BASF SE BASF Finance Europe N.V. - BASF.com

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BASF Group is exposed to the risk of delivery bottlenecks.
Delivery bottlenecks resulting from interruptions in production or the supply chain and raw material
shortages may adversely affect BASF Group's operating results.
BASF Group is subject to the risks associated with the use of information technology.
BASF Group relies on a number of information technology (IT) systems in order to carry out its day-to-day
operations. The non-availability of critical IT systems and applications can have a direct impact on
production and logistic processes. If data are lost or manipulated, this can negatively affect process safety
and the accuracy of BASF Group's financial reporting. Unauthorized access to sensitive data, such as
personnel records, competition-related information or research results, can result in legal consequences or
jeopardize competitive advantages.
Litigations and claims could harm BASF Group's operating results and cash flows.
BASF Group is involved in legal, regulatory, governmental and arbitration proceedings and may become
involved in additional proceedings. These proceedings involve claims by and against BASF Group, which
arise in the ordinary course of its businesses, including in connection with its business activities, employer,
investor and taxpayer. Any proceeding might negatively impact BASF Group.
BASF Group is exposed to foreign exchange risks.
BASF Group conducts a significant portion of its operations outside of Europe and is therefore exposed to
risks associated with the fluctuations of foreign currencies. For BASF, risks arise in particular on the sales
side when the U.S. dollar exchange rate fluctuates. Financial foreign currency risks also result from the
translation of receivables, liabilities and other monetary items in accordance with IAS 21 at the closing rate
into the functional currency of the respective Group company. In addition, BASF incorporates planned
purchase and sales transactions in foreign currencies into its financial foreign currency risk management.
These risks are hedged using derivative instruments, if necessary.
BASF Group is exposed to interest rate risks.
BASF Group is subject to interest rate risks in the ordinary course of its business and resulting from its
financial structure. Interest rate risks result from potential changes in prevailing market interest rates.
These can cause a change in the present value of fixed-rate instruments and fluctuations in the interest
payments for variable-rate instruments, which would positively or negatively affect earnings. To hedge
these risks, interest rate swaps and combined interest rate and currency derivatives are used in individual
cases.
In addition to market interest rates, BASF's financing costs are determined by the credit risk premiums to
be paid. These are mainly influenced by the company's credit rating and the market conditions at the time
of issue.
BASF Group is subject to risks resulting from metal and raw materials trading.
In the catalysts business, BASF Group employs commodity derivatives for precious metals and trades
precious metals on behalf of third parties and on its own account. Furthermore, the business uses its
knowledge of the markets for crude oil and oil products to generate earnings from the trade of raw
materials. Although trading is conducted within predetermined limits and exposure constraints, adverse
market developments could lead to significant losses or changes in market values of employed
instruments, which may require significant liquidity.
BASF is exposed to liquidity risks.
BASF's ability to finance its business depends on future developments of financial markets. Access to
liquid funds may be limited during a financial crisis.
BASF is exposed to the risk of impairment of individual assets.
The risk of asset impairment occurs if the assumed interest rate in an impairment test increases or the
forecast cash flows decline. Albeit impairment risk is currently regarded as being low, an economic
downturn with an associated reduction in projected cash flows or an increase in interest rates could
increase such risk and thereby affect profitability.