Results of Operations of BASF SE

BASF SE’s sales revenue declined by €7,726 million year on year to €22,832 million in 2023; the expected considerable decline in sales has thus materialized. Sales decreased in the operating business due mainly to lower sales volumes. The economic environment continues to pose exceptional challenges for the chemical industry. Against this backdrop, lower plant capacity utilization, impairments on intangible assets totaling €260 million and impairments on property, plant and equipment totaling €75 million, had an impact on BASF SE’s profit in 2023. Gross profit on sales declined by €272 million to €2,762 million.

Contrary to our prediction of a considerable increase, income from operations decreased by €68 million to -€2,064 million. In the reporting year, income from operations continued to be negatively impacted by a high inflation rate on pension obligations. In contrast, expenses for variable compensation decreased. Selling expenses decreased by €410 million, due in particular to lower freight and shipping costs. Administrative costs were €121 million below the prior-year level. In addition, research expenses decreased by €220 million as a result of lower expenditure in the divisions and for exploratory research. The balance of other operating income and expenses declined by €547 million compared with the previous year to -€1,284 million. Out-of-period income decreased by €45 million, primarily due to lower reversals of provisions. Furthermore, €396 million higher expenses from agreed cost transfers from Group companies were recognized. In addition, €152 million higher expenses for restructuring measures and €65 million for portfolio measures were recorded in connection with the implementation of strategic measures. By contrast, the foreign currency result improved by €33 million.

The financial result rose by €3,360 million compared with the previous year to €9,909 million. Dividends totaling €4,807 million from a Dutch subsidiary of BASF SE, which mainly included retained earnings, led to an increase in net income from shareholdings. This was offset by lower profit transfers, which were influenced in particular by a lower distribution of retained earnings from a Belgian Group company. The higher interest result was attributable to a positive result from plan assets and lower interest expenses from pension obligations.

Income before income taxes increased by €3,292 million year on year to €7,845 million. Income tax expenses decreased by €293 million in the reporting year. Due to deferred tax assets and liabilities, €628 million lower expenses were recorded in the reporting year. By contrast, current income tax expenses increased by €335 million.

Net income increased by €3,585 million compared with the previous year to €7,434 million in 2023.