BASF in Greater China

Report 2020

Cover photo: At BASF, we are increasing the share of renewables in our energy supply as a way to reduce carbon emissions. The picture shows the photovoltaic station at the roof of the newly inaugurated mobile emissions catalysts plant in BASF Shanghai Pudong Innovation Park.

On this page: The picture shows a newly developed, highly efficient nickel catalyst. It allows the usage of CO2 to produce the required synthesis gas. New process technologies and catalysts can reduce the carbon footprint of olefin production

by up to 50 percent.

Index

Index

About this Report

3

BASF Group 2020 at a glance

4

Welcome

5

The BASF Group

6

BASF in Asia Pacific

12

BASF in Greater China

16

Business development

18

Supplier management

24

Environmental protection, health and safety

25

Employees and society

34

Further information

43

About this Report

The "BASF in Greater China" Report is published annually as a concise document about the performance of our activities across the three dimensions of sustainability - economy, environment and society - in Greater China. The reporting period for this publication is the financial year 2020. This report also carries an overview of BASF Group along with its financial performance, prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS), and, where applicable, the German Commercial Code as well as the German Accounting Standards (GAS). The emissions, waste, energy and water use of consolidated joint operations are included pro rata, based on our stake. The employee numbers refer to employees within the BASF Group scope of consolidation as of December 31, 2020.

Greater China is currently BASF's second largest market after the United States. We continue to invest in local production and R&D to empower future growth.

BASF in Greater China Report 2020

3

BASF Group 2020 at a glance

BASF Group 2020 at a glance

Segment data

Key data

Sales

million €

EBITDA before special itemsa

million €

EBITDAa

million €

EBIT before special itemsa

million €

EBITa

million €

Net income

million €

ROCE

%

Earnings per share

Total assets

million €

Investments including

acquisitionsb

million €

Employees at year-end

Personnel expenses

million €

Research and

development expenses

million €

Greenhouse gas

million metric tons

emissionsc

of CO

2

equivalents

Energy efficiency in

kilograms of sales

production processes

product/MWh

Accelerator sales

million €

Number of on-site sustainability audits of raw material suppliers

2020

2019

+/-

59,149

59,316

-0.3%

7,435

8,324

-10.7%

6,494

8,185

-20.7%

3,560

4,643

-23.3%

-191

4,201

.

-1,060

8,421

.

1.7

7.7

-

-1.15

9.17

.

80,292

86,950

-7.7%

4,869

4,097

18.8%

2020

2019

+/-

110,302

117,628

-6.2%

10,576

10,924

-3.2%

2,086

2,158

-3.3%

20.8

20.1

3.5%

540

598

-9.7%

16,740

15,017

11.5%

50

81

-38.3%

Chemicals

Million €

Sales

2020

8,071

2019

9,532

EBIT before special items

2020

445

2019

791

Materials

Million €

Sales

2020

10,736

2019

11,466

EBIT before special items

2020

835

2019

1,003

Industrial Solutions

Million €

Sales

2020

7,644

2019

8,389

EBIT before special items

2020

822

2019

820

Surface Technologies

Million €

Sales

2020

16,659

2019

13,142

EBIT before special items

2020

484

2019

722

Nutrition & Care

Million €

Sales

2020

6,019

2019

6,075

EBIT before special items

2020

773

2019

793

Agricultural Solutions

Million €

Sales

2020

7,660

2019

7,814

EBIT before special items

2020

970

2019

1,095

  1. Restated figures 2019; for more information, see basf.com/report
  2. Additions to property, plant and equipment and intangible assets
  3. Excluding sale of energy to third parties

4

Welcome

Welcome

Letter from the President

The global coronavirus pandemic has fundamentally changed the way we live and work. It has been more important than ever to stay connected with our employees, customers, partners and stakeholders. BASF has demonstrated its resilience by protecting the health and safety of our employees, as well as by safeguarding our business operations and ensuring reliable deliveries to our customers.

For the full year 2020, we posted sales of approximately €8.5 billion to customers in Greater China (2019: €7.4 billion). We have walked out of the shadow of the pandemic to be stronger, owing to BASF's continued investments in local production capacities, innovation capabilities and in our people.

For example, we started to construct the first plants of BASF Zhanjiang Verbund site in Guangdong which will become our world's third largest Verbund site upon completion by 2030 with US$10 billion investment. Together with our partner Sinopec, we doubled the production capacity of neopentylglycol (NPG) at our 50-50 joint venture Verbund site in Nanjing to meet the growing needs of environmentally friendly powder coatings in China. At the same time, BASF has completed its global acquisition of Solvay's polyamide business with production and research facilities in China, along with several other site expansion projects in Shanghai.

Digitalization has been an integral part of our business that creates ample opportunities along the entire value chain, including research, production, supply chain and new business models. We have been utilizing digital platforms to enhance a speedy delivery to customers across different industries. Several new business models have been created to reach end consumers to create higher awareness of sustainable solutions in daily life.

As in our own operations in Greater China, we continued to reduce emissions to air despite increases in output. This was achieved by optimizing efficiency at our plants through digitalization and new technologies and increasing the share of renewables in our energy supply. For example, our new photovoltaic plants at the Caojing and Pudong sites in Shanghai have the capacity to supply solar energy

at around 1,300 kWp (kilowatt peak). What's more exciting, the first plants at the BASF Zhanjiang Verbund site will use 100% renewable electricity upon start-up.

Looking forward, BASF has presented its roadmap to climate neutrality aiming to achieve net zero CO2 emissions globally by 2050. This resonates with China's latest climate pledges on carbon peak and carbon neutrality in which BASF is committed to contributing.

China remains the key growth driver of global chemical production. This trend became more pronounced in 2020 with the rapid economic recovery from the pandemic. In future, we will continue to collaborate with our partners and customers to drive sustainability and digital transformation that contribute to a sustainable development in China.

Dr. Stephan Kothrade

President and Chairman Greater China, BASF

BASF in Greater China Report 2020

5

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BASF SE published this content on 02 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 June 2021 08:30:00 UTC.