BASF SE / Key word(s): Quarter Results/Change in Forecast 27.10.2015 07:00 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- BASF: Sales and EBIT before special items decline slightly in difficult environment 3rd quarter 2015: - Sales EUR17.4 billion (minus 5%) - EBIT before special items EUR1.6 billion (minus 10%) - EBIT EUR1.9 billion (plus 8%) - Cash provided by operating activities in the first nine months of the year EUR8.5 billion (plus EUR3.6 billion) Outlook 2015: - Subdued economy, oil price decline and asset swap with Gazprom to burden sales and earnings in 4th quarter - Slight decrease now expected in sales and EBIT before special items in 2015 Ludwigshafen, Germany - October 27, 2015 - In a weaker than expected market environment, BASF sales in the third quarter of 2015 were EUR17.4 billion, 5% below the level of the previous third quarter. EBITDA increased by EUR358 million to EUR2.9 billion, mainly due to higher depreciation. In contrast, income from operations (EBIT) before special items declined by EUR171 million to EUR1.6 billion. In the Chemicals segment, EBIT before special items rose slightly, while it increased sharply in the Functional Materials & Solutions segment. In the remaining segments, earnings declined significantly. There was a pronounced summer lull this year and no volume momentum in September. Major markets like Brazil are in a recession or face lower growth rates, such as China. The sharp drop in the price of oil led to lower prices (minus 8%), primarily in the Chemicals and Oil & Gas segments. Sales volumes were slightly lower (minus 1%) than in the previous third quarter. Volumes in the chemicals business, which comprises the Chemicals, Performance Products and Functional Materials & Solutions segments, were below the level of the prior-year quarter, but they rose in the Agricultural Solutions and Oil & Gas segments. Currency effects were positive (plus 4%) in every division except Crop Protection. Special items in EBIT totaled EUR286 million in the third quarter of 2015, compared with minus EUR32 million in the third quarter of 2014. This was particularly the result of gains from the asset swap with Gazprom concluded at the end of September 2015. Compared with the previous third quarter, EBIT grew by EUR147 million to EUR1.9 billion. Net income rose by EUR195 million to EUR1.2 billion. Earnings per share were EUR1.31 in the third quarter of 2015, compared with EUR1.11 in the same quarter of 2014. In the first nine months of 2015, sales of BASF Group were around EUR56.6 billion, 1% higher than in the same period of the previous year. EBIT before special items declined by EUR182 million to EUR5.7 billion. At EUR5.9 billion, EBIT in the first nine months of 2015 reached the same level as in the same period of the previous year. Cash provided by operating activities in the first three quarters of 2015 rose year-on-year by EUR3.6 billion to EUR8.5 billion. This was predominantly the result of a decline in inventories. Outlook for full year 2015 In the first three quarters of 2015, growth in the global economy remained considerably below the company's expectations. The economic environment clouded over in important emerging markets, especially in China. BASF has further reduced its expectations for the global economy in 2015 (previous forecast in parentheses): - Gross domestic product growth: 2.3% (2.4%) - Growth in industrial production: 2.0% (2.9%) - Growth in chemical production: 3.5% (3.8%) - An average euro/dollar exchange rate of $1.12 per euro ($1.15 per euro) - An average oil price for the year of $55 per barrel ($60 to $70 per barrel) BASF had been expecting higher growth rates at the beginning of the year: Growth for the gross domestic product had been assumed to be 2.8%, for industrial production 3.6% and for chemical production 4.2%. Besides weaker economic development, the oil price fell further than expected. In addition, the divestitures concluded in the third quarter of 2015 will put a strain on sales and earnings development. BASF is therefore adjusting its outlook for 2015. The company now expects a slight decrease in sales and EBIT before special items. It is unlikely that the BASF Group will achieve the slight sales growth forecast for 2015. BASF now expects sales to decline slightly. This assumption is based on the divestiture of the natural gas trading and storage business concluded in the third quarter of 2015 as well as on the lower price of oil. The company continues to aim to raise sales volumes, excluding the effects of acquisitions and divestitures. Contrary to expectations, EBIT before special items in 2015 will probably not match the previous year's level but will instead see a slight decrease. BASF continues to anticipate larger contributions from the chemicals business, whereas earnings in the Oil & Gas segment will decrease considerably. In the crop protection business, the difficult market environment will likely result in earnings that, against expectations, come in slightly below the level of 2014. BASF still foresees a slight decline in EBIT for the BASF Group. In 2014, higher levels of special income arose primarily from the disposal of the 50% share in Styrolution Holding GmbH. Business development in the segments in the 3rd quarter Sales in the Chemicals segment were EUR3.6 billion, 13% below the level of the previous third quarter. This was essentially due to lower prices on account of decreased raw material costs, especially in the Petrochemicals division. Sales were also reduced by the disposal of BASF's share in the Singapore-based Ellba Eastern Private Ltd. joint operation at the end of 2014. These developments were partially countered by positive currency effects and volumes increases in the Intermediates and Monomers divisions. EBIT before special items rose by EUR17 million to EUR633 million, mostly as a result of higher margins in the Petrochemicals division. Compared with the third quarter of 2014, sales in the Performance Products segment declined 1% to EUR3.9 billion. This was due to lower prices, weaker volumes and the lack of sales from the textile chemicals business sold in June 2015. Currency effects had a positive influence on sales in all divisions. Decreased sales volumes were brought about by lower volumes in the pigments business as well as weak demand in the oilfield chemicals business in connection with oil price developments. Intense competition in the vitamin business put pressure on prices. The market environment for paper chemicals remained difficult. EBIT before special items was down EUR57 million to EUR319 million as a consequence of higher fixed costs, stemming particularly from the startup of new plants as well as currency effects. In the Functional Materials & Solutions segment, sales matched the level of the third quarter of 2014 and were EUR4.5 billion. Positive currency effects counterbalanced lower prices and a slight decline in volumes. Continuing high demand from the automotive and construction industry was not able to fully offset lower sales volumes in precious metal trading. EBIT before special items grew by EUR61 million to EUR371 million, mainly thanks to an earnings increase in the Performance Materials division. Compared with the previous third quarter, sales rose by 6% to EUR1.1 billion in the Agricultural Solutions segment through higher volumes and prices. The sharp depreciation of the Brazilian real resulted in negative currency effects. EBIT before special items declined by EUR36 million to EUR7 million. This was largely the result of higher costs arising primarily from capacity increases and inventory reduction. At EUR3.6 billion, the Oil & Gas segment's sales were down by 2% year-on-year, predominantly on account of a price-related sales decline in the Natural Gas Trading business sector. Despite a sharp drop in the price of oil, sales grew in the Exploration & Production business sector thanks to higher volumes and portfolio effects. The smaller contribution from Natural Gas Trading resulted in a considerable decrease in earnings; EBIT before special items declined by EUR65 million to EUR371 million. Sales in Other fell by 30% to EUR685 million compared with the third quarter of 2014. Decreased raw material trading and the disposal of BASF's share in the Ellba Eastern Private Ltd. joint operation at the end of 2014 were primarily responsible for this development. EBIT before special items declined by EUR91 million to minus EUR98 million, primarily because of fewer reversals in provisions for the long-term incentive program as compared with the prior third quarter. Contact: Dr. Stefanie Wettberg Corporate Communications +49 621-60-99223 [email protected] Jennifer Moore-Braun Media Relations +49 621 60-99123 [email protected] 27.10.2015 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: BASF SE Carl-Bosch-Straße 38 67056 Ludwigshafen Germany Phone: +49 (0)621 60-0 Fax: +49 (0)621 60-4 25 25 E-mail: [email protected] Internet: www.basf.com ISIN: DE000BASF111, DE000A0JRFB0, Börse Dublin, Frankfurter Wertpapierbörse, DE000A0JRFA2, Börse Dublin, Frankfurter Wertpapierbörse, DE000A0JQF26, Börse Dublin, Frankfurter Wertpapierbörse, DE000A0EUB86, Frankfurter Wertpapierbörse, DE0008846718, Frankfurter Wertpapierbörse, DE000A0XFK16, Börse Luxemburg, Frankfurter Wertpapierbörse, XS0420401779, Börse Luxemburg, XS0412154378, Börse Luxemburg, Frankfurter Börse, DE000A0T4DU7,Börse Luxemburg, Frankfurter Börse, CH0039943292, Swiss Exchange (SWX), CH0039943383, Swiss Exchange (SWX), DE000A0TKBM, Börse Luxemburg, Frankfurter Börse, XS0414672070, Börse Luxemburg, , WKN: BASF11, WKN A0JRFB, Börse Dublin, Frankfurter Wertpapierbörse, , WKN A0JRFA, Börse Dublin, Frankfurter Wertpapierbörse, , WKN A0JQF2, Börse Dublin, Frankfurter Wertpapierbörse, , WKN A0EUB8, Frankfurter Wertpapierbörse, , WKN 884671, Frankfurter Wertpapierbörse, , WKN A0XFK1, Börse Luxemburg, Frankfurter Wertpapierbörse, , WKN A0XFHJ, Börse Luxemburg, , WKN A0T6EG, Börse Luxemburg, Frankfurter Wertpapierbörse, , WKN A0T4DU, Börse Luxemburg, Frankfurter Wertpapierbörse, , WKN 3994329, Swiss Exchange (SWX), , WKN 3994338, Swiss Exchange (SWX), , WKN A0TKBM, Börse Luxemburg, Frankfurter Wertpapierbörse, , WKN A0T65R, Börse Luxemburg, Indices: DAX, EURO STOXX 50 Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime Standard), Hamburg, Hanover, Munich, Stuttgart; Terminbörse EUREX; London, SIX End of Announcement DGAP News-Service ---------------------------------------------------------------------------