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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

4 -- Reporting by segment and region

As of January 1, 2008, we restructured our segments on the basis of similar products, production processes and customer industries. In doing so, we are taking account of changes in our portfolio as a result of acquisitions, divestitures and restructuring measures over the past few years. The previous year’s figures for the segments and for Other have been adjusted accordingly.

BASF’s worldwide business is conducted by operating divisions that are aggregated into six segments for reporting purposes.

The Chemicals segment consists of the Inorganics, Petrochemicals and Intermediates divisions. The Catalysts division has been transferred to the new Functional Solutions segment.

The Plastics segment is composed of the Performance Polymers and Polyurethanes divisions. The Specialty Plastics and Foams business units of the former Styrenics division have been integrated into the Performance Polymers division.

The Performance Products segment comprises the Acrylics & Dispersions, Care Chemicals and Performance Chemicals divisions. The Functional Polymers division has been renamed Acrylics & Dispersions. The activities of the former Fine Chemicals division and the detergents and formulators business from the Performance Chemicals division have been included in the new Care Chemicals division.

In the Functional Solutions segment, which consists of the Catalysts, Construction Chemicals and Coatings divisions, we bundle the majority of our systems solutions and products for the automotive and construction industries.

The Agricultural Products & Nutrition segment has been renamed Agricultural Solutions and its Agricultural Products division has been renamed Crop Protection.

The Oil & Gas segment is composed of the Oil & Gas division with the Exploration & Production and Natural Gas Trading business sectors.

Activities not assigned to a particular division are reported in Other. In particular, they include the styrene (SM), polystyrene (PS), styrene-butadiene-copolymer (SBS) and acrylonitrile butadiene styrene (ABS) businesses, which are managed under the name Styrenics, as well as fertilizer activities. In addition, the sale of feedstock, engineering and other services, rental income and leases are reported in Other. In 2008, Styrenics accounted for €3,082 million of the sales reported under Other.

With our corporate research, which is also reported in Other, we develop cross-divisional growth clusters and secure BASF’s long-term competence with regard to technology and methods.

As of January 1, 2008, Group corporate costs are no longer allocated to the segments but reported in Other. Group corporate costs consist of the expenses for steering the BASF Group.

Foreign currencies results reported in Other relate to the results from the hedging of forecasted sales not allocated to the segments; the hedging of cross-segment net positions of monetary assets and liabilities; and the translation of financial indebtedness.

In 2008, hedging and valuation effects were related to negative earnings resulting from hedging for raw material price risks that are not allocated to the segments, as well as income from the reversal of provisions for BASF’s option program.

Earnings in the styrenics business were negative due to lower demand and writedowns on sites in Mexico and Korea. Earnings with fertilizers and other business increased, however.

Intersegmental transfers are predominantly conducted on the basis of market prices. The allocation of assets and depreciation to the segments is based on economic control. Assets used by more than one segment are allocated based on the percentage of usage.

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Income from operations (EBIT) of Other (million €)

 

 

2008

2007

Corporate research costs

(325)

(323)

Costs of the corporate center

(243)

(237)

Styrenics, fertilizers, other business

(121)

167

Foreign currency results, hedging and other measurement effects

(209)

90

Miscellaneous income and expenses

(32)

(118)

 

(930)

(421)

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Assets of Other (million €)

 

 

2008

2007

Assets of businesses included under Other

3,081

3,045

Financial assets

3,093

2,786

Deferred tax assets

930

679

Cash and cash equivalents/marketable securities

2,811

818

Defined benefit assets

165

417

Miscellaneous receivables/prepaid expenses

2,512

1,140

 

12,592

8,885

The reconciliation Oil & Gas shows the reconciliation of income from operations in the Oil & Gas segment and the contribution of the segment to the net income of the BASF Group.

The miscellaneous earnings relates to income and expenses not included in the income from operations of the segment, the interest result as well as the miscellaneous financial result. The decline in income from operations resulted chiefly from losses on loan commitments denominated in the U.S. dollar and euro at OAO Severneftegazprom due to the depreciation of the Russian Ruble. The increase in the miscellaneous result relates chiefly to results from foreign currency hedging not allocated to the segments that is reported under Other.

Minority interests increased in 2008 compared with the previous year. This resulted chiefly from the increase in the Gazprom’s stakes in a German Wintershall subsidiary which holds production and exploration rights to onshore concessions 96 and 97 in Libya and in a natural gas trading company, WINGAS GmbH & Co KG, Kassel, to 50% minus one share.

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Reconciliation Oil & Gas (million €)

 

 

2008

2007

Income from operations

3,844

3,031

Income from financial assets

(68)

5

Miscellaneous earnings

121

8

Income before taxes and minority interests

3,897

3,044

Income taxes

2,573

2,121

Thereof income taxes on oil-producing operations non-compensable with German corporate income tax

1,851

1,302

Income before minority interests

1,324

923

Minority interests

373

134

Net income

951

789

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Segments

 

 

 

 

 

 

 

 

 

2008 (million €)

 

 

 

 

 

 

 

 

 

 

 

Chemicals

Plastics

Performance
Products

Functional Solutions

Agricultural Solutions

 

Oil & Gas

Thereof Exploration
& Production

Other

BASF Group

Sales

10,324

9,675

8,967

9,388

3,409

 

14,445

5,308

6,096

62,304

Change (%)

10.3

(3.0)

1.2

(1.1)

8.7

 

37.3

21.6

(7.8)

7.5

Intersegmental transfers

5,503

642

422

147

28

 

1,235

237

444

8,421

Sales including intersegmental transfers

15,827

10,317

9,389

9,535

3,437

 

15,680

5,545

6,540

70,725

Income from operations

1,376

530

787

151

705

 

3,844

3,319

(930)

6,463

Change (%)

(27.7)

(54.8)

15.6

(65.2)

36.6

 

26.8

33.5

.

(11.7)

Assets

5,455

5,060

6,352

8,693

4,352

 

8,356

4,740

12,592

50,860

Thereof goodwill

120

119

755

1,898

1,383

 

381

381

92

4,748

property, plant and equipment

3,313

2,570

2,396

1,562

502

 

3,638

1,830

1,051

15,032

Debt

1,497

1,044

1,354

2,100

929

 

3,107

1,487

22,107

32,138

Research and development expenses

125

147

231

186

325

 

10

10

331

1,355

Additions to property, plant and equipment and intangible assets

528

478

432

234

196

 

1,651

1,364

115

3,634

Amortization of intangible assets and depreciation of property, plant and equipment

612

432

499

413

200

 

565

425

378

3,099

Thereof impairments

62

.

38

50

.

 

.

.

141

291

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2007 (million €)

 

 

 

 

 

 

 

 

 

 

Chemicals

Plastics

Performance
Products

Functional Solutions

Agricultural Solutions

 

Oil & Gas

Thereof Exploration
& Production

Other

BASF Group

Sales

9,358

9,976

8,862

9,491

3,137

 

10,517

4,365

6,610

57,951

Change (%)

2.2

5.4

4.3

60.7

1.9

 

(1.6)

(4.2)

13.5

10.2

Intersegmental transfers

4,829

828

361

141

19

 

1,189

514

336

7,703

Sales including intersegmental transfers

14,187

10,804

9,223

9,632

3,156

 

11,706

4,879

6,946

65,654

Income from operations

1,903

1,172

681

434

516

 

3,031

2,486

(421)

7,316

Change (%)

42.3

(0.7)

58.0

28.4

9.3

 

(7.2)

(6.5)

(54.8)

8.4

Assets

5,971

5,605

6,397

8,730

4,157

 

7,057

4,037

8,885

46,802

Thereof goodwill

115

114

722

1,914

1,304

 

64

64

72

4,305

property, plant and equipment

3,220

2,500

2,429

1,530

507

 

3,125

1,460

904

14,215

Debt

1,804

1,182

1,495

2,193

813

 

2,624

1,456

16,593

26,704

Research and development expenses

123

142

267

181

328

 

9

9

330

1,380

Additions to property, plant and equipment and intangible assets

668

510

434

315

83

 

2,280

2,162

135

4,425

Amortization of intangible assets and depreciation of property, plant and equipment

513

483

462

442

202

 

561

415

246

2,909

Thereof impairments

.

58

6

90

.

 

.

.

7

161

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Regions

 

 

 

 

 

2008 (million €)

 

 

 

 

 

 

 

Europe

Thereof Germany

North
America

Asia
Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

Sales

36,693

13,796

11,932

9,320

4,359

62,304

Change (%)

13.4

15.3

0.0

(2.7)

6.4

7.5

Share (%)

58.8

22.1

19.2

15.0

7.0

100.0

Location of companies

 

 

 

 

 

 

Sales

38,652

27,497

11,937

8,664

3,051

62,304

Sales including intersegmental transfers

42,874

30,626

13,050

8,911

3,197

68,032

Income from operations

5,822

4,744

73

254

314

6,463

Assets

32,704

19,950

9,991

5,771

2,394

50,860

Thereof property, plant
and equipment

8,778

5,485

3,227

2,477

550

15,032

Additions to property, plant and equipment and intangible assets

2,818

1,249

542

172

102

3,634

Amortization of intangible assets and depreciation of property, plant
and equipment

1,801

1,011

690

510

98

3,099

Employees as of December 31

61,889

47,364

15,168

13,734

6,133

96,924

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2007 (million €)

 

 

 

 

 

 

Europe

Thereof Germany

North
America

Asia
Pacific

South America, Africa, Middle East

BASF Group

Location of customers

 

 

 

 

 

 

Sales

32,347

11,967

11,928

9,579

4,097

57,951

Change (%)

9.5

8.2

3.5

18.2

18.5

10.2

Share (%)

55.8

20.7

20.6

16.5

7.1

100.0

Location of companies

 

 

 

 

 

 

Sales

34,316

24,312

12,007

8,785

2,843

57,951

Sales including intersegmental transfers

41,599

27,278

14,203

11,761

2,969

70,532

Income from operations

5,415

4,226

762

828

311

7,316

Assets

26,799

16,483

11,704

6,185

2,114

46,802

Thereof property, plant
and equipment

8,082

5,198

2,984

2,569

580

14,215

Additions to property, plant and equipment and intangible assets

3,513

873

634

184

94

4,425

Amortization of intangible assets and depreciation of property, plant
and equipment

1,763

1,004

677

376

93

2,909

Employees as of December 31

61,020

46,890

15,191

13,278

5,686

95,175

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