Fibers        462      260          +202        720
Oil & Gas                318      482          -164        926
Other                   -167     -151           -16       -126
 thereof costs
 of exploratory
 research                127      126            +1        250
                       2,752    2,497          +255      5,342

Earnings: There was further gratifying growth in earnings in the 2nd
quarter. The effects of falling selling prices were partly offset by a
trend in the prices of raw materials that was favorable to us.
However, the increase in income from operations flattened off in the
2nd quarter, mainly as a consequence of the base effect of the very
strong same quarter of last year.
     In spite of high investments for modernizing our IT systems and a
drop in the foreign exchange results, income from operations in the
1st half rose by 10.2%, three times the increase in sales.  The
financial results were positive at DM 63 million, so that we increased
profit before taxes by 14.5%.  A much better result in North America
made a major contribution here.  Net income after taxes and minority
interests rose by 14.1% to DM 1,617 million.  Earnings per share for
the half-year are DM 2.60 (1997: DM 2.29).  We generated a cash flow
of DM 3,931 million, an increase of 11.8%.
     Capital expenditures: Capital expenditures on tangible fixed
assets were nearly 26% higher than in the first half of 1997.  For the
year 1998 as a whole, we are planning capital expenditures - excluding
acquisitions - of DM 4,700 million.  Of the funds invested, 45% were
spent in Germany and 13% on other European sites.  North American
sites accounted for 35%.  South America and Asia, Pacific Area, Africa
accounted for 3% and 4%, respectively, of total capital expenditures.

Sales by regions (locations of customers)(a)
in the 1st half of 1998

Million DM               1st half of 1998          Change

Europe                       17,645                 +3.2%
 thereof Germany             (7,345)                +2.9%
North America (NAFTA)         6,574                +10.7%
South America                 1,483                 +1.4%
Asia, Pacific Area, Africa    3,036                 -8.0%

(a) Without petroleum and natural gas taxes

Sales and income from operations by regions
(locations of companies)
                                                Sales
                                      1st half          Change
Million DM                       1998         1997         %

Europe                           19,578      19,394      +0.9
 thereof Germany                 12,783      13,135      -2.7
North America (NAFTA)             6,544       5,938     +10.2
South America                     1,149       1,092      +5.2
Asia, Pacific Area, Africa        1,467       1,373      +6.8
                                ------------------------------
                                 28,738      27,797      +3.4


                                   Income from operations
                                     1st half        Change
Million DM                        1998     1997     Mill. DM


Europe                           2,071     2,071      --
 thereof Germany                 1,243     1,306     -63
North America (NAFTA)              555       293    +262
South America                       66        77     -11
Asia, Pacific Area, Africa          60        56      +4
                                 -----------------------
                                 2,752     2,497    +255
-0-

Employees: The number of people employed by the BASF Group has declined slightly, by 25 to 104,954 since the end of 1997. Changes in the scope of consolidation together with acquisitions and divestitures brought on balance a total of 1,094 employees into the Group, mainly in Japan, Korea and Spain. At the same time, 1,119 people left the Group. At BASF Aktiengesellschaft, the number of people employed has fallen by 1,087 since the end of 1997, mainly as a result of "Altersteilzeit" (short-time work for those nearing retirement), retirements and transfers to the Elenac joint venture. The breakdown of employees by regions is as follows: Germany 57.3%, other European sites 15.6%, North America 15.2%, South America 6.1%, and Asia, Pacific Area, Africa 5.8%.

Outlook: The 1st half was very successful overall. We expect business to remain steady in the 2nd half, with the growth of earnings flattening off in the coming vacation months and crop protection business showing its usual seasonal effect. Our expectations are based on orders in hand, which are slightly up on last year in terms of volume, and on BASF's improved strategic position. We are confident, therefore, that we will exceed 1997's good results in the current year and further improve the return on assets before income taxes and interest expenses.

Further reporting 3rd quarter of 1998 Nov. 10, 1998 Year 1998 Mar. 15, 1999 1st quarter of 1999 and Annual Meeting Apr. 29, 1999 1st half of 1999 Aug. 5, 1999 -0-

Financial statements of the BASF Group (abridged version)

                               1st half     Change
Million DM                  1998     1997    in %   Year 1997
Profit and loss account

Sales (without petroleum
 and natural gas taxes)    28,738   27,797   +3.4    55,780
Cost of sales              17,639   17,619   +0.1    35,520
Gross profit on sales      11,099   10,178   +9.0    20,260
Selling expense             4,824    4,547   +6.1     9,355
General administration
 expense                      763      647   +17.9    1,397
Research and development
 expense                    1,267    1,221   +3.8     2,549
Other operating expense/
 income (balance)           1,493    1,266   +17.9    1,617
Income from operations      2,752    2,497   +10.2    5,342
Financial results              63      -39    --        -11
Profit before taxes         2,815    2,458   +14.5    5,331
Income taxes                1,217    1,051   +15.8    2,126
Minority interests            -19      -10    --        -31
Net income after taxes      1,617    1,417   +14.1    3,236

Balance sheet (million DM)

                                        Change
Assets               30.06.98 30.06.97  in %    31.12.97

Fixed assets          26,505   23,397   +13.3   24,848
Inventories and
 receivables(a)       21,037   19,032   +10.5   19,530
Cash and cash items    3,389    5,274   -35.7    3,610
Current assets        24,426   24,306   +0.5    23,140
Assets                50,931   47,703   +6.8    47,988

Equity and                               Change
 liabilities          30.06.98 30.06.97  in %    31.12.97

Subscribed capital
 and capital surplus    8,137    8,008   +1.6     8,131
Revenue reserves and
 other equity          15,999   13,222   +21.0   15,399
Equity                 24,136   21,230   +13.7   23,530
Provisions(a)          15,503   15,751   -1.6    14,252
Liabilities            11,292   10,722   +5.3    10,206
Liabilities(a)         26,795   26,473   +1.2    24,458
Equity and
 liabilities           50,931   47,703   +6.8    47,988

(a) Including prepaid expenses, deferred income and special reserves

The interim balance has not been audited

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