BASF: Successful Start to 2006

-- Further increase in volumes, sales climb 24 percent

-- EBIT before special items rises 19 percent

-- Positive outlook for 2006:

-- Significantly higher sales

-- Increase in EBIT before special items

In the first quarter of 2006, BASF continued its success storywith another top performance. "Our declared goal is to createsustainable value by implementing our strategy," said BASF chairmanDr. Juergen Hambrecht in his presentation of BASF's first-quarterresults at the company's 54th Annual Meeting on May 4, 2006.

At EUR 12.5 billion, first-quarter sales were 24 percent higherthan in the same period of 2005. Growth was driven above all byconsiderably higher volumes and price increases in the chemicalbusinesses and in the Oil & Gas segment. Disregarding currencyeffects, in particular due to the appreciation of the U.S. dollar,sales increased by 20 percent.

Income from operations (EBIT) before special items rose by 19percent compared with the first quarter of 2005 to EUR 1.9 billion. Inthe Chemicals segment, significantly higher raw materials and energyprices could not be completely passed on to the market in the form ofhigher sales prices. Earnings in the Plastics segment rose as a resultof higher volumes and improved margins in the global polyurethanesbusiness. The Performance Products segment posted higher earningsthanks in particular to strong volume growth and stable margins in theCoatings division. First-quarter earnings in the Agricultural Productsdivision were negatively impacted by the difficult market environmentin Brazil and higher research costs. The profitability of the productslysine and vitamin C remained unsatisfactory in the Fine Chemicalsdivision. Higher prices and expansion of the natural gas tradingbusiness led to very good earnings in the Oil & Gas segment.

First-quarter EBIT after special items rose by 23 percent to EUR1.8 billion. Special items were related to income from the ongoingportfolio optimization measures in the Agricultural Products divisionand expenses for restructuring, which are recorded under "Other" untilthey are implemented in the course of the year.

The financial result declined by EUR 24 million to EUR 21 million.In the first quarter of 2005, the financial result still containedearnings from BASF's stake in the Basell joint venture, which was soldin the third quarter of 2005. Income before taxes and minorityinterests rose by 21 percent to EUR 1.9 billion.

The tax rate was 46 percent compared with 40 percent in the firstquarter of 2005. This increase was due to the higher contribution toearnings from the Oil & Gas segment. Taxes for oil production that arenoncompensable with German corporate income tax amounted to EUR 272million compared with EUR 198 million in the same period of 2005.

Net income increased 10 percent to EUR 950 million. Earnings pershare were EUR 1.87 compared with EUR 1.60 in the same period of theprevious year.

Positive outlook for full-year 2006

Hambrecht's outlook for full-year 2006 is confident, based onglobal economic growth of more than 3 percent. In 2006, BASF expectsan average oil price of $60 per barrel of Brent crude and an averageeuro/dollar exchange rate of $1.25 per euro.

Hambrecht formulated his optimistic prognosis as follows: "Ourbusiness has developed very positively since the beginning of 2006,and the level of orders remains extremely robust. We have seen twostrong years in a row, and we are confident that we will continue oursuccessful performance in 2006. We aim to continue to grow faster thanthe market. Above all, though, we want to achieve profitable growth.We expect to post higher EBIT before special items compared with theprevious year's strong level. This depends, of course, on a stablegeopolitical environment and the development of the crude oil price."

Growth in Europe, North America and Asia

In Europe, sales by location of company increased by 28 percent inthe first quarter of 2006. EBIT before special items rose by EUR 286million to EUR 1.4 billion. The higher sales and earnings wereprimarily due to the contribution of the Oil & Gas segment.

First-quarter sales by location of company in North America roseby 7 percent in Dollar terms. The sales growth was due in particularto the Chemicals and Plastics segments. EBIT before special itemsincreased by EUR 27 million to EUR 298 million.

In Asia Pacific, we increased sales in local currencies by 19percent. EBIT before special items rose EUR 28 million to EUR 115million. Growth in the Chemicals segment was due especially to theVerbund site in Nanjing, China, which started operations in the secondquarter of 2005.

Sales by location of company in South America, Africa, Middle Eastdeclined by 11 percent in local currency terms. EBIT before specialitems was EUR 39 million lower than in the same period of 2005 becauseof the difficult market environment in the agricultural productsbusiness in Brazil. The Coatings division recorded strong business, inparticular with decorative paints.

BASF is the world's leading chemical company: The ChemicalCompany. Its portfolio ranges from chemicals, plastics, performanceproducts, agricultural products and fine chemicals to crude oil andnatural gas. As a reliable partner to virtually all industries, BASF'sintelligent system solutions and high-value products help itscustomers to be more successful. BASF develops new technologies anduses them to open up additional market opportunities. It combineseconomic success with environmental protection and socialresponsibility, thus contributing to a better future. In 2005, BASFhad approximately 81,000 employees and posted sales of more than EUR42.7 billion. BASF shares are traded on the stock exchanges inFrankfurt (BAS), London (BFA), New York (BF) and Zurich (AN). Furtherinformation on BASF is available on the Internet at www.basf.com.

On May 4, 2006, you can obtain further information from theInternet at the following addresses:
Interim Report (from 7:30 a.m. CEST)
corporate.basf.com/interimreport (English)
corporate.basf.com/zwischenbericht (German)

Press release (from 7:30 a.m. CEST)
corporate.basf.com/pressrelease (English)
corporate.basf.com/pressemitteilungen (German)

Live-Transmission - Speech Dr. Juergen Hambrecht
(from 10:00 a.m. CEST)
corporate.basf.com/shareholdermeeting (English)
corporate.basf.com/hauptversammlung (German)

Speech Dr. Juergen Hambrecht - print version
(from 11:00 a.m. CEST)
corporate.basf.com/pressconference (English)
corporate.basf.com/pressekonferenz (German)

Photos (from 7:30 a.m. CEST)
corporate.basf.com/photos (English)
corporate.basf.com/fotos (German)

Photos from the Annual Shareholder Meeting
(from 11:30 a.m. CEST)
corporate.basf.com/photos (English)
corporate.basf.com/fotos (German)

Information about BASF shares
corporate.basf.com/share (English)
corporate.basf.com/aktie (German)

Live-Transmission Telephone Conference for Analysts
(from 8:30 a.m. CEST)
corporate.basf.com/share (English)
corporate.basf.com/aktie (German)

This press release contains forward-looking statements. Allstatements contained in this press release that are not clearlyhistorical in nature or that necessarily depend on future events areforward-looking, and the words "anticipate," "believe," "expect,""estimate," "plan," and similar expressions are generally intended toidentify forward-looking statements. These statements are based oncurrent expectations, estimates and projections of BASF management andcurrently available information. They are not guarantees of futureperformance, involve certain risks and uncertainties that aredifficult to predict and are based upon assumptions as to futureevents that may not prove to be accurate. Many factors could cause theactual results, performance or achievements of BASF to be materiallydifferent from those that may be expressed or implied by suchstatements. Such factors include those discussed in BASF's Form 20-Ffiled with the SEC.Successful start to 2006BASF sets course for future successFirst-Quarter Results 2006 January - March 2006published on May 4, 2006BASF Group
1st Quarter
Million EUR Change
2006 2005 in %
Sales 12,515 10,083 24.1
Income from operations before interest,
taxes, depreciation and amortization
(EBITDA) 2,401 2,019 18.9
Income from operations (EBIT) before
special items 1,865 1,563 19.3
Income from operations (EBIT) 1,849 1,499 23.3
Financial result 21 45 (53.3)
Income before taxes and minority interests 1,870 1,544 21.1
Net income 950 861 10.3
Earnings per share (EUR) 1.87 1.60 16.9
EBIT before special items in percent of
sales 14.9 15.5 -
Cash provided by operating activities 1,448 1,104 31.2
Additions to fixed assets(a) 600 362 65.7
Excluding acquisitions 473 362 30.7
Amortization and depreciation(a) 552 520 6.2
Segment assets (end of period)(b) 29,680 27,374 8.4
Personnel costs 1,392 1,277 9.0
Number of employees (end of period) 79,926 81,335 (1.7)

(a) Tangible and intangible fixed assets

(b) Tangible and intangible fixed assets, inventories andbusiness-related receivablesThe interim financial statements have not been audited.
1 BASF Group Business BASF shares
Review and Outlook 1st Quarter Full Year
4 Chemicals 2006 2005
5 Plastics Share price
(end of period)(a)(EUR) 64.70 64.71
6 Performance Products High(a)(EUR) 65.95 65.33
7 Agricultural Products Low(a)(EUR) 61.65 50.11
& Nutrition
8 Oil & Gas Average daily
trade (million shares)(a) 3.01 2.70
9 Regions BASF share
performance(b) 0.0% 26.2%
10 Consolidated Statements of Dax 30
Income performance(b) 10.4% 27.1%
11 Consolidated Balance Euro Stoxx 50
Sheets performance(b) 7.9% 24.3%
12 Consolidated Statements Market
capitalization
(end of period)
of Cash Flows (billion EUR) 33.33 33.33
13 Consolidated Statements Number of shares
(end of period)
of Recognized Income and
Expense (million shares)(c) 515.06 515.06
14 Consolidated Statements (a) XETRA trading
of Stockholders' Equity (b)With dividends
reinvested
15 Segment Reporting (c)Including bought-back shares
intended for cancellation

Cover photo:

Antonio Germani, delegate from BASF Italy and Director SpecialProjects Pharma Solutions, and Verena Bertgen, laboratory assistant atBASF's Competence Center Polymer Research in Ludwigshafen

News from our innovation centers

Environmentally friendly processing of cellulose

BASF and the University of Alabama cooperate on the use of ionicliquids

BASF has set up a research partnership with the University ofAlabama to study the dissolution and processing of cellulose by meansof ionic liquids. The two partners will further develop practical usesfor this innovative application. Cellulose is the commonest organiccompound and is a constituent of virtually all plant cell walls. Ofthe 40 billion tons formed by nature every year, only 100 million tonsis used as a feedstock for further processing. A more widespread useof cellulose as a renewable raw material has to date been prevented byits poor solubility. By means of ionic liquids, however, solutions ofcellulose can now be produced for the first time at technically usefulconcentrations.

BASF is in the process of evaluating a variety of ideas that mightimprove the use of cellulose. The use of ionic liquids cansignificantly simplify the production of cellulose fibers, forexample.

"We believe ionic liquids have a promising future," says Dr.Matthias Maase, who works in the New Business Development unit ofBASF's Intermediates division. "Their properties will open upcompletely new applications in addition to classical chemical uses.Examples include fluids used in engineering, optical devices,electronic components and heat transfer."

BASF has several years of experience in the fairly recent field ofionic liquids. At its Ludwigshafen site, the company operates theworld's first large-scale industrial process that uses ionic liquids.The process allows fast and simple removal of the acids from thedesired product, and the ionic liquids employed can be almostcompletely recycled.

BASF sells its ionic liquids under the brand name Basionics(TM),while the corresponding processes are marketed under the nameBasil(TM).

Renewable raw materials: Turning cellulose into fibers.

BASF markets its portfolio of ionic liquids under the brand nameBasionics.

The current portfolio consists of 19 different ionic liquids.

News from our innovation centers

Polyurethane composite protects imperiled dikes

The innovative covering of small stones and the Elastocoastpolyurethane system is elastic and porous. As a result, it canwithstand the force of the water masses particularly well.

Flexible covering with BASF's Elastocoast withstands even harshstorms

During the coming century, scientists predict that global warmingwill cause a rise in the sea level and increased flooding from rivers.More than ever before, innovative solutions are needed to provideeffective and stable coastal protection and river dikes. One of themis a specially developed elastomer polyurethane system from BASF'ssubsidiary Elastogran: Under the name Elastocoast(R), the company isoffering a novel plastic for reinforcing stone ballast revetments fordikes. These coverings represent the first line of defense, forexample, against the sea. They protect the dike by absorbing the forceof the breaking waves and slowing down the water masses.

Elastic and porous - these two properties are the secret ofElastocoast: The ability to yield slightly protects the revetmentagainst the brute force of the water masses crashing down upon them;the interconnecting cavities between the stones absorb their energy.Rigid and solid revetments made from the conventional "adhesives"concrete or asphalt, on the other hand, are often broken down by thepounding force of the waves: starting from an initial, tiny defect,the breakers gradually make deeper and deeper inroads into therevetment.

It could hardly be easier to use: The liquid two-component specialplastic polyurethane is stirred on site and then mixed - for examplein a concrete mixer - with the crushed stone which it envelops like athin, transparent film. With relatively little effort, the finishedmix of materials can be applied in covering layers about 15 to 30centimeters thick. The mixture even hardens underwater. Elastocoastalso provides benefits for nature: Flora and fauna can find newhabitats in the porous structure of the cover layers.

Following its successful use in the redevelopment of a jetty onthe bank of the River Elbe in Hamburg, Elastocoast is now facing itsbiggest challenge on the island of Sylt. Especially in winter, theNorth Sea gnaws away at the island. In September 2005, a revetmentmade of Elastocoast has been protecting part of the particularlyexposed northern part of the island. Dr. Marcus Leberfinger, projectmanager for maritime applications at Elastogran, is very satisfiedwith the results achieved in the first winter: "Even in the breakerzone of the open coast of Sylt, the revetment reliably withstood thehigh dynamic stresses caused by wave impact, salt water and theeffects of frost." A similar pilot project has also been completed onHamburger Hallig to the north of the German town of Husum.

BASF Group Business Review and Outlook

-- Further increase in volumes, sales climb 24%

-- EBIT before special items rises 19%

-- Agreement reached on acquisition of Degussa's construction chemicals business

-- Positive outlook for 2006:

-- Significantly higher sales

-- Increase in EBIT before special items

Sales

At EUR12.5 billion, first-quarter sales were 24% higher than inthe same period of 2005. Growth was driven above all by considerablyhigher volumes and price increases in our chemical businesses and inthe Oil & Gas segment. Disregarding currency effects, in particulardue to the appreciation of the U.S. dollar, sales increased by 20%.

Factors influencing sales in comparison with previous year
% of sales 1st Quarter
Volumes 7
Prices 12
Currencies 4
Acquisitions/divestitures 1
Total 24

Sales increased in all segments.

Volumes in the Chemicals segment rose in particular due to thestartup of the Verbund site in Nanjing, China, in 2005. The electronicchemicals business, which was acquired in April last year, alsocontributed to the significant increase in sales.

In the Plastics and Performance Products segments we also postedhigher volumes while adjusting sales prices to reflect increased rawmaterial costs.Sales by segment, 1st Quarter 2006
Chemicals 2006 2,239 23%
2005 1,822
Plastics 2006 3,091 10%
2005 2,800
Performance 2006 2,147 13%
Products 2005 1,908
Agricultural
Products 2006 1,376 2%
& Nutrition 2005 1,354
Oil & Gas 2006 2,985 62%
2005 1,840

In the Agricultural Products & Nutrition segment, the FineChemicals division recorded higher sales thanks to an increase involumes and the acquisition of Orgamol Group's pharmaceutical contractmanufacturing business in the fourth quarter of 2005. Sales in theAgricultural Products division declined slightly compared with thefirst quarter of 2005 due to lower sales volumes in South America.

With a sales increase of more than EUR1.1 billion, the Oil & Gassegment accounted for 11 percentage points of the BASF Group's salesgrowth. This was a consequence of the high oil price and increasedsales volumes in the natural gas trading business.
Special items
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Million EUR 2006 2005 2006 2005 2006 2005 2006 2005
Special items in:
Income from
operations (16) (64) (70) (65) (109)
Financial result - - - 222 -
Income before taxes
and minority
interests (16) (64) (70) 157 (109)

Earnings

Compared with the first quarter of 2005, we increased income fromoperations (EBIT) before special items by 19% to EUR1,865 million.

In the Chemicals segment, significantly higher raw material andenergy prices could not be completely passed on to the market in theform of higher sales prices. It was therefore not possible to matchthe previous year's very strong first-quarter earnings, in particularin the Petrochemicals division.

Earnings in the Plastics segment rose as a result of highervolumes and improved margins in the global polyurethanes business.

The Performance Products segment posted higher earnings thanks inparticular to strong volume growth and stable margins in the Coatingsdivision.

First-quarter earnings in the Agricultural Products division werenegatively impacted by the difficult market environment in Brazil andhigher research costs.

The profitability of the products lysine and vitamin C remainedunsatisfactory in the Fine Chemicals division.

Higher prices and expansion of the natural gas trading businessled to very good earnings in the Oil & Gas segment.

First-quarter EBIT after special items rose by 23% to EUR1,849million.

Special items in income from operations were related to incomefrom the ongoing portfolio optimization measures in the AgriculturalProducts division and expenses for restructuring, which are recordedunder "Other" until they are implemented in the course of the year.

The financial result declined by EUR24 million to EUR21 million.In the first-quarter of 2005, the financial result still containedearnings from our stake in the Basell joint venture, which was sold inthe third quarter of 2005.
Chemicals 2006 317 (26)%
2005 426
Plastics 2006 332 23%
2005 269
Performance 2006 248 10%
Products 2005 225
Agricultural
Products 2006 224 (24)%
& Nutrition 2005 296
Oil & Gas 2006 848 75%
2005 484

Income before taxes and minority interests rose by 21% to EUR1,870million.

The tax rate was 46% compared with 40% in the first quarter of2005. This increase was due to the higher contribution to earningsfrom the Oil & Gas segment. Taxes for oil production that arenoncompensable with German corporate income tax amounted to EUR272million compared with EUR198 million in the same period of 2005.

Net income increased 10% to EUR950 million. Earnings per sharewere EUR1.87 compared with EUR1.60 in the same period of the previousyear.

Outlook

We expect the following conditions in 2006:

-- Average oil prices (Brent) of about $60/barrel

-- An average euro/dollar exchange rate of $1.25 per euro and moderately higher interest rates

-- Global economic growth of more than 3%

On this basis, we expect that our business will continue todevelop positively in the further course of the year. We plan toincrease our sales prices to counter the pressure on margins caused byrising raw material prices. Risk factors continue to be the politicalsituation in regional hotspots and the development of the crude oilprice.

The good start in the first quarter confirms our positive outlookfor the full year. We expect to post significantly higher sales andhigher EBIT before special items compared with the previous year'sstrong level.

Significant events

On February 28, 2006, BASF reached an agreement with Degussa AG,Duesseldorf, to acquire Degussa's construction chemicals business. Thepurchase price for equity is just under EUR2.2 billion. As a result,the transaction value for BASF is EUR2.7 billion including debt.

Subject to approval by the relevant authorities, the transactionis expected to close by the middle of 2006. We will place Degussa'sconstruction chemicals business in a new operating division -Construction Chemicals - in our Performance Products segment.

On April 27, 2006, BASF and Gazprom agreed on a swap of assets ofequivalent value. In accordance with this agreement, BASF's subsidiaryWintershall will receive a total interest of 35% less one share in theYuzhno Russkoye gas field. In return, Gazprom is to increase itsinterest in WINGAS GmbH to 50% less one share. In addition, Gazpromwill receive a share in a Wintershall subsidiary with interests inexploration and production activities in Libya as well as a 50% sharein a company that will be responsible for expanding gas marketingactivities in Europe (excluding Germany).

On May 1, 2006, BASF announced that it extended the expirationdate of its cash offer to acquire all outstanding shares in EngelhardCorporation until Monday, June 5, 2006. At the same time, the tenderoffer was increased to $38 per share. BASF is confident thatEngelhard's shareholders will accept this offer. Further informationis available on the Internet at corporate.basf.com/tender-offer and onthe SEC's website at www.sec.gov

Chemicals

-- Strong sales growth in all operating divisions

-- Pressure on margins due to high raw material and energy prices

-- First-quarter earnings below previous year's very high level
Overview Chemicals 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,239 1,822 23
Thereof Inorganics 306 207 48
Petrochemicals 1,374 1,136 21
Intermediates 559 479 17
EBITDA 452 544 (17)
EBIT before special items 317 426 (26)
EBIT before special items in percent of
sales 14.2 23.4 -
EBIT 317 426 (26)

Sales in the Chemicals segment increased significantly in thefirst quarter (volumes 11%, portfolio 3%, prices 4%, currencies 5%).This was due in particular to the volumes from our Verbund site inNanjing, China, as well as from the electronic chemicals businessacquired in April 2005. Higher raw material and energy prices couldnot be passed on fully to the market in the form of higher prices.Earnings were below the previous year's very strong level.

Inorganics

Sales of electronic chemicals developed very positively, inparticular in Asia. We also posted higher sales of inorganicspecialties, catalysts and glues and impregnating resins. Thedivision's earnings declined slightly. Margins in the basic productsbusiness in particular were adversely affected by high raw materialand energy costs.

Petrochemicals

Sales rose thanks to strong demand worldwide. High crude oilprices resulted in significantly higher purchase prices for our mainfeedstock, naphtha, and impaired margins for cracker products inparticular in Europe, but also in Asia. In addition, earnings werenegatively impacted by scheduled plant turnarounds as well as byproduction losses at the cracker in Port Arthur, Texas. Earnings weretherefore significantly lower than in the first quarter of 2005. Rawmaterial prices are expected to continue to rise in the secondquarter. Sales and earnings in the second quarter will also beimpaired by the scheduled turnaround of the crackers in Port Arthurand Ludwigshafen, and by the temporary shutdown of the cracker at thesite in Antwerp, Belgium, as the result of a power outage.

Intermediates

Sales increased in all regions and product lines, in particulardue to higher volumes. Considerably higher raw material costs putmargins under pressure, especially at our new THF plant in Caojing,China. Earnings declined as a result.

The THF and PolyTHF(R) plants in Yokkaichi, Japan, were closed inthe first quarter of 2006 as announced last year.

Plastics

-- Segment earnings increase significantly

-- Polyurethanes business continues to perform well

-- Integrated isocyanate site in Caojing, China, to start operations in mid-2006
Overview Plastics 1st Quarter
Million EUR Change
2006 2005 in %
Sales 3,091 2,800 10
ThereofStyrenics 1,151 1,136 1
Performance Polymers 750 689 9
Polyurethanes 1,190 975 22
EBITDA 456 380 20
EBIT before special items 332 269 23
EBIT before special items in percent of
sales 10.7 9.6 -
EBIT 331 268 24

In the Plastics segment, sales rose thanks to higher volumes,increased sales prices and positive currency effects (volumes 3%,prices 2%, currencies 5%). The significant increase in earnings wasprimarily due to the Polyurethanes division.

Styrenics

Volumes remained unchanged and sales and earnings increasedslightly compared with the first quarter of 2005. The temporary lossof production at the styrene plant in Ludwigshafen and persistentlyhigh raw material prices prevented a significant increase in earnings.

To strengthen this division, we plan to acquire Lanxess' businesswith styrene-acrylonitrile (SAN) copolymers in Europe and SouthAmerica. The transaction is subject to approval by the relevantantitrust authorities.

Performance Polymers

Although sales increased due to higher volumes, earnings werebelow the high level posted in the first quarter of 2005. This was dueto higher raw material costs, which we were unable to pass on to ourcustomers to a sufficient extent. In addition, earnings were impactedby the startup of the PBT plant in Kuantan, Malaysia, which wasconstructed in a joint venture with Toray Industries, Inc. LeunaMiramid GmbH, which was acquired in November 2005, made a positivecontribution to earnings.

Polyurethanes

The strong business performance recorded in the previous yearcontinued in all regions in the first quarter of 2006. Wesignificantly increased sales and earnings thanks to higher volumesworldwide and higher sales prices.

In Geismar, Louisiana, we acquired a production plant for DNT -precursor for polyurethanes - from Air Products and Chemicals Inc.,Pennsylvania.

The integrated isocyanate site in Caojing, China, is scheduled tostart operations in mid-2006 as planned.

Performance Products

-- Strong sales growth in all operating divisions

-- Earnings rise due to strong business with coatings

-- Agreement with Degussa on the acquisition of the construction chemicals business
Overview Performance Products 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,147 1,908 13
ThereofPerformance Chemicals 764 694 10
Coatings 591 472 25
Functional Polymers 792 742 7
EBITDA 329 304 8
EBIT before special items 248 225 10
EBIT before special items in percent of sales 11.6 11.8 -
EBIT 247 224 10

In the Performance Products segment, we recorded significantlyhigher sales in all divisions as a result of an increase in volumes,higher prices and positive currency effects (volumes 4%, portfolio 1%,prices 3%, currencies 5%). We also posted a further increase inearnings compared with the same period of the previous year. This wasdue in particular to strong business in the Coatings division.

We reached an agreement with Degussa AG to acquire Degussa'sconstruction chemicals business. Thanks to this forward integration,we will further improve BASF's strong position as a partner to theconstruction industry. Our goal is to expand the highly profitableconstruction chemicals business, which is both very innovative andcyclically resilient. We expect the transaction to close by the middleof 2006.

Performance Chemicals

Sales rose in particular due to strong business with performancechemicals for the automotive and oil industry and for detergents andformulators. All regions contributed to this sales growth. Earningsimproved further despite higher raw material costs.

Coatings

We increased sales and earnings considerably thanks to strongbusiness with automotive (OEM) and automotive refinish coatings, inparticular in Asia and North America, and with industrial coatings inEurope and decorative paints in South America. We benefited from theupturn in the automotive industry. We also gained new customers in theautomotive refinish coatings business.

Functional Polymers

The increase in sales was due primarily to higher sales volumes ofsuperabsorbents and products for the adhesives and constructionindustry. Earnings were slightly lower than in the strong firstquarter of 2005. With raw material prices remaining high, acrylicmonomers were subject to increased price pressure. The business wasalso negatively impacted by restructuring among customers in the paperindustry.

Agricultural Products & Nutrition

-- Earnings down on previous year's quarter despite a slight increase in sales

-- Portfolio optimization continues in the Agricultural Products division

-- Fine Chemicals demonstrates growth in aroma chemicals and fat-soluble vitamins
Overview Agricultural Products 1st Quarter
Million EUR Change
2006 2005 in %
Sales 928 959 (3)
EBITDA 333 332 -
EBIT before special items 213 276 (23)
EBIT before special items in percent of sales 23.0 28.8 -
EBIT 280 284 (1)

Sales in the Agricultural Products division declined compared withthe first quarter of 2005 (volumes -4%, portfolio -1%,prices/currencies 2%). This was due mainly to subdued demand forfungicides to combat soybean rust in Brazil and North America. Theappreciation of the real and low prices for agricultural products areputting pressure on our customers in Brazil. Our herbicides businessdeveloped positively, especially in North America and Europe. In Asiaand Eastern Europe, we posted higher sales in all indications.

Income from operations before special items declined as a resultof lower sales volumes of fungicides, higher research costs, andhigher expenses associated with the development of new marketsegments. Our ongoing portfolio optimization measures resulted inspecial income. In March 2006, we sold the generics business of MicroFlo Company LLC, Memphis, Tennessee, to Arysta LifeScience NorthAmerica Corporation.
Overview Fine Chemicals 1st Quarter
Million EUR Change
2006 2005 in %
Sales 448 395 13
EBITDA 40 50 (20)
EBIT before special items 11 20 (45)
EBIT before special items in percent of sales 2.5 5.1 -
EBIT 10 20 (50)

Sales volumes increased, in particular for aroma chemicals andvitamins A and E for animal nutrition. Orgamol Group's contractmanufacturing business, which was acquired in October 2005 alsocontributed to the rise in sales (volumes 7%, portfolio 6%, prices-5%, currencies 5%). Declining prices for lysine and vitamin C andsignificantly higher raw material costs, for example for crude sugar,increased pressure on margins. Fixed costs in the vitamin C businessdeclined due to the closure of the plant in Grenaa, Denmark, as wellas a number of restructuring measures carried out in 2005. Overall,earnings were below the previous year's level but were neverthelesssignificantly higher than in the fourth quarter of 2005.

Oil & Gas

-- Sales and earnings rise significantly

-- Exploration and production benefits from higher oil prices

-- Volumes and margins improve considerably in natural gas trading
Overview Oil & Gas 1st Quarter
Million EUR Change
2006 2005 in %
Sales 2,985 1,840 62
ThereofExploration and production 1,081 693 56
Natural gas trading 1,904 1,147 66
EBITDA 953 590 62
ThereofExploration and production 707 459 54
Natural gas trading 246 131 88
EBIT before special items 848 484 75
ThereofExploration and production 638 386 65
Natural gas trading 210 98 114
EBIT before special items in percent of
sales 28.4 26.3 -
ThereofExploration and production 59.0 55.7 -
Natural gas trading 11.0 8.5 -
EBIT 848 484 75
ThereofExploration and production 638 386 65
Natural gas trading 210 98 114

Sales increased significantly due to a considerable rise in theprice of oil, a slight increase in natural gas production and theexpansion of the natural gas trading business (volumes 11%,prices/currencies 51%). These factors resulted in a strong increase inearnings.

Natural gas production was increased in the exploration andproduction business sector. Crude oil production declined slightly asa result of scheduled maintenance work at production facilities.Compared with the same quarter of 2005, the average price of Brentcrude rose by $14/barrel to $62/barrel. In euro terms, thiscorresponds to an increase of EUR15/barrel to EUR51/barrel.

The natural gas trading business sector recorded high volumes, inparticular because of the long, cold winter in Europe. Compared withthe same period of the previous year, sales prices were significantlyhigher and margins improved. Earnings more than doubled.

Debottlenecking of the STEGAL long-distance gas pipeline throughthe German regions of Saxony and Thuringia was completed at the end ofMarch 2006, further increasing our east-west transport capacities.

Regions

-- Europe: Strong increase in earnings thanks to the Oil & Gas segment

-- North America (NAFTA): Positive earnings trend continues

-- Asia: Growth due to Nanjing Verbund site

-- South America: Difficult market environment in the agricultural products business
Overview Regions Sales Sales
(location of company) (location of customer)
---------------- ---------------------- --------------------------
Change Change
Million EUR 2006 2005 in % 2006 2005 in %
1st Quarter
Europe 7,786 6,102 28 7,415 5,851 27
Thereof
Germany 5,757 4,310 34 2,972 2,201 35
North America
(NAFTA) 2,637 2,265 16 2,617 2,243 17
Asia Pacific 1,648 1,299 27 1,777 1,366 30
South America,
Africa, Middle
East 444 417 6 706 623 13
12,515 10,083 24 12,515 10,083 24


Overview Regions EBIT before
special items
---------------- ----------------------
Change
Million EUR 2006 2005 in %
1st Quarter
Europe 1,420 1,134 25
Thereof
Germany 1,015 742 37
North America
(NAFTA) 298 271 10
Asia Pacific 115 87 32
South America,
Africa, Middle
East 32 71 (55)
1,865 1,563 19

In Europe, sales by location of company increased by 28% in thefirst quarter of 2006. EBIT before special items rose by EUR286million to EUR1,420 million. The higher sales and earnings wereprimarily due to the contribution of the Oil & Gas segment.

First-quarter sales by location of company in North America roseby 7% in dollar terms. The sales growth was due in particular to theChemicals and Plastics segments. EBIT before special items increasedby EUR27 million to EUR298 million. In the Chemicals segment, earningswere negatively impacted by the temporary shutdown of the cracker inPort Arthur, Texas. The Plastics segment benefited from strong demandfor polyurethanes. We further optimized our portfolio in theAgricultural Products & Nutrition segment by selling the genericsbusiness of Micro Flo Company LLC, Memphis, Tennessee.

In Asia Pacific, we increased sales in local currencies by 19%.EBIT before special items rose EUR28 million to EUR115 million. Growthin the Chemicals segment was due especially to the Verbund site inNanjing, China, which started operations in the second quarter of2005. The Performance Products segment additionally benefited from thestrengthened Coatings business following the acquisition of remainingshares in a joint venture in Japan in 2005.

Sales by location of company in South America, Africa, Middle Eastdeclined by 11% in local currency terms. EBIT before special items wasEUR39 million lower than in the same period of 2005 because of thedifficult market environment in the agricultural products business inBrazil. The Coatings division recorded strong business, in particularfor decorative paints.

Consolidated Statements of Income
1st Quarter Full
Year
Million EUR Change
2006 2005 in % 2005
Sales 12,515 10,083 24.1 42,745
Cost of sales 8,888 6,845 29.8 29,567
Gross profit on sales 3,627 3,238 12.0 13,178
Selling expenses 1,103 1,004 9.9 4,330
General and administrative
expenses 186 164 13.4 780
Research and development expenses 305 250 22.0 1,064
Other operating income 250 126 98.4 601
Other operating expenses 434 447 (2.9) 1,775
Income from operations 1,849 1,499 23.3 5,830
(Expenses)/income from financial
assets 15 71 (78.9) 348
Interest result (48) (40) (20.0) (170)
Other financial result 54 14 285.7 (82)
Financial result 21 45 (53.3) 96
Income before taxes and minority
interests 1,870 1,544 21.1 5,926
Income taxes 853 622 37.1 2,758
Net income before minority
interests 1,017 922 10.3 3,168
Minority interests 67 61 9.8 161
Net income 950 861 10.3 3,007
Earnings per shares (EUR ) 1.87 1.60 16.9 5.73
Number of shares, in million
(weighted) 509 537 (5.2) 525

The interim financial statements have not been audited.

The previous year's figures have been adjusted as follows:Expenses in the Oil & Gas segment related to exploration for oil andgas deposits and to dry holes are now recorded as other operatingexpenses rather than as research and development expenses. Inassociation with the change to standard IAS 19, actuarial gains andlosses from the valuation of pension obligations are recognizedagainst retained earnings in the reporting period in which they occur.

Consolidated Balance Sheets
Assets
March March Dec.
31, 31, Change 31, Change
Million EUR 2006 2005 in % 2005 in %
Long-term assets
Intangible assets 3,662 3,543 3.4 3,720 (1.6)
Property, plant and
equipment 13,976 13,202 5.9 13,987 (0.1)
Investments accounted for
using the equity method 267 1,165 (77.1) 244 9.4
Other financial assets 866 930 (6.9) 813 6.5
Deferred taxes 1,046 1,211 (13.6) 1,255 (16.7)
Other long-term assets 521 585 (10.9) 524 (0.6)
20,338 20,636 (1.4) 20,543 (1.0)
Short-term assets
Inventories 5,364 4,964 8.1 5,430 (1.2)
Accounts receivable,
trade 7,529 6,589 14.3 7,020 7.3
Other receivables and
miscellaneous short-term
assets 1,694 2,224 (23.8) 1,586 6.8
Liquid funds 3,115 3,007 3.6 1,091 185.5
17,702 16,784 5.5 15,127 17.0
Total assets 38,040 37,420 1.7 35,670 6.6
Stockholders' equity
March March Dec.
31, 31, Change 31, Change
Million EUR 2006 2005 in % 2005 in %
Stockholders' equity
Subscribed capital 1,301 1,371 (5.1) 1,317 (1.2)
Capital surplus 3,118 3,043 2.5 3,100 0.6
Retained earnings 12,525 12,533 (0.1) 11,928 5.0
Other comprehensive
income 680 11 696 (2.3)
Minority interests 478 413 15.7 482 (0.8)
18,102 17,371 4.2 17,523 3.3
Long-term liabilities
Provisions for pensions
and similar obligations 1,419 4,133 (65.7) 1,547 (8.3)
Other provisions 2,788 2,315 20.4 2,791 (0.1)
Deferred taxes 640 831 (23.0) 699 (8.4)
Financial indebtedness 3,629 1,966 84.6 3,682 (1.4)
Other long-term
liabilities 1,033 1,064 (2.9) 1,043 (1.0)
9,509 10,309 (7.8) 9,762 (2.6)
Short-term liabilities
Accounts payable, trade 2,770 2,879 (3.8) 2,777 (0.3)
Provisions 3,046 2,547 19.6 2,763 10.2
Tax liabilities 1,252 1,110 12.8 887 41.1
Financial indebtedness 1,719 1,455 18.1 259 .
Other short-term
liabilities 1,642 1,749 (6.1) 1,699 (3.4)
10,429 9,740 7.1 8,385 24.4
Total stockholders'
equity and liabilities 38,040 37,420 1.7 35,670 6.6 Consolidated Statements of Cash Flows
January - March
Million EUR 2006 2005
Net income 950 861
Depreciation and amortization of long-term assets 552 521
Changes in net working capital 61 (175)
Miscellaneous items (115) (103)
Cash provided by operating activities 1,448 1,104
Payments related to tangible and intangible assets (493) (393)
Acquisitions/divestitures (7) 139
Financial investments and other items 195 38
Cash using in investing activities (305) (216)
Proceeds from capital increases/repayments (377) (264)
Changes in financial liabilities 1,407 143
Dividends (85) (19)
Cash used in financing activities 945 (140)
Net changes in cash and cash equivalents 2,088 748
Cash and cash equivalents as of beginning of year
and other changes 911 2,094
Cash and cash equivalents 2,999 2,842
Marketable securities 116 165
Liquid funds 3,115 3,007

At EUR1,448 million, cash provided by operating activities wasEUR344 million higher than in the first quarter of 2005. This was dueto higher earnings as well as a reduction in net working capital.

Cash used in investing activities amounted to EUR305 millioncompared with EUR216 million in the same period of 2005. Paymentsrelated to tangible and intangible fixed assets were below the levelof depreciation and amortization on fixed assets.

We spent EUR396 million on share buybacks. Of this amount, EUR339million was associated with the EUR1.5 billion share buyback programthat was completed in mid-February 2006. EUR57 million was associatedwith the new EUR500 million program that is scheduled to run until theAnnual Meeting in 2007. In the first quarter, a total of 6.3 millionshares were bought back for an average price of EUR63.20 per share.

Liquid funds rose by EUR2,024 million to EUR3,115 million. AtEUR5,348 million, financial indebtedness was EUR1,407 million higherthan on December 31, 2005. Net debt declined by EUR617 million toEUR2,233 million. The equity ratio at the end of the first quarter was47.6%.

Consolidated Statements of Recognized Income and Expense
Income and expense items
January - March
Million EUR 2006 2005
Net income before minority interests 1,017 922

Fair value changes in available-for-sale securities 56 (15)
Cash-flow hedges 16 16
Change in foreign currency translation adjustments (83) 77
Actuarial gains/losses from pensions and other
obligations 55 39
Deferred taxes (14) (22)
Minority interests (5) 11
Total income and expenses recognized in equity 25 106

Total income and expense for the period 1,042 1,028
Thereof BASF 979 956
Thereof minority interests 63 72
Development of income Retained earnings Other comprehensive income
and expense recognized
directly in equity
Actuarial Foreign Fair value
gains/losses currency changes in
translation available-
adjustment for-
sale
securities
Million EUR
As of January 1, 2006 (894) 475 258
Additions 55 - 56
Releases - (83) -
Deferred taxes (9) 2 (1)
As of March 31, 2006 (848) 394 313

As of January 1, 2005 (234) (226) 193
Additions 39 77 -
Releases - - (15)
Deferred taxes (15) (1) -
As of March 31, 2005 (210) (150) 178


Development of income Other Total
and expense compre- income and
recognized hensive expense
directly in equity income recognized
directly in
equity
Cash- Total of
flow other
hedges comprehen-
sive income
Million EUR
As of January 1, 2006 (37) 696 (198)
Additions 16 72 127
Releases - (83) (83)
Deferred taxes (6) (5) (14)
As of March 31, 2006 (27) 680 (168)

As of January 1, 2005 (27) (60) (294)
Additions 16 93 132
Releases - (15) (15)
Deferred taxes (6) (7) (22)
As of March 31, 2005 (17) 11 (199)

Consolidated Statements of Stockholders' Equity
January - March 2006 Number of Subscribed Capital
subscribed capital surplus
shares
outstanding
Million EUR
As of January 1, 2006 514,379,000 1,317 3,100
Share buy-back and cancellation
of own shares including own
shares intended to
be cancelled (6,259,000) (16) 18
Capital injection by minority
interests - - -
Dividends paid - - -
Net income - - -
Income and expense recognized
directly
in equity - - -
Change in scope of consolidation
and
other changes - - -
As of March 31, 2006 508,120,000 1,301 3,118


January - March 2006 Retained Other com- Minority Stock-
earnings prehensive interests holders'
income equity
Million EUR
As of January 1, 2006 11,928 696 482 17,523
Share buy-back and
cancellation of own shares
including own shares
intended to
be cancelled (398) - - (396)
Capital injection by minority
interests - - 18 18
Dividends paid - - (85) (85)
Net income 950 - 67 1,017
Income and expense recognized
directly
in equity 46 (16) (5) 25
Change in scope of
consolidation and
other changes (1) - 1 -
As of March 31, 2006 12,525 680 478 18,102
January - March 2005 Number of Subscribed Capital Retained
subscribed capital surplus earnings
shares
outstanding
Million EUR
As of January 1, 2005 540,440,410 1,384 3,028 11,923
Share buy-back and
cancellation of own
shares including own
shares intended to
be cancelled (5,091,410) (13) 15 (276)
Capital injection by
minority interests - - - -
Dividends paid - - - -
Net income - - - 861
Income and expense
recognized directly
in equity - - - 24
Change in scope of
consolidation and
other changes - - - 1
As of March 31, 2005 535,349,000 1,371 3,043 12,533


January - March 2005 Other com- Minority Stock-
prehensive interests holders'
income equity
Million EUR
As of January 1, 2005 (60) 328 16,603
Share buy-back and
cancellation of own
shares including own
shares intended to
be cancelled - - (274)
Capital injection by
minority interests - 10 10
Dividends paid - (19) (19)
Net income - 61 922
Income and expense
recognized directly
in equity 71 11 106
Change in scope of
consolidation and
other changes - 22 23
As of March 31, 2005 11 413 17,371 Segment Reporting
Segments Sales EBITDA
Million EUR
1st Quarter 2006 2005 in % 2006 2005 in %
Chemicals 2,239 1,822 22.9 452 544 (16.9)
Plastics 3,091 2,800 10.4 456 380 20.0
Performance Products 2,147 1,908 12.5 329 304 8.2
Agricultural
Products &
Nutrition 1,376 1,354 1.6 373 382 (2.4)
Agricultural
Products 928 959 (3.2) 333 332 0.3
Fine Chemicals 448 395 13.4 40 50 (20.0)
Oil & Gas 2,985 1,840 62.2 953 590 61.5
Other(1) 677 359 88.6 (162) (181) 10.5
12,515 10,083 24.1 2,401 2,019 18.9


Segments Income from operations Income from
before special items operations (EBIT)
Million EUR
1st Quarter 2006 2005 in % 2006 2005 in %
Chemicals 317 426 (25.6) 317 426 (25.6)
Plastics 332 269 23.4 331 268 23.5
Performance Products 248 225 10.2 247 224 10.3
Agricultural Products &
Nutrition 224 296 (24.3) 290 304 (4.6)
Agricultural Products 213 276 (22.8) 280 284 (1.4)
Fine Chemicals 11 20 (45.0) 10 20 (50.0)
Oil & Gas 848 484 75.2 848 484 75.2
Other(1) (104) (137) 24.1 (184) (207) 11.1
1,865 1,563 19.3 1,849 1,499 23.3
Segments Research and Assets(b)
development expenses
1st Quarter
-------------------- ------------------------------------------------
Chemicals 31 27 14.8 6,198 5,416 14.4
Plastics 41 34 20.6 6,894 6,530 5.6
Performance Products 60 50 20.0 4,936 4,711 4.8
Agricultural
Products &
Nutrition 97 86 12.8 6,854 6,700 2.3
Agricultural
Products 80 68 17.6 5,365 5,402 (0.7)
Fine Chemicals 17 18 (5.6) 1,489 1,298 14.7
Oil & Gas - 1 - 4,798 4,017 19.4
Other(1) 76 52 46.2 8,360 10,046 (16.8)
305 250 22.0 38,040 37,420 1.7


Segments Additions to Amortization and
fixed assets(c) depreciation(c)
1st Quarter
------------------------------------------------------------------
Chemicals 162 88 84.1 135 118 14.4
Plastics 218 82 165.9 125 112 11.6
Performance Products 81 54 50.0 82 80 2.5
Agricultural Products &
Nutrition 37 31 19.4 83 78 6.4
Agricultural Products 15 12 25.0 53 48 10.4
Fine Chemicals 22 19 15.8 30 30 0.0
Oil & Gas 75 94 (20.2) 105 106 (0.9)
Other(1) 27 13 107.7 22 26 (15.4)
600 362 65.7 552 520 6.2

(a) "Other" includes the fertilizers business and other businessesas well as expenses, income and assets not allocated to the segments.This item also includes foreign currency results from financialindebtedness that are not allocated to the segments, hedging offorecasted sales as well as from currency positions that aremacro-hedged {EUR55 million in the first quarter (first quarter 2005EUR(45) million)}.

(b) The assets of "Other" includes the assets of the fertilizersbusiness and other businesses as well as assets that are not allocatedto the segments (financial assets, liquid funds, financialreceivables, deferred taxes; first quarter 2006: EUR6,685 million,first quarter 2005: EUR8,388 million).

(c) Tangible and intangible fixed assets

Forward-looking statements

This report contains forward-looking statements under the U.S.Private Securities Litigation Reform Act of 1995. These statements arebased on current expectations, estimates and projections of BASFmanagement and currently available information. They are notguarantees of future performance, involve certain risks anduncertainties that are difficult to predict and are based uponassumptions as to future events that may not prove to be accurate.Many factors could cause the actual results, performance orachievements of BASF to be materially different from those that may beexpressed or implied by such statements. Such factors include thosediscussed in BASF's Form 20-F filed with the Securities and ExchangeCommission. {The Annual Report on Form 20-F is available on theInternet at corporate.basf.com/20-f-report.} We do not assume anyobligation to update the forward-looking statements contained in thisreport.
- Important Dates -- Contacts


- August 2, 2006 -- Corporate Media Relations:
Interim Report Second Quarter Michael Grabicki
2006 Phone: +49 621 60-99938
Fax: +49 621 60-92693
- November 2, 2006
Interim Report Third Quarter -- Investor Relations:
2006 Magdalena Moll
Phone: +49 621 60-48230
Fax: +49 621 60-22500

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Phone: +49 621 60-0
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- May 4, 2006, Mannheim -- Internet: corporate.basf.com

- April 26, 2007, Mannheim -- BASF Aktiengesellschaft
67056 Ludwigshafen
Germany You can find this and other publications from BASF on the Internet at corporate.basf.com.You can also order the reports-- by telephone: +49 621 60-91827-- by fax: +49 621 60-20162-- on the Internet: corporate.basf.com/mediaorders