MOSCOW (MRC) -- BASF's both sales and earnings in the first half of 2016 reflected the lack of contributions from the natural gas trading and storage business as a result of the asset swap completed with Gazprom at the end of September 2015, as per the company's report.
The oil-price-related drop in sales prices additionally dampened business development. As a consequence, BASF's sales and income from operations (EBIT) before special items declined considerably, especially in the Oil & Gas segment. Thanks to considerably higher contributions from the Performance Products and Functional Materials & Solutions segments, earnings in the chemicals business reached the same level of the prior first half.
The company's sales decreased by 27% to EUR28.7 billion compared with the first half of 2015. This was predominantly due to the divestiture of the gas trading and storage business, which had contributed EUR7.2 billion to sales in the first half of 2015. In addition, the lower price of oil weighed down sales prices in the Chemicals segment in particular - an effect that was also seen in our other chemicals business as well as the Oil & Gas segment.
EBIT before special items declined by EUR0.5 billion to EUR3.6 billion, owing primarily to the substantially smaller contributions from the Oil & Gas and Chemicals segments, while Agricultural Solutions saw a slight decrease. We achieved signi?cant earnings improvement in the Performance Products and Functional Materials & Solutions segments, as well as in Other, in the first half of 2016.
As MRC informed previously, BASF and Gazprom completed the swap of assets with equivalent value effective at the end of September 30, 2015, financially retroactive to April 1, 2013. With the swap, BASF is further expanding its production of oil and gas and has exited the gas trading and storage business.
BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of more than EUR70 billion in 2015.