Dynamic BASF on Course for Profitable Growth; Second-Quarter Results 2006.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 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). -- 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. ): April - June June: see month. 2006 published on August 2, 2006 --Strong sales growth of 16% --EBIT before special items up 15% --New growth opportunities from acquisitions --Outlook: Higher sales and EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). before special items compared with 2005
Overview 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 12,322 10,581 16.5
Income from operations before interest,
taxes, depreciation and amortization
(EBITDA) 2,374 2,149 10.5
Income from operations (EBIT) before
special items 1,910 1,657 15.3
Income from operations (EBIT) 1,797 1,587 13.2
Financial result 23 (82) .
Income before taxes and minority
interests 1,820 1,505 20.9
Net income 920 778 18.3
Earnings per share (EUR) 1.82 1.48 23.0
EBIT before special items in percent of
sales 15.5 15.7 -
Cash provided by operating activities 760 977 (22.2)
Additions to fixed assets (a) 4,957 850 483.2
Excluding acquisitions 491 482 1.9
Amortization and depreciation (a) 577 562 2.7
Segment assets (end of period) (b) 35,241 28,631 23.1
Personnel costs 1,430 1,393 2.7
Number of employees (end of period) 86,794 80,946 7.2
Overview 1st
Half
Million EUR Change
2006 2005 in %
Sales 24,837 20,664 20.2
Income from operations before interest, taxes,
depreciation and amortization (EBITDA) 4,775 4,168 14.6
Income from operations (EBIT) before special
items 3,775 3,220 17.2
Income from operations (EBIT) 3,646 3,086 18.1
Financial result 44 (37) .
Income before taxes and minority interests 3,690 3,049 21.0
Net income 1,870 1,639 14.1
Earnings per share (EUR) 3.69 3.08 19.8
EBIT before special items in percent of sales 15.2 15.6 -
Cash provided by operating activities 2,208 2,081 6.1
Additions to fixed assets (a) 5,557 1,212 358.5
Excluding acquisitions 964 844 14.2
Amortization and depreciation (a) 1,129 1,082 4.3
Segment assets (end of period) (b) - - -
Personnel costs 2,822 2,670 5.7
Number of employees (end of period) - - -
* Tangible and intangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → (including acquisitions) ** Tangible and intangible fixed assets, inventories and business-related receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed Contents
1 BASF Group Business Review 13 Consolidated Statements of Income
3 BASF Shares 14 Consolidated Balance Sheets
4 Significant Events and 15 Consolidated Statements of Cash Flows
Outlook
6 Chemicals 16 Consolidated Statements of Recognized
7 Plastics Income and Expense
8 Performance Products 17 Consolidated Statements of
Stockholders'
9 Agricultural Products & Equity
Nutrition
10 Oil & Gas 18 Segment Reporting
11 Regions 20 Explanations to the Interim Financial
12 Overview of Other Topics Statements
Cover photo: Shah Shah is a Persian term for a monarch (ruler) that has been adopted in many other languages. This term is a Post Islamic Revolution term for monarchs in Iran which is replaced by valie faghih or Supreme Leader. Kazi Kazi may refer to:
News from our innovation centers Wax in the wall for a pleasant indoor climate BASF's phase-change material Micronal(R) PCM (1) See phase change memory. (2) (Plug Compatible Manufacturer) An organization that makes a computer or electronic device that is compatible with an existing machine. absorbs daytime Daytime may refer to:
temperature peaks Summer, sun, sunshine - although much longed for throughout the winter months, they can soon become too much of a good thing when they arrive. Modern lightweight construction houses and steel and glass office complexes with transparent frontages can become more like saunas overnight. BASF's SmartBoard(TM) offers a solution to this problem. The cooling properties of this innovative gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. wallboard are provided by the raw material Micronal(R) PCM, a microencapsulated microencapsulated Therapeutics adjective Surrounded by a thin layer of biodegradable substance–eg, a microsphere, as a means of protecting a drug or vaccine antigen from rapid breakdown, or of enhancing antigenic absorption and immune response thereto latent heat latent heat, heat change associated with a change of state or phase (see states of matter). Latent heat, also called heat of transformation, is the heat given up or absorbed by a unit mass of a substance as it changes from a solid to a liquid, from a liquid to a gas, store based on paraffin wax paraffin wax Mixture of organic compounds traditionally derived from petroleum but also obtained synthetically. It usually consists of alkane hydrocarbons (also called paraffins) and is used for coating and sealing, for candles, and in floor waxes, lubricants, waterproofing that absorbs excess heat. PCM stands for phase change material. Micronal(R) is an effective thermal buffer buffer, solution that can keep its relative acidity or alkalinity constant, i.e., keep its pH constant, despite the addition of strong acids or strong bases. due to the physical phenomena that occur when wax changes from the solid to the liquid state. During this phase transition, a large amount of thermal energy thermal energy Internal energy of a system in thermodynamic equilibrium (see thermodynamics) by virtue of its temperature. A hot body has more thermal energy than a similar cold body, but a large tub of cold water may have more thermal energy than a cup of boiling (known as latent heat) is consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. without the temperature of the material itself changing. The waxes contained in Micronal(R) PCM melt at 23C or 26C (73/79F) depending on the application. When they melt, they absorb large amounts of heat from the environment, thereby preventing the room temperature from rising further. At night, when the outside temperature falls, the heat bound when the wax solidifies is released and the heat store is ready for a new summer's day. Thanks to microencapsulation microencapsulation a manufacturing process in which an active agent is contained in microcapsules, suspended in a liquid. As the vehicle dries, the capsules dry out and the contents become active. the wax can be safely integrated into building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . like wall plaster Plaster A plastic mixture of solids and water which sets to a hard, coherent solid and which is used to line the interiors of buildings. A similar material of different composition, used to line the exteriors of buildings, is known as stucco. , mortar or gypsum boards: Microscopically mi·cro·scop·ic also mi·cro·scop·i·cal adj. 1. a. Too small to be seen by the unaided eye but large enough to be studied under a microscope. b. Of, relating to, or concerned with a microscope. 2. small droplets of wax are enclosed en·close also in·close tr.v. en·closed, en·clos·ing, en·clos·es 1. To surround on all sides; close in. 2. To fence in so as to prevent common use: enclosed the pasture. in a virtually indestructible in·de·struc·ti·ble adj. Impossible to destroy: indestructible furniture; indestructible faith. [Late Latin ind 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. polymer shell that withstands even drilling and sawing. Depending on the material, between 20 and 40 percent Micronal(R) PCM may be used. The ready-to-use gypsum wallboard Micronal(R) PCM SmartBoard(TM) is very user-friendly user-friendly - Programmer-hostile. Generally used by hackers in a critical tone, to describe systems that hold the user's hand so obsessively that they make it painful for the more experienced and knowledgeable to get any work done. : although only 1.5 centimeters thick, each square meter Noun 1. square meter - a centare is 1/100th of an are centare, square metre area unit, square measure - a system of units used to measure areas contains around three kilograms of Micronal(R) PCM, and its heat insulating capacity corresponds to that of a brick wall 12 centimeters thick. As a result, it acts as an important functional component of the building that actively improves the indoor climate. The SmartBoard(TM) wallboards can be obtained directly through BASF's subsidiary BTC BTC Baku-Tbilisi-Ceyhan (crude oil pipeline) BTC Belgische Technische Coöperatie (Dutch: Belgian Technical Cooperation) BTC Berlinale Talent Campus BTC Business Travel Coalition Specialty Chemical A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. Distribution GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) in Cologne Cologne (kəlōn`), Ger. Köln, city (1994 pop. 962,500), North Rhine–Westphalia, W Germany, on the Rhine River. It is a commercial, financial, and industrial center, a rail and road junction, and a river port. . But several other industrial partners are also offering PCM construction materials based on Micronal(R) PCM. The German company H+H Celcon, for example, has incorporated BASF's phase-change material in aerated aer·ate tr.v. aer·at·ed, aer·at·ing, aer·ates 1. To supply with air or expose to the circulation of air: aerate soil. 2. cement cement, binding material used in construction and engineering, often called hydraulic cement, typically made by heating a mixture of limestone and clay until it almost fuses and then grinding it to a fine powder. blocks. The heat storage capacity of the blocks, which are sold under the brand name CelBloc Plus and recognizable by their characteristic green color, is thus considerably enhanced. The perspex microcapsules - about 5 micrometers in diameter - contain a storage medium such as paraffin paraffin, white, more-or-less translucent, odorless, tasteless, waxy solid. It melts between 47°C; and 65°C; and is insoluble in water but soluble in ether, benzene, and certain esters. . When the contents melt, heat is taken up and is given out again only when the material solidifies. News from our innovation centers Biotechnologists fight dreaded dread v. dread·ed, dread·ing, dreads v.tr. 1. To be in terror of. 2. To anticipate with alarm, distaste, or reluctance: dreaded the long drive home. potato disease Noun 1. potato disease - a blight of potatoes potato blight, potato mildew, potato mold, potato murrain blight - any plant disease resulting in withering without rotting Microscope image of the fungus fungus Any of about 200,000 species of organisms belonging to the kingdom Fungi, or Mycota, including yeasts, rusts, smuts, molds, mushrooms, and mildews. Though formerly classified as plants, they lack chlorophyll and the organized plant structures of stems, roots, and Phytophthora infestans Noun 1. Phytophthora infestans - fungus causing late blight in solanaceous plants especially tomatoes and potatoes genus Phytophthora, Phytophthora - destructive parasitic fungi causing brown rot in plants (light red structure in the center of the picture). The fungus spreads through leaf tissue in potatoes and causes potato blight potato blight n. Any of various highly destructive fungus diseases of the potato. Noun 1. potato blight - a blight of potatoes potato disease, potato mildew, potato mold, potato murrain . Two genes from wild potatoes Noun 1. wild potato - erect or spreading perennial of southwestern United States and Mexico bearing small pale brown to cream-colored tubers resembling potatoes Solanum jamesii protect crops Phytophthora infestans is every potato farmer's nightmare. Once this harmful fungus shows up, the dreaded potato blight can't be far behind. This disease can result in considerable crop losses. In the mid- mid- pref. Middle: midbrain. 19th century, it caused a famine famine Extreme and protracted shortage of food, resulting in widespread hunger and a substantial increase in the death rate. General famines affect all classes or groups in the region of food shortage; class famines affect some classes or groups much more severely than in Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. , and even today around 20 percent of potato harvest losses in the world are due to this disease. Researchers at BASF Plant Science GmbH have now developed a genetically improved potato that is resistant to this harmful pathogen Pathogen Any agent capable of causing disease. The term pathogen is usually restricted to living agents, which include viruses, rickettsia, bacteria, fungi, yeasts, protozoa, helminths, and certain insect larval stages. . The starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the for this modern innovation is a remote valley in the Central American Central America A region of southern North America extending from the southern border of Mexico to the northern border of Colombia. It separates the Caribbean Sea from the Pacific Ocean and is linked to South America by the Isthmus of Panama. Andes Andes (ăn`dēz), mountain system, more than 5,000 mi (8,000 km) long, W South America. The ranges run generally parallel to the Pacific coast and extend from Tierra del Fuego northward, across the equator, as the backbone of the entire . Various wild types of potato grow here and potato blight is also rampant. But not all the potato plants are infested in·fest tr.v. in·fest·ed, in·fest·ing, in·fests 1. To inhabit or overrun in numbers or quantities large enough to be harmful, threatening, or obnoxious: . Some seem to have developed a very effective strategy to protect themselves against the pathogen that causes the disease. Scientists discovered that the resistant potato plants had at least one gene that the infested plants did not have. This gene ensures that the plant recognizes the harmful fungus in the first place. To set its defense mechanisms in motion, the plant needs to know that the fungus is there. That is precisely the problem with the modern cultivated cultivated, n in herbal medicine, used to describe plants that are commercially farmed rather than collected from the wild. potato. These plants would be able to fight off the fungus if they were only able to recognize its presence. This encouraged scientists to attempt to transfer the benefits of the wild potato to its cultivated counterpart counterpart n. in the law of contracts, a written paper which is one of several documents which constitute a contract, such as a written offer and a written acceptance. . Conventional breeding methods were attempted for years but without success. Although the new types were partially resistant, they had other negative properties such as the lower yield typical of the wild potato. The breakthrough finally came in recent years with the aid of biotechnology: Scientists isolated a resistance gene of the wild potato and transferred it to the cultivated potato. Because the fungus adapts to varying environmental conditions, mutates Mutates Undergoes a spontaneous change in the make-up of genes or chromosomes. Mentioned in: Antiretroviral Drugs and forms a large number of variants, scientists from BASF Plant Science identified other resistance genes in the wild potato. Together with potato breeders, a potato with two additional genes taken from the wild potato has now been developed. The potato from BASF Plant Science has already demonstrated its resistance in the greenhouse. Field trials are now being carried out at a number of locations to investigate whether various climatic conditions adversely affect the resistance of the genetically improved potato. The potato can be launched on the market as soon as these trials have been completed and following E.U. approval. BASF Group Business Review --Sales volumes up 7% --Sales growth of 16% --EBIT before special items up 15% Sales Compared with the same period of the previous year, sales in the second quarter of 2006 increased by 16% to 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. 12.3 billion. The sales growth was due to the following factors: Factors influencing sales in comparison with previous year
% of sales 2nd Quarter 1st Half
Volumes 7 7
Prices 7 9
Acquisitions/divestitures 2 2
Currencies 0 2
16 20
The new Catalysts division has been assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the Chemicals segment. This division includes the catalysts business and precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. trading acquired on June 6, 2006 as part of Engelhard
Engelhard Corporation is an international Fortune 500 company headquartered in Iselin, New Jersey. It is credited with developing the first production catalytic converter. Corporation as well as our own existing catalysts business, which was formerly part of the Inorganics division. In addition to the effect of the activities of Engelhard, which contributed sales of EUR 240 million, sales in the Chemicals segment were boosted by the 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%). site in Nanjing Nanjing (nän`jĭng`) or Nanking (năn`kĭng`) [southern capital], city (1994 est. pop. 2,224,200), capital of Jiangsu prov., E central China, in a bend of the Chang (Yangtze) River. , China, which started operations in June 2005. Furthermore, sales increased due to sales price increases to pass on significantly higher raw material costs. In the Plastics segment, sales rose considerably due to higher sales volumes in the Styrenics and 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.Second-quarter sales by segment
Million EUR
Chemicals 2006 2,443 22%
2005 2,007
Plastics 2006 3,168 8%
2005 2,924
Performance 2006 2,197 5%
Products 2005 2,098
Agricultural Products 2006 1,389 (5)%
& Nutrition 2005 1,465
Oil & Gas 2006 2,481 50%
2005 1,650
In the Performance Products segment, all operating divisions posted higher sales due to higher volumes and a slight increase in sales prices. Volumes and sales prices declined in the Agricultural Products & Nutrition segment. Together with the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of major parts of the generics business in 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. , this resulted in significantly lower sales in the Agricultural Products division. The Fine Chemicals division posted significantly higher sales thanks to the pharmaceutical contract manufacturing business of the Orgamol Group that was acquired in the fourth quarter of 2005 and the personal care business acquired from Engelhard Corporation. Sales in the Oil & Gas segment rose strongly due to higher volumes and prices.
Special items
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Million EUR 2006 2005 2006 2005 2006 2005 2006 2005
Special items in:
- Income from
operations (16) (64) (113) (70) (65) (109)
- Financial
result - - - - 222 -
(16) (64) (113) (70) 157 (109)
Earnings Compared with the same period of 2005, we increased income from operations (EBIT) before special items by 15% to EUR 1,910 million. Margins in the Chemicals segment declined due to significantly higher prices for energy and raw materials. In addition, earnings were negatively affected by maintenance turnarounds at several plants as well as plant outages. In the Plastics segment, increased raw material costs reduced our margins. Nevertheless, higher volumes led to a rise in earnings. Earnings in the Performance Products segment declined due to severe pressure on margins, in particular 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. Second-quarter earnings in the Agricultural Products division were impacted by lower volumes due to the late start to the season in 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). as well as subdued sub·due tr.v. sub·dued, sub·du·ing, sub·dues 1. To conquer and subjugate; vanquish. See Synonyms at defeat. 2. To quiet or bring under control by physical force or persuasion; make tractable. 3. demand from customers in North America. In the Fine Chemicals division, earnings increased as a result of the contribution from the acquired businesses as well as a reduction in 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). compared with the same period of the previous year. The Oil & Gas segment posted the strongest earnings growth, due partly to higher crude oil prices and increased volumes in the natural gas trading business. Compared with the same period of 2005, second-quarter EBIT rose by 13% to EUR 1,797 million. Special items in income from operations were related to the integration of Engelhard Corporation, as well as expenses for 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). , which are primarily recorded under "Other" in the course of the year. The reduction of a fine imposed by the E.U. in 2001 for anti-trust anti-trust adj (COMM): anti-trust legislation → legislazione f antitrust inv violations related to vitamin sales resulted in special income of EUR 66 million. Second-quarter EBIT before special items
Million EUR
Chemicals 2006 351 (15)%
2005 415
Plastics 2006 315 15%
2005 274
Performance 2006 209 (23)%
Products 2005 272
Agricultural Products 2006 183 (39)%
& Nutrition 2005 302
Oil & Gas 2006 868 50%
2005 579
The financial result increased by EUR 105 million to EUR 23 million. This was due in particular to lower net financing costs Net financing cost Also called the cost of carry or, simply carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the for pension obligations recorded under "Other financial result" following the transfer of approximately EUR 3.7 billion to a contractual trust arrangement at the end of 2005. Income before taxes and minority interests rose by 21% to EUR 1,820 million. The tax rate was 47.6% compared with 46.3% in the second quarter of 2005. Taxes for oil production that are noncompensable with German corporate income tax amounted to EUR 383 million compared with EUR 267 million in the same period of the previous year. Net income increased 18% to EUR 920 million. Earnings per share were EUR 1.82 compared with EUR 1.48 in the second quarter of 2005. BASF Shares --BASF shares better than DAX 30 and EURO STOXX STOXX A series of market indexes that are representative of the European and global markets. These indexes cover a wide range of market segments including the broad market, blue chips, individual sectors and global indexes. 50 indices in the second quarter --Shares buybacks for EUR 285 million in the second quarter of 2006
BASF shares 2nd Quarter 1st Half
2006 2006
Performance (with dividends reinvested)
BASF (%) (0.14) (0.16)
DAX 30 (%) (4.80) + 5.09
EURO STOXX 50 (%) (3.66) + 3.97
Share prices and trade (XETRA trading)
Average (EUR) 64.07 63.78
High (EUR) 69.49 69.49
Low (EUR) 58.97 58.97
Close (EUR) 62.78 62.78
Average daily trade in shares (million shares) 3.37 3.20
BASF share performance After a relatively flat period in the first quarter of 2006, the price of BASF's stock increased significantly in April and reached a record high of EUR 69.49 on April 21. In May, the stock pared gains in a market characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by high crude oil prices and anticipated interest rate increases and closed the quarter with a performance of - 0.14% (assuming reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of the EUR 2.00 per share dividend paid on May 5). As a result, BASF shares performed better than the DAX 30 and EURO STOXX 50 indices, which declined by 4.80% and 3.66%, respectively, in the second quarter. Share buybacks In the second quarter of 2006, 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. bought back 4.54 million shares for a total of EUR 285 million and an average price of EUR 62.83 per share. Up to the end of the second quarter, BASF had bought back shares for a total of EUR 342 million under the EUR 500 million share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program that was announced in February February: see month. 2006. This program is scheduled to run until the Annual Meeting in 2007. We also plan to buy back shares in the future. Up-to-date information on BASF shares 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.de/share. You can reach BASF's investor relations Investor relations The process by which the corporation communicates with its investors. team by calling +49 621 60-48230 or by sending an e-mail to investorrelations@basf.com. Significant Events and Outlook Acquisition of Engelhard Corporation Following the acceptance of BASF's cash offer by the majority of shareholders, BASF gained control of Engelhard Corporation on June 6, 2006. BASF owns 100% of the company since June 9, 2006. As a result of this acquisition, we will become a leading supplier in the fast growing market for catalysts. The combination of the two companies' R&D activities will create a unique Know-how know-how n. The knowledge and skill required to do something correctly. See Synonyms at art1. know-how Noun Informal the ability to do something that is difficult or technical Verbund and thus open up further potential for innovation and growth in the area of catalysis catalysis Modification (usually acceleration) of a chemical reaction rate by addition of a catalyst, which combines with the reactants but is ultimately regenerated so that its amount remains unchanged and the chemical equilibrium of the conditions of the reaction is not . The acquisition involves 50 production sites and 22 R&D centers in more than 20 countries. Approximately 7,300 Engelhard employees have transferred to BASF as a result of the acquisition. The purchase price for Engelhard shares amounted to $ 4.8 billion or appoximately EUR 3.8 billion. Engelhard Corporation reported the following results for fiscal 2005: Key data Engelhard Corporation Million $ 2005 Sales 4,597 Income from operations 299 Assets 3,879 The catalysts business will be managed in BASF's new Catalysts operating division and reported as part of the Chemicals segment. Engelhard's remaining businesses will be integrated primarily in BASF's Performance Products segment and in the Fine Chemicals operating division. The companies acquired as a result of the acquisition are included in BASF Group's 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 as of June 6, 2006. Acquisition of Degussa's construction chemicals business The acquisition of the construction chemicals business of Degussa AG by BASF Aktiengesellschaft was completed on July July: see month. 1. With BASF's chemical expertise and Degussa's know-how in construction chemicals applications, we offer our customers a greater range of innovative products and help them to be more successful in the competitive construction sector. BASF's strong presence in Asia will additionally generate growth opportunities in this region's booming construction sector. The acquisition includes production sites and sales centers in over 50 countries as well as an R&D center in Trostberg Trostberg is a town in the district of Traunstein, in Bavaria, Germany. It is situated on the river Alz, 19 km northwest of Traunstein. History During World War II, a subcamp of Dachau concentration camp was located in the town. , Germany. Approximately 7,400 employees have transferred from Degussa to BASF. The purchase price for equity was just under EUR 2.2 billion. In addition, the transaction was associated with debt of EUR 0.5 billion. Degussa reported the following results for its construction chemicals business in fiscal 2005: Key data Degussa Construction Chemicals Million $ 2005 Sales 1,968 Income from operations 223 Assets 1,472 The activities will be reported in the new Construction Chemicals division, which is part of the Performance Products segment. The companies acquired as a result of the acquisition will be included in BASF Group's consolidated financial statements as of July 1, 2006. The acquisition price of EUR 2.7 billion for Degussa's construction chemicals business is reported under "Other receivables" as of June 30, 2006. Further significant events The acquisition of Johnson Polymer was completed on July 1, 2006. It provides BASF with a range of water-based resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. that complements our portfolio of high solids and UV resins for the coatings and paints industry and will strengthen our market presence, in particular in North America. The acquisition of Johnson Polymer involves one production site each 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. and in the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , as well as technical centers and offices in Asia Pacific. The purchase price was $470 million on a cash and debt-free basis. In 2005, Johnson Polymer posted sales of approximately $360 million and had 430 employees worldwide. The business will be integrated into the Performance Chemicals division and included in BASF Group's consolidated financial statements as of July 1, 2006. The acquisition price of EUR 376 million for Johnson Polymer is reported under "Other receivables" as of June 30, 2006. BASF acquired CropDesign CropDesign is a biotech company located in Ghent, Belgium. The company develops a portfolio of agronomic traits for the global commercial seed markets. It has developed a technology platform to discover genetic traits for the improvement of corn, rice and other plants. on June 27, 2006. This Belgian Belgian having some relationship to Belgium. Belgian barge dog see schipperke. Belgian black pied cattle black, Belgian dairy cattle. Belgian blue dual-purpose cattle; blue, white or blue roan. biotechnology company will be integrated in BASF Plant Science GmbH, in which all of our plant biotechnology activities are combined. CropDesign will strengthen our research network thanks to the workforce of over 70 employees at its research facilities in Ghent Ghent (gĕnt), Du. Gent, Fr. Gand, city (1991 pop. 230,246), capital of East Flanders prov., W Belgium, at the confluence of the Scheldt and Leie rivers. , Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. . On July 10, BASF and the China Petroleum & Chemical Corporation (SINOPEC Corp.) signed a $500 million agreement to expand their joint Verbund site in Nanjing, China. BASF-YPC Co. Ltd. - the 50-50 joint venture between BASF and SINOPEC - plans to invest in additional 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 and expand the capacity of its 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 . The new activities are expected to come on stream in 2009. On July 7, 2006, the Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. of BASF Aktiengesellschaft extended the appointment of BASF Chairman Dr. Juergen Hambrecht until the end of the Annual Meeting in 2011. At the same time, the Supervisory Board extended the appointments of Klaus Klaus is a German given name and surname. It originated as a short form of Nikolaus, a German form of the given name Nicholas. Notable persons whose family name is Klaus
Outlook We expect the following conditions in 2006: --Average oil prices (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 about $ 65/barrel --An average euro/dollar exchange rate of $ 1.25 per euro and a further increase in interest rates --Global economic growth and chemical production growth (excluding pharmaceuticals) of more than 3% On this basis, we expect that our business will continue to develop positively in the further course of the year. Persistently high oil prices are likely to lead to an increase in raw material costs and margin pressure. Additional sales price increases are therefore necessary. Major risk factors continue to be the political situation in unstable unstable, adj 1. not firm or fixed in one place; likely to move. 2. capable of undergoing spontaneous change. A nuclide in an unstable state is called radioactive. An atom in an unstable state is called excited. areas, especially in the Middle East, and the development of the crude oil price. In view of the strong business performance in the first half, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op for the full year: We expect to post significantly higher sales and higher EBIT before special items compared with the previous year's strong level. Furthermore, our acquisitions will contribute to sales in the second half, bringing total sales to more than EUR 50 billion. We anticipate an additional contribution to EBIT before special items. Chemicals --Higher sales and volumes in all divisions --Margins and earnings decline due to high raw material and energy pricesas well as plant shutdowns --New Catalysts operating division
Overview Chemicals 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,443 2,007 22
Thereof Inorganics 285 250 14
Catalysts 259 18 .
Petrochemicals 1,324 1,227 8
Intermediates 575 512 12
EBITDA 409 477 (14)
EBIT before special items 351 415 (15)
EBIT before special items in percent of
sales 14.4 20.7 -
EBIT 263 345 (24)
Assets 10,903 6,026 81
Overview Chemicals 1st Half
Million EUR 2006 2005 Change in %
Sales 4,682 3,829 22
Thereof Inorganics 570 439 30
Catalysts 280 36 .
Petrochemicals 2,698 2,363 14
Intermediates 1,134 991 14
EBITDA 861 1,021 (16)
EBIT before special items 668 841 (21)
EBIT before special items in
percent of sales 14.3 22.0 -
EBIT 580 771 (25)
Assets - - -
We increased sales significantly in the second quarter. In addition to higher volumes and sales prices, sales were boosted by Engelhard's catalyst business, which was acquired at the beginning of June (volumes 6%, prices 4%, portfolio 12%). EBIT before special items was negatively impacted by significantly higher prices for raw materials and energy as well as by plant turnarounds and outages. EBIT contains special charges related to the integration of Engelhard Corporation. Inorganics Sales rose especially due to strong demand for 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. basic chemicals and specialties. Significantly higher prices for natural gas put pressure on margins, especially for methane-based derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , and led to a decline in earnings. The catalysts business unit, which was previously part of the Inorganics division, was assigned to the new Catalysts division with effect from January January: see month. 1, 2006. The previous year's figures were restated accordingly. Catalysts BASF acquired Engelhard Corporation at the beginning of June and has started the integration process. Effective June 6, Engelhard's catalysts business and precious metals trading are reported in this new operating division together with BASF's existing catalyst business. Petrochemicals Higher prices and additional volumes from production at the site in Nanjing, China, led to an increase in sales compared with the same period of 2005. Business with plasticizers plasticizers mostly triaryl phosphates, such as tricresyl, triphenyl phosphates, which are poisonous. See also triorthocresyl phosphate. and solvents was strong. Earnings were significantly lower, however, due to high and rising raw material costs, as well as plant turnarounds and outages. Following shutdowns lasting several weeks, plants in Ludwigshafen, Antwerp Antwerp, city, Belgium Antwerp, Du. Antwerpen, Fr. Anvers, city (1991 pop. 467,518), capital of Antwerp prov., N Belgium, on the Scheldt River. , Belgium, and Port Arthur, Texas Port Arthur is a city in Jefferson County within the Beaumont-Port Arthur metropolitan area and is situated in southeast Texas. As of the 2000 U.S. Census, the city had a total population of 57,755. , are again operating at high capacity utilization rates Capacity utilization rate The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. . Intermediates As in previous quarters, demand continued to rise in the second quarter of 2006. Sales were higher than in the same period of 2005. Very high prices for raw materials worldwide could only be passed on to a limited extent in the form of higher sales prices. Earnings were at the same level as in the previous year. Plastics --Further increase in sales and earnings --Higher volumes of polyurethanes and styrenics --Startup of new plants in Kuantan Kuantan is the state capital of Pahang, the largest state in Peninsular Malaysia. It is situated near Kuantan River mouth and facing the South China Sea. The town comprises 58% of Malays, 32% of Chinese, 4% of Indian and 6% of other races. , Malaysia Malaysia (məlā`zhə), independent federation (2005 est. pop. 23,953,000), 128,430 sq mi (332,633 sq km), Southeast Asia. The official capital and by far the largest city is Kuala Lumpur; Putrajaya is the adminstrative capital. , and Caojing, China
Overview Plastics 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 3,168 2,924 8
Thereof Styrenics 1,232 1,128 9
Performance Polymers 738 732 1
Polyurethanes 1,198 1,064 13
EBITDA 442 400 11
EBIT before special items 315 274 15
EBIT before special items in percent of
sales 9.9 9.4 -
EBIT 314 280 12
Assets 6,867 6,591 4
Overview Plastics 1st Half
Million EUR 2006 2005 Change in %
Sales 6,259 5,724 9
Thereof Styrenics 2,383 2,264 5
Performance Polymers 1,488 1,421 5
Polyurethanes 2,388 2,039 17
EBITDA 898 780 15
EBIT before special items 647 543 19
EBIT before special items in percent of
sales 10.3 9.5 -
EBIT 645 548 18
Assets - - -
The Plastics segment posted an increase in sales compared with the second quarter of 2005 due to higher volumes and virtually stable prices (volumes 9%, prices -1%, portfolio -1%, currencies 1%). Earnings rose to an even greater extent. This was due in particular to improved earnings in the Styrenics division and continued strong earnings in the Polyurethanes division. Styrenics Sales were higher than in the same period of the previous year, in particular thanks to strong demand in Europe and Asia. Earnings increased significantly compared with the weak second quarter of 2005. Margins, however, remain unsatisfactory. Earnings were additionally impacted by the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of the styrene sty·rene n. A colorless oily liquid from which polystyrenes, plastics, and synthetic rubber are produced. Also called vinylbenzene. plant in Ludwigshafen for maintenance. In order to expand our specialties business, we have opened a service center called designfabrik(R) in Ludwigshafen through which we support our customers in the early stages of product development. Performance Polymers Second-quarter sales and earnings were at the same level as in 2005. Sales volumes of engineering plastics developed positively in Asia and Europe. The business acquired from Leuna-Miramid in November November: see month. 2005 contributed to this effect. Together with our partner Toray, we started operations at a world-scale production plant for polybutylene terephthalate Polybutylene terephthalate (PBT) is a plastic that is used as an insulator in the electrical and electronics industries. It is a thermoplastic crystalline polymer, and a type of polyester. (PBT PBT Provider Backbone Transport (networking technology adding determinism to ethernet) PBT Polybutylene Terephthalate PBT Profit Before Tax PBT Paper Based Test (education) ) at our Verbund site in Kuantan, Malaysia, as scheduled in April 2006. The capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. of the plant is already high as a result of the customer base that has been systematically established. Polyurethanes We increased sales significantly thanks to strong demand, in particular in North America. Earnings were increased slightly compared with the previous year's high level. In Caojing, China, we are currently starting operations as planned at the integrated isocyanate i·so·cy·a·nate n. Any of a family of nitrogenous chemicals that are used in industry and can cause respiratory disorders, especially asthma, if inhaled. complex for MDI (1) (Multiple Document Interface) A Windows function that allows an application to display and lets the user work with more than one document at the same time. and TDI TDI - Transport Driver Interface that we have built with Huntsman and Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. partners. Together with DOW and Solvay Noun 1. Solvay - Belgian chemist who developed the Solvay process and built factories exploiting it (1838-1922) Ernest Solvay we will start construction work on plants for hydrogen peroxide hydrogen peroxide, chemical compound, H2O2, a colorless, syrupy liquid that is a strong oxidizing agent and, in water solution, a weak acid. It is miscible with cold water and is soluble in alcohol and ether. and propylene oxide propylene oxide a gas used to disinfect animal feeds. (HPPO) in Antwerp, Belgium, in September September: see month. 2006. Performance Products --Higher sales due to increased volumes in all divisions --Decline in earnings due to rise in raw material costs --Acquisition of Degussa's construction chemicals business and resins producer Johnson Polymer
Overview Performance Products 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,197 2,098 5
Thereof Coatings 576 555 4
Functional Polymers 848 809 5
Performance Chemicals 773 734 5
EBITDA 298 366 (19)
EBIT before special items 209 272 (23)
EBIT before special items in percent of
sales 9.5 13.0 -
EBIT 209 282 (26)
Assets 5,884 4,938 19
Overview Performance Products 1st Half
Million EUR Change
2006 2005 in %
Sales 4,344 4,006 8
Thereof Coatings 1,167 1,027 14
Functional Polymers 1,640 1,551 6
Performance Chemicals 1,537 1,428 8
EBITDA 627 670 (6)
EBIT before special items 457 497 (8)
EBIT before special items in percent of
sales 10.5 12.4 -
EBIT 456 506 (10)
Assets - - -
In the Performance Products segment, all divisions posted higher second-quarter sales compared with the same period of 2005 (volumes 2%, prices 1%, portfolio 2%). Rising raw material costs negatively affected margins, and earnings were lower than in the previous year's second quarter. The construction chemicals business acquired from Degussa will be reported in the new operating division Construction Chemicals with effect from July 1, 2006. Johnson Polymer, a producer of water-based resins for the coatings and printing inks industry that was acquired by BASF, will become part of the Performance Chemicals division as of July 1, 2006. The pigments business of Engelhard Corporation is reported in the Functional Polymers and Performance Chemicals divisions effective June 6, 2006. Coatings We increased sales of automotive coatings in Asia and North America. This growth occurred despite a slight decline in automotive production in North America. In Europe, sales of industrial coatings An industrial coating is a paint or coating defined by its protective, rather than its aesthetic properties, although it can provide both. The most common use of industrial coatings is for corrosion control of steel or concrete. grew in particular. Earnings increased compared with the same period of 2005. Functional Polymers We improved sales of functional polymers thanks in particular to higher volumes of polymers for construction chemicals, adhesive adhesive, substance capable of sticking to surfaces of other substances and bonding them to one another. The term adhesive cement is sometimes used in place of adhesive, especially when referring to a synthetic adhesive. raw materials and superabsorbents. Prices for acrylic monomers came increasingly under pressure due to additional capacities in Asia. The business environment in the paper industry is negatively affected by ongoing restructuring activities among our customers. Overall, earnings were lower than in the strong second quarter of 2005. The high level of prices in almost all product lines is making it increasingly difficult to pass on increased raw material costs promptly to our customers. Performance Chemicals We increased volumes and sales, in particular for performance chemicals for the automotive and oil industry. Further increases in raw material costs could be passed on to the market only to a limited extent. Thanks to strict cost management, earnings were at almost the same level as in the second quarter of 2005. Agricultural Products & Nutrition --Difficult market environment for agricultural products --Fine Chemicals division improves sales and earnings
Overview Agricultural 2nd Quarter 1st Half
Products
Million EUR Change Change
2006 2005 in % 2006 2005 in %
Sales 924 1,043 (11) 1,852 2,002 (7)
EBITDA 217 351 (38) 550 683 (19)
EBIT before special items 165 295 (44) 378 571 (34)
EBIT before special items
in percent of sales 17.9 28.3 - 20.4 28.5 -
EBIT 164 291 (44) 444 575 (23)
Assets 5,025 5,540 (9) - - -
Sales were significantly lower than in the second quarter of 2005. This was due primarily to a decline in sales volumes and the divestiture of major parts of the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. generics business (volumes -6%, prices/currency -1%, portfolio -4%). In Europe, business was negatively affected by the late start to the season, which resulted in the application of smaller amounts of crop protection products. The agricultural economy in North America was impacted by higher operating costs operating costs npl → gastos mpl operacionales and lower sales prices for agricultural produce. In addition, retailers reduced high inventory levels of fungicides This page aims to list well-known chemical compounds, to stimulate the creation of Wikipedia articles. This list is not necessarily complete or up to date – if you see an article that should be here but isn't (or one that shouldn't be here but is), please update the page that were established in 2005 in expectation of the rapid spread of Asian soybean rust Soybean rust, also known as Asian soybean rust, is a disease that affects soybeans and other legumes. It is caused by two types of fungi, Phakopsora pachyrhizi and Phakopsora meibomiae. P. . Earnings declined due to the drop in volumes. The further appreciation of the Brazilian real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. also contributed to the decline. On the basis of business to date, we do not expect to be able to match the previous year's level of sales and earnings.
Overview Fine Chemicals 2nd Quarter 1st Half
Million EUR Change Change
2006 2005 in % 2006 2005 in %
Sales 465 422 10 913 817 12
EBITDA 96 12 . 136 62 119
EBIT before special items 18 7 157 29 27 7
EBIT before special items
in percent of sales 3.9 1.7 - 3.2 3.3 -
EBIT 63 (19) . 73 1 .
Assets 1,760 1,326 33 - - -
Sales increased thanks to the pharmaceutical contract manufacturing business that we acquired in October October: see month. 2005 and the personal care business of Engelhard Corporation (volumes -1%, prices/currencies -2%, portfolio 13%). While growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. remained high in the aroma chemicals aroma chemical, n an odorous chemical with useful properties that is also legal and safe to use as a flavor or fragrance. business, sales of lysine lysine (lī`sēn), organic compound, one of the 20 amino acids commonly found in animal proteins. Only the l-stereoisomer appears in mammalian protein. and vitamin C vitamin C or ascorbic acid Water-soluble organic compound important in animal metabolism. Most animals produce it in their bodies, but humans, other primates, and guinea pigs need it in the diet to prevent scurvy. continued to decline. EBIT before special items improved considerably compared with the same period of 2005. This was due in particular to the pharmaceutical contract manufacturing business. We are continuing with our cost reduction measures to combat the persisting per·sist intr.v. per·sist·ed, per·sist·ing, per·sists 1. To be obstinately repetitious, insistent, or tenacious. 2. pressure on margins for lysine, vitamin C and pharmaceutical active ingredients An active ingredient, also active pharmaceutical ingredient (or API), is the substance in a drug that is pharmaceutically active. Some medications may contain more than one active ingredient. . EBIT contains special income of EUR 66 million resulting from the reduction of a fine imposed by the E.U. for anti-trust violations related to vitamin sales as well as special charges for restructuring measures. Oil & Gas --Sales and earnings 50% up on previous year --Considerably higher volumes in natural gas trading --Achimgaz joint venture starts production wells
Overview Oil & Gas 2nd Quarter
Million EUR Change
2006 2005 in %
Sales 2,481 1,650 50
Thereof Exploration and production 1,219 862 41
Natural gas trading 1,262 788 60
EBITDA 973 686 42
Thereof Exploration and production 835 609 37
Natural gas trading 138 77 79
EBIT before special items 868 579 50
Thereof Exploration and production 766 533 44
Natural gas trading 102 46 122
EBIT before special items in percent of
sales 35.0 35.1 -
Thereof Exploration and production 62.8 61.8 -
Natural gas trading 8.1 5.8 -
EBIT 868 579 50
Thereof Exploration and production 766 533 44
Natural gas trading 102 46 122
Assets 4,802 4,210 14
Thereof Exploration and production 2,232 2,063 8
Natural gas trading 2,570 2,147 20
Overview Oil & Gas 1st Half
Million EUR Change
2006 2005 in %
Sales 5,466 3,490 57
Thereof Exploration and production 2,300 1,555 48
Natural gas trading 3,166 1,935 64
EBITDA 1,926 1,276 51
Thereof Exploration and production 1,542 1,068 44
Natural gas trading 384 208 85
EBIT before special items 1,716 1,063 61
Thereof Exploration and production 1,404 919 53
Natural gas trading 312 144 117
EBIT before special items in percent of
sales 31.4 30.5 -
Thereof Exploration and production 61.0 59.1 -
Natural gas trading 9.9 7.4 -
EBIT 1,716 1,063 61
Thereof Exploration and production 1,404 919 53
Natural gas trading 312 144 117
Assets - - -
Thereof Exploration and production - - -
Natural gas trading - - -
Persistently high crude oil prices and considerably higher sales volumes in the natural gas trading business sector (volumes 7%, prices/currencies 43%) led to a significant increase in sales and earnings compared with the strong second quarter of 2005. In the exploration and production business sector, sales and earnings increased significantly compared with the same period of the previous year as a result of persistently high crude oil prices. Compared with the second quarter of 2005, the average price of Brent crude Brent Crude is one of the major classifications of oil consisting of Brent Crude, Brent Sweet Light Crude, Oseberg and Forties. Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum. rose by approximately $ 18/barrel to just under $ 70/barrel. In euro terms, this corresponds to an increase of EUR 14/barrel to EUR 55/barrel. The natural gas trading business sector again increased sales volumes considerably in both Germany and Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . Sales prices were also raised compared with the previous year's second quarter. Significantly higher sales and earnings were posted as a result. Our Achimgaz joint venture with Gazprom JSC Gazprom (RTS:B>GAZP MICEX:B>GAZP LSE: OGZD; Russian: ОАО Газпром, sometimes transcribed as Gasprom[1] started its first two production wells in the second quarter. The construction work on the remaining facilities is proceeding according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. schedule. We therefore aim to start production around the end of the year. In April 2006, BASF and Gazprom signed an agreement on BASF's participation in the Yuzhno Russkoye gas field. The contracts are expected to be completed by the end of the year. Regions --Europe: Strong increase in sales and earnings due to Oil & Gas segment --North America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. : Sales growth due to acquisition of Engelhard Corporation; earnings impaired by plant turnarounds and weaker agricultural products business --Asia: Additional growth from Verbund site in Nanjing, China
Regions Sales Sales
(location of company) (location of customer)
Change Change
Million EUR 2006 2005 in % 2006 2005 in %
2nd Quarter
Europe 7,499 6,178 21 7,051 5,829 21
Thereof Germany 5,544 4,141 34 2,439 2,053 19
North America (NAFTA) 2,720 2,585 5 2,738 2,588 6
Asia Pacific 1,707 1,451 18 1,871 1,560 20
South America, Africa,
Middle East 396 367 8 662 604 10
12,322 10,581 16 12,322 10,581 16
Regions EBIT before
special items
Change
Million EUR 2006 2005 in %
2nd Quarter
Europe 1,513 1,199 26
Thereof Germany 1,125 772 46
North America (NAFTA) 263 351 (25)
Asia Pacific 125 95 32
South America, Africa, Middle
East 9 12 (25)
1,910 1,657 15
1st Half
Europe 15,285 12,280 24 14,466 11,680 24
Thereof Germany 11,301 8,451 34 5,411 4,254 27
North America (NAFTA) 5,357 4,850 10 5,355 4,831 11
Asia Pacific 3,355 2,750 22 3,648 2,926 25
South America, Africa,
Middle East 840 784 7 1,368 1,227 11
24,837 20,664 20 24,837 20,664 20
1st Half
Europe 2,933 2,333 26
Thereof Germany 2,140 1,514 41
North America (NAFTA) 561 622 (10)
Asia Pacific 240 182 32
South America, Africa, Middle East 41 83 (51)
3,775 3,220 17
Sales by location of company in Europe rose by 21% in the second quarter of 2006. EBIT before special items climbed 26% to EUR 1,513 million. This strong improvement was due above all to the Oil & Gas segment. Companies in North America increased sales in dollar and euro terms by 5%. This sales growth was due to the acquisition of Engelhard Corporation and higher sales volumes in the Polyurethanes division. EBIT before special items declined by 25% to EUR 263 million. The planned plant turnarounds and a decline in sales of fungicides negatively impacted earnings in the Petrochemicals and Agricultural Products divisions, respectively. Sales by location of company in Asia Pacific increased by 17% in local currency terms and by 18% in euro terms. EBIT before special items rose by 32% to EUR 125 million. All segments contributed to the sales growth, in particular the Chemicals segment as a result of the Verbund site in Nanjing, China, which started operations in June 2005. In 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. , Africa, Middle East sales by location of company rose 4% in local currencies and 8% in euro terms. EBIT before special items was negatively impacted by higher costs due to the further significant appreciation of the Brazilian real. Higher earnings from gas production in 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. were unable to offset this effect. Overview of Other Topics Research and development In the first half of 2006, we increased spending on research and development by 15% as planned to EUR 583 million. Of the amount spent in the first six months of this year, approximately 80% fell under the operational responsibility of the operating divisions. Corporate research costs accounted for the remaining 20%. We have expanded our global network of centers of excellence in the key areas of catalysis and nanotechnology nanotechnology: see micromechanics. nanotechnology Manipulation of atoms, molecules, and materials to form structures on the scale of nanometres (billionths of a metre). . Through the acquisition of Engelhard Corporation we have significantly expanded our research capacity in process and environmental catalysis and are now a world leader in this area. Together with the University of Heidelberg Heidelberg (hī`dəlbĕrkh), city (1994 pop. 139,430), Baden-Württemberg, SW Germany, picturesquely situated on the Neckar River. Manufactures include machinery, precision instruments, leather goods, and tobacco and wood products. , we plan to establish a joint laboratory for homogeneous catalysis Homogeneous catalysis is a chemistry term which describes catalysis where the catalyst is in the same phase (ie. solid, liquid and gas) as the reactants. It is the opposite to heterogeneous catalysis. Notice that two liquids can be different phases. by fall 2006. To strengthen our research network in Asia, we opened a research laboratory for nanostructured Created by nanotechnology. surfaces in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). at the end of April. Employees The number of BASF Group employees rose by 5,849 compared with the end of 2005 to 86,794 as of June 30, 2006. This increase was due in particular to the acquisition of Engelhard Corporation. Simultaneously, employees left BASF as a result of continued measures to increase efficiency. In Europe, the number of employees increased by 0.5% in the first six months of 2006. The greatest increase of 44.5% was in North America (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 ) as a result of the acquistion of Engelhard Corporation. Employee numbers increased by 11% in Asia Pacific and by 2.5% in South America, Africa, Middle East.
Employees by region
June 30, 2006 Dec. 31, 2005
Europe 56,904 56,614
North America (NAFTA) 14,202 9,826
Asia Pacific 10,733 9,669
South America, Africa,
Middle East 4,955 4,836
86,794 80,945
Compared with the first half of 2005, personnel costs rose by 5.7% to EUR 2.8 billion in the same period of 2006. Consolidated Statements of Income
2nd Quarter
Million EUR Change
2006 2005 in %
Sales 12,322 10,581 16.5
Cost of sales 8,658 7,083 22.2
Gross profit on sales 3,664 3,498 4.7
Selling expenses 1,143 1,085 5.3
General and administrative expenses 207 193 7.3
Research and development expenses 278 256 8.6
Other operating income 168 56 200.0
Other operating expenses 407 433 (6.0)
Income from operations 1,797 1,587 13.2
(Expenses)/income from financial assets 30 42 (28.6)
Interest result (55) (51) (7.8)
Other financial result 48 (73) .
Financial result 23 (82) .
Income before taxes and minority interests 1,820 1,505 20.9
Income taxes 866 697 24.2
Net income before minority interests 954 808 18.1
Minority interests 34 30 13.3
Net income 920 778 18.3
Earnings per share (EUR)
Number of shares, in million (weighted) 506 527 (4.0)
Dilutive effect - - -
Earnings per share (EUR)
Undiluted 1.82 1.48 23.0
Diluted 1.82 1.48 23.0
2nd Quarter 1st
Half
Million EUR Change
2006 2005 in %
Sales 24,837 20,664 20.2
Cost of sales 17,546 13,928 26.0
Gross profit on sales 7,291 6,736 8.2
Selling expenses 2,246 2,089 7.5
General and administrative expenses 393 357 10.1
Research and development expenses 583 506 15.2
Other operating income 418 182 129.7
Other operating expenses 841 880 (4.4)
Income from operations 3,646 3,086 18.1
(Expenses)/income from financial assets 45 113 (60.2)
Interest result (103) (91) (13.2)
Other financial result 102 (59) .
Financial result 44 (37) .
Income before taxes and minority interests 3,690 3,049 21.0
Income taxes 1,719 1,319 30.3
Net income before minority interests 1,971 1,730 13.9
Minority interests 101 91 11.0
Net income 1,870 1,639 14.1
Earnings per share (EUR)
Number of shares, in million (weighted) 507 532 (4.7)
Dilutive effect - - -
Earnings per share (EUR)
Undiluted 3.69 3.08 19.8
Diluted 3.69 3.08 19.8
Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm.
Million EUR June 30, June 30, Change Dec. Change
2006 2005 in % 31, in %
2005
Long-term assets
Intangible assets 6,938 3,773 83.9 3,720 86.5
Property, plant and
equipment 14,782 13,709 7.8 13,987 5.7
Investments accounted for
using the equity method 261 1,168 (77.7) 244 7.0
Other financial assets 1,099 974 12.8 813 35.2
Deferred taxes 899 1,425 (36.9) 1,255 (28.4)
Other long-term assets 557 362 53.9 524 6.3
24,536 21,411 14.6 20,543 19.4
Short-term assets
Inventories 6,122 5,331 14.8 5,430 12.7
Accounts receivable, trade 7,825 6,815 14.8 7,020 11.5
Other receivables and
miscellaneous short-term
assets 5,492 1,869 193.8 1,586 246.3
Liquid funds 496 3,156 (84.3) 1,091 (54.5)
19,935 17,171 16.1 15,127 31.8
Total assets 44,471 38,582 15.3 35,670 24.7
Million EUR June 30, June Change Dec. Change
2006 30, in % 31, in %
2005 2005
Stockholders' equity
Subscribed capital 1,289 1,342 (3.9) 1,317 (2.1)
Capital surplus 3,130 3,072 1.9 3,100 1.0
Retained earnings 12,337 11,244 9.7 11,928 3.4
Other comprehensive income 356 416 (14.4) 696 (48.9)
Minority interests 476 435 9.4 482 (1.2)
17,588 16,509 6.5 17,523 0.4
Long-term liabilities
Provisions for pensions and
similar obligations 1,193 4,837 (75.3) 1,547 (22.9)
Other provisions 2,749 2,463 11.6 2,791 (1.5)
Deferred taxes 1,203 788 52.7 699 72.1
Financial indebtedness 5,920 3,496 69.3 3,682 60.8
Other long-term liabilities 1,323 1,014 30.5 1,043 26.8
12,388 12,598 (1.7) 9,762 26.9
Short-term liabilities
Accounts payable, trade 3,215 2,369 35.7 2,777 15.8
Provisions 2,856 2,759 3.5 2,763 3.4
Tax liabilities 1,178 1,078 9.3 887 32.8
Financial indebtedness 5,037 1,510 233.6 259 .
Other short-term liabilities 2,209 1,759 25.6 1,699 30.0
14,495 9,475 53.0 8,385 72.9
Total stockholders' equity
and liabilities 44,471 38,582 15.3 35,670 24.7
Consolidated Statements of Cash Flows 1st Half Million EUR 2006 2005 Net income 1,870 1,639 Depreciation and amortization of long-term assets 1,129 1,082 Changes in net working capital (611) (573) Miscellaneous items (180) (67) Cash provided by operating activities 2,208 2,081 Payments related to tangible and intangible assets (983) (875) Acquisitions/divestitures (6,987) (51) Financial investments and other items 268 13 Cash using in investing activities (7,702) (913) Proceeds from capital increases/repayments (663) (858) Changes in financial liabilities 6,772 1,494 Dividends (1,124) (942) Cash provided by/used in financing activities 4,985 (306) Net changes in cash and cash equivalents (509) 862 Cash and cash equivalents as of beginning of year and other changes 901 2,126 Cash and cash equivalents 392 2,988 Marketable securities 104 168 Liquid funds 496 3,156 Cash provided by operating activities was EUR 2,208 million in the first half of 2006 compared with EUR 2,081 million in the same period of 2005. The increase was primarily due to the rise in earnings. Cash used in investing activities was EUR 7,702 million compared with EUR 913 million in the same period of the previous year. Approximately EUR 7 billion was spent in the second quarter on the acquisitions described under "Significant Events and Outlook." In cash provided by financing activities, share buybacks and dividend payments led to a cash outflow of EUR 1,805 million. In the first six months of 2006, we bought back 10.8 million shares for EUR 681 million or an average of EUR 63.04 per share. At EUR 10.957 million, 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. was EUR 7,016 million higher than on December December: see month. 31, 2005. On April 11, BASF Aktiengesellschaft issued a euro benchmark bond Benchmark Bond A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue". with a volume of EUR 1 billion and a maturity of five years. The coupon is 4.0% per year. In addition, on June 22, BASF Aktiengesellschaft issued a three-year floating rate note and a 10-year euro fixed-rate benchmark bond, each with a nominal volume of EUR 500 million. The coupon of the 10-year bond is 4.5 percent per year. In addition, commercial paper equivalent to approximately EUR 4.4 billion was outstanding as of June 30, 2006. As of June 30, 2006, nebt debt was EUR 10,461 million and the equity ratio was 39.5%. Consolidated Statements of Recognized Income and Expense
Income and expense items
1st Half
Million EUR 2006 2005
Net income before minority interests 1,971 1,730
Fair value changes in available-for-sale securities (2) (22)
Cash-flow hedges 23 (3)
Change in foreign currency translation adjustments (360) 501
Actuarial gains/losses from pensions and other
obligations 368 (874)
Deferred taxes (132) 340
Minority interests (15) 23
Total income and expenses recognized in equity (118) (35)
Total income and expense for the period 1,853 1,695
Thereof BASF 1,767 1,581
Thereof minority interests 86 114
Development Retained Other comprehensive income
of income earnings
and expense
recognized
directly in
equity
Actuarial Foreign Fair value Cash- Total of
gains/losses currency changes in flow other compr-
translation available- hedges ehensive
adjustments for income
sale
securities
Million EUR
As of
January 1,
2006 (894) 475 258 (37) 696
Additions 368 - - 23 23
Releases - (360) (2) - (362)
Deferred
taxes (131) 7 1 (9) (1)
As of June
30, 2006 (657) 122 257 (23) 356
As of
January 1,
2005 (234) (226) 193 (27) (60)
Additions - 501 - - 501
Releases (874) - (22) (3) (25)
Deferred
taxes 340 (10) 8 2 -
As of June
30, 2005 (768) 265 179 (28) 416
Development of income Total
and expense recognized income and
directly in equity expense
recognized
directly in
equity
Million EUR
As of January 1, 2006 (198)
Additions 391
Releases (362)
Deferred taxes (132)
As of June 30, 2006 (301)
As of January 1, 2005 (294)
Additions 501
Releases (899)
Deferred taxes 340
As of June 30, 2005 (352)
Consolidated Statements of Stockholders' Equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets.
January - June 2006 Number of Subscribed Capital Retained
subscribed capital surplus earnings
shares
outstanding
Million EUR
As of January 1, 2006 514,379,000 1,317 3,100 11,928
Share buy-back and
cancellation of own shares
including own shares intended
to
be cancelled (10,799,000) (28) 30 (683)
Capital injection by minority
interests - - - -
Dividends paid - - - (1,014)
Net income - - - 1,870
Income and expense recognized
directly
in equity - - - 237
Change in scope of
consolidation and
other changes - - - (1)
As of June 30, 2006 503,580,000 1,289 3,130 12,337
January - June 2006 Other com- Minority Stock-
prehensive interests holders'
income equity
Million EUR
As of January 1, 2006 696 482 17,523
Share buy-back and cancellation
of own shares including own
shares intended to
be cancelled - - (681)
Capital injection by minority
interests - 18 18
Dividends paid - (110) (1,124)
Net income - 101 1,971
Income and expense recognized
directly
in equity (340) (15) 118
Change in scope of consolidation
and
other changes - - 1
As of June 30, 2006 356 476 17,588
January - June 2005 Number of Subscribed Capital Retained
subscribed capital surplus earnings
shares
outstanding
Million EUR
As of January 1, 2005 540,440,410 1,384 3,028 11,923
Share buy-back and
cancellation of own shares
including own shares intended
to
be cancelled (16,402,229) (42) 44 (869)
Capital distribution to
minority interests - - - -
Dividends paid - - - (904)
Net income - - - 1,639
Income and expense recognized
directly
in equity - - - (534)
Change in scope of
consolidation and
other changes - - - (11)
As of June 30, 2005 524,038,181 1,342 3,072 11,244
January - June 2005 Other com- Minority Stock-
prehensive interests holders'
income equity
Million EUR
As of January 1, 2005 (60) 328 16,603
Share buy-back and cancellation
of own shares including own
shares intended to
be cancelled - - (867)
Capital distribution to minority
interests - 10 10
Dividends paid - (38) (942)
Net income - 91 1,730
Income and expense recognized
directly
in equity 476 23 (35)
Change in scope of consolidation
and
other changes - 21 10
As of June 30, 2005 416 435 16,509
Segment Reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four
2nd Quarter Sales EBITDA
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 2,443 2,007 21.7 409 477 (14.3)
Plastics 3,168 2,924 8.3 442 400 10.5
Performance Products 2,197 2,098 4.7 298 366 (18.6)
Agricultural Products &
Nutrition 1,389 1,465 (5.2) 313 363 (13.8)
Thereof Agricultural
Products 924 1,043 (11.4) 217 351 (38.2)
Fine Chemicals 465 422 10.2 96 12 .
Oil & Gas 2,481 1,650 50.4 973 686 41.8
Other (a) 644 437 47.4 (61) (143) 57.3
12,322 10,581 16.5 2,374 2,149 10.5
2nd Quarter Income from Income from
operations (EBIT) operations (EBIT)
before special
items
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 351 415 (15.4) 263 345 (23.8)
Plastics 315 274 15.0 314 280 12.1
Performance Products 209 272 (23.2) 209 282 (25.9)
Agricultural Products &
Nutrition 183 302 (39.4) 227 272 (16.5)
Thereof Agricultural Products 165 295 (44.1) 164 291 (43.6)
Fine Chemicals 18 7 157.1 63 (19) .
Oil & Gas 868 579 49.9 868 579 49.9
Other (a) (16) (185) 91.4 (84) (171) 50.9
1.910 1.657 15.3 1,797 1,587 13.2
2nd Quarter Research and Assets (b)
development
expenses
Chemicals 35 28 25.0 10,903 6,026 80.9
Plastics 32 35 (8.6) 6,867 6,591 4.2
Performance Products 59 47 25.5 5,884 4,938 19.2
Agricultural Products &
Nutrition 99 92 7.6 6,785 6,866 (1.2)
Thereof
Agricultural Products 83 75 10.7 5,025 5,540 (9.3)
Fine Chemicals 16 17 (5.9) 1,760 1,326 32.7
Oil & Gas - - - 4,802 4,210 14.1
Other (a) 53 54 (1.9) 9,230 9,951 (7.2)
278 256 8.6 44,471 38,582 15.3
2nd Quarter Additions to Amortization and
fixed assets (c) depreciation (c)
Chemicals 3,233 369 . 146 132 10.6
Plastics 116 120 (3.3) 128 120 6.7
Performance Products 921 134 . 89 84 6.0
Agricultural Products &
Nutrition 282 33 . 86 91 (5.5)
Thereof
Agricultural Products 37 14 164.3 53 60 (11.7)
Fine Chemicals 245 19 . 33 31 6.5
Oil & Gas 115 156 (26.3) 105 107 (1.9)
Other (a) 290 38 . 23 28 (17.9)
4,957 850 483.2 577 562 2.7
Segment Reporting
1st Half Sales EBITDA
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 4,682 3,829 22.3 861 1,021 (15.7)
Plastics 6,259 5,724 9.3 898 780 15.1
Performance Products 4,344 4,006 8.4 627 670 (6.4)
Agricultural Products &
Nutrition 2,765 2,819 (1.9) 686 745 (7.9)
Thereof Agricultural
Products 1,852 2,002 (7.5) 550 683 (19.5)
Fine Chemicals 913 817 11.8 136 62 119.4
Oil & Gas 5,466 3,490 56.6 1,926 1,276 50.9
Other (a) 1,321 796 66.0 (223) (324) 31.2
24,837 20,664 20.2 4,775 4,168 14.6
1st Half Income from Income from
operations (EBIT) operations (EBIT)
before special
items
Million EUR 2006 2005 in % 2006 2005 in %
Chemicals 668 841 (20.6) 580 771 (24.8)
Plastics 647 543 19.2 645 548 17.7
Performance Products 457 497 (8.0) 456 506 (9.9)
Agricultural Products &
Nutrition 407 598 (31.9) 517 576 (10.2)
Thereof Agricultural
Products 378 571 (33.8) 444 575 (22.8)
Fine Chemicals 29 27 7.4 73 1 .
Oil & Gas 1,716 1,063 61.4 1,716 1,063 61.4
Other (a) (120) (322) 62.7 (268) (378) 29.1
3,775 3,220 17.2 3,646 3,086 18.1
1st Half Research and Assets (b)
development
expenses
Chemicals 66 55 20.0 10,903 6,026 80.9
Plastics 73 69 5.8 6,867 6,591 4.2
Performance Products 119 97 22.7 5,884 4,938 19.2
Agricultural Products &
Nutrition 196 178 10.1 6,785 6,866 (1.2)
Thereof
Agricultural Products 163 143 14.0 5,025 5,540 (9.3)
Fine Chemicals 33 35 (5.7) 1,760 1,326 32.7
Oil & Gas - 1 - 4,802 4,210 14.1
Other (a) 129 106 21.7 9,230 9,951 (7.2)
583 506 15.2 44,471 38,582 15.3
1st Half Additions to Amortization and
fixed assets (c) depreciation (c)
Chemicals 3,395 457 . 281 250 12.4
Plastics 334 202 65.3 253 232 9.1
Performance Products 1,002 188 433.0 171 164 4.3
Agricultural Products &
Nutrition 319 64 398.4 169 169 0.0
Thereof
Agricultural Products 52 26 100.0 106 108 (1.9)
Fine Chemicals 267 38 . 63 61 3.3
Oil & Gas 190 250 (24.0) 210 213 (1.4)
Other (a) 317 51 . 45 54 (16.7)
5,557 1,212 358.5 1,129 1,082 4.3
(a) "Other" includes the fertilizers business and other businesses as well as expenses, income and assets not allocated to the segments. This item also includes foreign currency results from financial indebtedness that are not allocated to the segments, from hedging of forecasted sales as well as from currency positions that are macro-hedged (EUR 38 million in the second quarter (2005: EUR (94) million) and EUR 93 million in the first half (2005: EUR (139) million)). (b) The assets of "Other" includes the assets of the fertilizers business and other businesses as well as assets that are not allocated to the segments (financial assets Financial assets Claims on real assets. , liquid funds, financial receivables, deferred taxes; first half 2006: EUR 7,189 million, first half 2005: EUR 8,180 million). (c) Intangible and tangible fixed assets Explanations to the Interim Financial Statements 1. Basis of presentation The Consolidated Financial Statements of BASF Group for the year ended December 31, 2005 were prepared according to the International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ) valid as of the balance sheet date. The current interim financial statements were prepared using the same accounting policies. BASF's Financial Report for fiscal 2005 is available on the Internet at corporate.basf.com/financial-report. The previous year's figures have been adjusted as follows 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 changes made effective December 31, 2005: Expenses in the Oil & Gas segment related to exploration for oil and gas deposits and to dry holes are now recorded as other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. rather than as research and development expenses. In association with the change to IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 19, actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin gains and losses from the valuation of pension obligations are recognized against retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. in the reporting period in which they occur. Compared with the end of 2005, the assumptions used to determine expenses for pension benefit were changed as follows with effect from June 30, 2006: The interest rate was increased from 4.25% to 4.75% and the expected pension increase from 1.50% to 1.75%. The interim financial statements have not been audited. 2. Scope of consolidation The Consolidated Financial Statements include BASF Aktiengesellschaft, the parent company, as well as all material subsidaries on a fully consolidated basis. Material jointly operated companies are proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: consolidated. The number of fully and proportionally consolidated companies has developed as follows: 2006 2005 As of January 1 180 160 Thereof proportionally consolidated 15 12 First-time consolidations 91 28 Thereof proportionally consolidated - 4 Thereof changes in the consolidation method - (1) Deconsolidations 4 8 Thereof proportionally consolidated - - As of June 30/December 31 267 180 Thereof proportionally consolidated 15 15 First-time consolidations since January 1, 2006 comprised: --A total of 79 companies associated with the acquisition of Engelhard Corporation, United States; --The biotechnology company CropDesign N.V., Belgium, acquired in May; --BASF Services Europe GmbH, Berlin, which performs finance and 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. services for BASF companies in Europe; and --Ten previously unconsolidated companies with headquarters in Germany, Australia, China, Malta and Switzerland due to their increased importance. Four companies have been deconsolidated since the beginning of 2006 due to their decreased significance or merger with other BASF companies. Companies accounted for using the equity method were as follows:
June 30, Dec. 31,
2006 2005
Affiliated companies 11 11
Joint ventures 2 2
Other associated companies 3 3
16 16
Companies acquired in association with the purchase of Degussa's construction chemicals business will be included in BASF's Consolidated Financial Statements as of July 1, 2006. Companies acquired in association with the purchase of Johnson Polymer will also be consolidated as of July 1, 2006. 3. Acquisitions/divestitures
Effect of acquisitions and divestitures
on BASF Group assets
June 30, 2006
Million
EUR %
Long-term assets 4,818 46.4
Thereof goodwill 2,089 20.1
Intangible assets 1,214 11.7
Property, plant and equipment 1,260 12.1
Short-term assets 5,559 53.6
Thereof Inventories 655 6.3
Accounts receivable, trade 484 4.7
Other receivables and miscellaneous short-term
assets 4,366 42.1
Assets 10,377 100.0
The total purchase price for Degussa's construction chemicals business and for Johnson Polymer of EUR 3,048 million is reported under "Other receivables" as of June 30, 2006. The provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. purchase price allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as for Engelhard Corporation is included in the above table under the respective balance sheet items. The activities acquired from Engelhard Corporation increased sales by EUR 288 million in the second quarter of 2006.
-- Important Dates
-- November 2, 2006
Interim Report Third
Quarter 2006
-- February 22, 2007
Annual Results 2006
-- April 26, 2007
Interim Report First Quarter
2007 and Annual Meeting
-- August 1, 2007
Interim Report Second
Quarter 2007
-- October 30, 2007
-- Interim Report Third Quarter 2007
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 report 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 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 corporate.basf.com/20-f-report. We do not assume any obligation to update the forward-looking statements contained in this report. You can find this and other publications from BASF on the Internet at corporate.basf.com. You can also order the reports --by telephone: +49 621 60-91827 --by fax: +49 621 60-20162 --on the Internet: corporate.basf.com/mediaorders |
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