Post on 08-May-2015
description
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011, 14:00 (CEST), Ludwigshafen
BASF 2nd Quarter 2011 Analyst Conference Call 1
BASF posts strong results
Second Quarter 2011 Financial highlightsJuly 28, 2011
Analyst Conference Call Script
Dr. Kurt Bock Dr. Hans-Ulrich Engel
The spoken word applies.
Page 2
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 2
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.
Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
Forward-looking statements
BASF 2nd Quarter 2011 Analyst Conference Call 3
Sales €18.5 billion +14%EBITDA €3.0 billion +5%EBITDA margin 16.3% 17.7%EBIT before special items (bSI) €2.2 billion +1%EBIT bSI adjusted for non-comp. oil taxes €2.2 billion +12%EBIT €2.2 billion +7%Net income €1.5 billion +23%EPS €1.59 +23% Adjusted EPS €1.75 +17%
Business performance Q2’11 vs. Q2’10
BASF posts strong resultsSecond quarter 2011 highlights
Robust sales and earnings growth in the chemicals business with volumes up 5%Excellent performance of the acquired former Cognis businessEarnings in Agricultural Solutions increased despite adverse weather conditionsSales growth in Oil & Gas was price driven. Net income rose by 74%
Page 3
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
Dr. Kurt Bock Ladies and Gentlemen, good afternoon and thank you for joining us.
[Chart 3: BASF posts strong results]
After a powerful start into the year we had another good and very
solid quarter. Sales grew by 14 percent to 18.5 billion Euros
compared to 2010. More importantly, we succeeded to grow
volumes in our chemical business by 5 percent. For the first time
in 2011 the weakening of the US Dollar led to a negative sales
effect of 6 percent, which however, was largely compensated by
the excellent performance of the acquired former Cognis
business.
In Oil and Gas, growth was purely price driven due to the
shutdown of our operations in Libya. The missing sales and
earnings from Libya – and we do not see our operations being
restarted in 2011 – also affected the year over year earnings
comparison. Adjusted for Libya, EBIT before special items
increased by 16 percent to 2.2 billion Euros.
Adjusted earnings per share grew by 17 percent to 1.75 Euro.
What we saw in Q2 was a continued upward trend in raw material
costs. Our sales prices rose by 13 percent in total and 12 percent
in the chemicals business. However, we were able to pass on the
cost increases to a very large degree.
We also had planned and unplanned plant outages which
affected earnings negatively, most notably, the turnaround of a
cracker as well as the disruption of our acetylene plant in
Ludwigshafen which impacted our butanediol value chain.
Page 4
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
Page 5
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
At the end of the second quarter, we saw some inventory
destocking at our customers, above all in Asia. We interpret this
as a sign that the exceptionally high growth rates of the last
couple of quarters are going to normalize as expected. We
therefore reiterate our guidance for full year sales and earnings.
Page 6
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 4
Important milestones in Q2 2011
Styrolution
Joint venture of BASF and INEOS to form the global market leader in styrenicsJoint venture contract signedFTC and EU antitrust approval receivedClosing subject to remaining approvals from antitrust authorities in other countries Closing of joint venture expected in Q4 2011
New TDI plant in Europe
TDI is a key component for polyurethane foams with growth rates above GDPBASF to expand its leading position in TDI with a new 300kt/a plant in Europe The world‘s largest single-train TDI plantSuperior technology and unique Verbundconcept provide industry leading cost structureStart-up of production in 2014
Page 7
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 4: Important milestones in Q2 2011]
In the second quarter, we also achieved important milestones:
As you all know, BASF and INEOS plan to combine major parts of
their global styrene monomer, polymer and copolymer business
activities into a new joint venture called Styrolution. In the second
quarter, we took important steps towards the establishment of the
joint venture Styrolution. In May, the companies signed the joint
venture contract. Meanwhile, the new joint venture has already
been approved by the U.S. Federal Trade Commission and the
EU Commission. We are still awaiting approvals from antitrust
authorities in a few countries and expect closing in the fourth
quarter.
In May, we announced our plans to build the world’s largest-
single train TDI plant in Europe. TDI is a key component for the
polyurethanes industry. It is widely used in the automotive
industry, for example in seating cushions and interior applications,
as well as in the furniture segment, for example in flexible foams
for mattresses and cushions. We expect the global TDI market to
grow faster than GDP in the coming years, with strong
contributions from Central and Eastern Europe, Middle East and
Africa. Our excellent technology and unique Verbund concept will
ensure an industry-leading cost structure. We aim to start up this
fully integrated plant in 2014. This investment supports our growth
strategy and underlines our leading position as the largest TDI
producer.
Page 8
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 5
Focus on future marketsBASF intensifying R&D around electromobility
Market trendsSustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility
BASF activitiesInvestment of three-digit million euro sum over the next five years for R&D and production of battery materials• Current investment in innovative cathode materials plant in
Elyria, Ohio to start up in mid-2012Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteriesLightweight construction solutions and heat management systems further help to reduce energy consumption
Electromobility – leveraging BASF’s R&D and business platforms
Page 9
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 5: Focus on future markets] We are further intensifying our efforts in the field of electro-
mobility and will bring BASF’s innovation strength to function
here.
Energy efficient electric cars are becoming key to the climate
friendly transformation of individual mobility. Improved batteries
as well as innovative solutions for weight reduction and heat
management are major challenges electromobility faces today.
We see new chemical solutions as a major contributor to
overcoming these challenges. BASF is therefore committed to
leveraging its research and business platforms on this future
market.
In battery materials, for example, BASF will be investing a three-
digit million euro sum in research, development and production
over the next five years. Part of the investment is being
channeled into the construction of a production plant for
advanced cathode materials in Elyria, Ohio. This new facility is
scheduled to supply the market with innovative cathode materials
for the production of high-performance lithium-ion batteries from
mid-2012 onwards. In addition, we are expanding our activities in
the field of high-quality tailored electrolytes to position ourselves
as a future systems supplier in this market.
Furthermore, in order to reduce the energy consumption of
electric vehicles we are working on resin-based solutions for fiber
reinforced composites to reduce vehicle weight as well as heat
management solutions.
Page 10
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 6
We aim to grow sales on average by two percentage points per year faster than chemical production growthWe strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012
We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/€ of $1.40 (from $1.35)We assume that oil production in Libya will not restart during 2011 →EBIT before special items from our Libyan oil production for the full year 2011
will be about €1 billion lower compared with 2010(thereof about €700 million of non-compensable oil taxes)
Assumptions
Medium-term targets
Outlook 2011
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted for non-compensable oil taxes (2010: €7.2 billion)We expect to achieve a high premium on our cost of capital
Targets 2011
Page 11
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 6: Outlook 2011]
Now let’s come to the outlook for 2011. To put it in a nutshell, we
confirm our strong outlook for 2011. We will continue to focus our
attention on protecting our margins and optimizing our fixed costs
as well as keeping working capital at a minimum level.
With the further weakening of the US Dollar and the high oil price
volatility we see the need to adjust the assumptions for our full year
outlook:
We are increasing our Brent oil price forecast from 100 Dollars
per barrel to 110 Dollars per barrel and we are expecting a
Dollar/Euro exchange rate of 1.40, up from 1.35.
Our assumptions for the growth of GDP, industrial and chemical
production remain unchanged.
We are still assuming that the oil production in Libya will not
resume during 2011.
For the full year 2011, we expect to generate significantly higher
sales than in 2010. As already explained during our first quarter
conference call, EBIT before special items excluding non-
compensable oil taxes provides a much more meaningful
guidance for 2011. We therefore confirm, that we aim to
significantly exceed the 2010 EBIT before special items excluding
non-compensable oil taxes which amounted to 7.2 billion Euros.
Finally, we remain committed to our target of achieving a high
premium on our cost of capital in 2011.
With this I’ll hand over to Hans.
Page 12
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 7
ChemicalsRobust sales and earnings supported by price increases
Intermediates693+7%
Inorganics351
+8%
Petrochemicals2,348+18%
€3,392+14%
687617
537
765674
0
200
400
600
800
Q2 Q3 Q4 Q1 Q2
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 2% 20% 0% (8)%
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
Page 13
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
Dr. Hans-Ulrich Engel
Good afternoon ladies and gentlemen.
I will highlight the financial performance of each segment in more
detail and focus on the respective business developments in
comparison to the second quarter of 2010.
[Chart 7: Chemicals – Robust sales and earnings supported by
price increases]
Ongoing solid demand in the Chemicals segment drove up sales
significantly. We successfully increased prices in many product lines
in order to offset higher raw material costs. Planned and unplanned
plant shutdowns negatively impacted our EBIT. Nevertheless,
earnings remained almost on the strong level of the previous year’s
quarter.
In Petrochemicals, the strong demand for our products led to
significant sales growth in all regions, but we witnessed a
declining momentum in Asia, specifically in China, towards the
end of the quarter. The performance in the acrylics business was
excellent as a result of ongoing tight markets. Plasticizers, on the
other hand, were weaker as demand from the construction and
housing industries remained subdued, especially in North
America. Earnings came in at a very high level, albeit below the
extremely high previous year’s quarter. This was due to the
turnaround at our larger cracker in Ludwigshafen.
In Inorganics, continued strong demand, particularly for inorganic
chemicals, glues and impregnating resins, led to an
Page 14
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
Page 15
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
increase in sales. Lower margins in ammonia and methanol as
well as higher costs triggered by major planned turnarounds of
our ammonia and sulphuric acid plants resulted in lower earnings.
Higher sales in Intermediates were driven particularly by
customers from the plastics, coatings and textile fiber industries.
The strong demand for our products could not be fully met in all
product lines. The unplanned shutdown of the acetylene plant in
Ludwigshafen due to a fire significantly impacted our butanediol
value chain. As a consequence we had to declare force majeure
for butanediol and several downstream products in Europe.
Nevertheless, earnings were up overall given higher volumes and
improved margins.
Page 16
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 8
PlasticsStrong demand in all product lines resulted in increased earnings
Polyurethanes1,498+7%
PerformancePolymers
1,330+12%
€2,828+9%
349 371
285
393 383
0
200
400
Q2 Q3 Q4 Q1 Q2
Sales development Period Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 4% 12% 0% (7)%
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
Page 17
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 8: Plastics – Strong demand in all product lines resulted
in increased earnings]
In Plastics, we experienced strong demand in all product lines and
we increased sales and earnings compared to the previous year’s
quarter in both divisions.
In Performance Polymers, positive pricing momentum drove
sales growth. Demand for polyamides and intermediates
remained at a high level. The Engineering Plastics business
benefitted from strong demand from the automotive industry,
especially in Europe and North America. Fierce competition from
Asia adversely affected demand for expandable polystyrene from
the construction industry in Asia and Europe. Sales of our
biodegradable plastics were temporarily impacted by limited raw
material availability, but still increased substantially. EBIT before
special items rose significantly as a result of higher volumes and
improved margins, especially in the polyamide and intermediates
businesses.
In Polyurethanes, sales were driven by higher volumes and
prices in all regions, most pronounced in Europe. Demand from
the automotive and construction industries increased compared
with the previous year’s quarter. We were able to increase prices
for MDI, polyurethane systems and polyols, while TDI prices were
slightly lower. Despite several turnarounds, earnings were up
mainly because of higher volumes.
Page 18
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 9
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 2% 6% 27% (5)%
Performance ProductsStrong earnings contributions from acquired Cognis business
471
370294
554513
0
100
200
300
400
500
600
Q2 Q3 Q4 Q1 Q2
PerformanceChemicals
908+13%
Care Chemicals1,353+100%
€4,095+30%
Paper Chemicals417(5)%
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
Nutrition & Health480+29%
Dispersions& Pigments
937+9% 20112010
Page 19
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 9: Performance Products – Strong earnings
contributions from acquired Cognis business]
Sales and EBIT before special items in the Performance Products
segment increased due to the acquired Cognis business, higher
volumes as well as the successful repositioning of the combined
businesses following the Ciba integration.
In Dispersions & Pigments, we could increase sales in all
product lines and regions, except for North America where we
faced negative currency effects. Margin levels could be largely
maintained since successful price increases helped to offset
higher raw material costs. Thanks to higher volumes and the
successful repositioning of the combined businesses following the
Ciba integration we were able to improve earnings.
In Care Chemicals, sales doubled and earnings were up
significantly due to Cognis. Volumes went up despite the limited
availability of precursors for hygiene and cosmetics. We
experienced strong demand, especially for detergents and
formulators. We successfully maintained our margins despite
significantly higher input costs. As a result, earnings were up
substantially.
In Nutrition & Health, net sales grew strongly mainly due to the
inclusion of Cognis. Demand was very good in all regions and in
all businesses. In vitamins, we continued to face some price
pressure but we see prices stabilizing at present. Earnings could
not be maintained at the previous year’s level as a result of higher
raw material costs, lower vitamin margins and a weaker US-
Dollar.
Page 20
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
Page 21
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
In an ongoing challenging business environment, sales in Paper
Chemicals decreased slightly. Sales were impacted by
divestments and portfolio optimizations as well as our “value over
volume” strategy. Earnings were below the previous year’s
quarter as we were not able to fully pass on higher raw material
costs.
In Performance Chemicals, sales increased substantially thanks
to price increases and the inclusion of the Cognis businesses.
Weaker order volumes from Japan could not be compensated by
the overall strong demand from the automotive and refinery
industries. EBIT before special items decreased slightly, mainly
due to lower volumes and higher raw material costs, which could
only partially be compensated by price increases.
Page 22
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 10
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 12% 8% 0% (7)%
Functional SolutionsStrong demand from automotive drove earnings growth
Catalysts1,500+22%
Construction Chemicals
5770%
Coatings689
+6%
€2,766+13%
165 158
33
142167
0
50
100
150
Q2 Q3 Q4 Q1 Q2
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
Page 23
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 10: Functional Solutions – Strong demand from
automotive drove earnings growth]
Volumes in the Functional Solutions segment were significantly
higher, reflecting the strong global demand for mobile emissions
catalysts and OEM coatings from the automotive industry. Demand
from the construction industry rose slightly in Northern, Central and
Eastern Europe. EBIT before special items improved slightly thanks
to strong volume growth in Catalysts.
Catalysts’ sales rose sharply. Mobile emission catalysts showed
strong growth in Europe, Asia and North America. Moreover, we
realized higher volumes in refinery and chemical catalysts. As a
result, EBIT before special items came in far above the level of
the prior year.
Sales in Construction Chemicals were at the previous year’s
level reflecting a volume improvement at stable prices as well as
negative currency effects. Volumes increased in all major regions
except for Southern Europe. Volumes in North America improved
despite the ongoing challenging market environment. EBIT before
special items did not match the previous year’s level due to higher
raw material costs, which we could not pass on to our customers.
In Coatings, the positive trend in demand continued for all
product lines, especially in automotive OEM coatings and
decorative paints. However, raw material prices could not be fully
passed on. As a result, EBIT before special items was below the
very good level of the previous year.
Page 24
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 11
Agricultural SolutionsHigh global demand for agricultural products drove volume growth
320 331
0
100
200
300
400
Q2 Q2
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
0200400600800
1,0001,2001,400
Q2 Q220112010
0%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 6% 0% 0% (6)%
1,211 1,205
Page 25
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 11: Agricultural Solutions – High global demand for
agricultural products drove volume growth ]
In Agricultural Solutions, high global demand for agricultural
products drove volume growth, especially in fungicides. This
development, however, was offset by negative currency effects from
the devaluation of the US-Dollar, resulting in sales at the previous
year’s level.
EBIT before special items was slightly above the prior year level
despite significantly negative currency effects.
In Europe, we increased sales thanks to higher demand for our
products in Eastern Europe which could more than offset the impact
of dry weather conditions in Western Europe.
In North America, sales declined as a result of a weaker US-Dollar
as well as weather related acreage reductions and a compressed
season, which led to a reduced number of herbicide applications.
Our Plant Health business performed strongly.
We improved sales in South America, mainly based on higher
demand for Clearfield®, our herbicide tolerance technology. Further
sales growth came from insecticides for sugarcane and seed
treatment products.
In Asia, sales were significantly above the previous year’s quarter
driven by our herbicide business.
Page 26
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 12
148257
0
200
400
600
Q2 Q2
Oil & GasHigher oil and gas prices compensated for lower volumes
Exploration &Production563(34)%
Natural GasTrading
1,898+25%
€2,461+4%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q2’11 vs. Q2’10 (19)% 23% 0%
63
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production Net income
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items/ Net income (million €)
20112010
420269
515
332
95
Non-compensableoil taxes 209
Page 27
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 12: Oil & Gas – Higher oil and gas prices compensated
for lower volumes]
Despite the production stoppage in Libya, sales in Oil & Gas
increased slightly, as a result of higher oil and gas prices.
Consequently, EBIT before special items adjusted for non-
compensable income taxes on oil increased.
In Exploration & Production sales decreased considerably due
to the discontinuation of our oil production in Libya. Nevertheless,
earnings adjusted for non-compensable oil taxes increased
substantially due to the higher oil and gas prices.
Sales in Natural Gas Trading were up significantly, reflecting
higher gas prices. Earnings, on the other hand, decreased as a
result of slightly lower volumes and negative time-lag effects.
A look at the income statement shows that net income rose by an
impressive 74 percent to 257 million Euros. This was related to
significantly higher oil and gas prices as well as a substantially lower
tax rate because of the production stoppage in Libya.
Page 28
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 13
Review of “Other”
Million € Q2 2011 Q2 2010Sales 1,714 1,471thereof Styrenics 811 785*
EBIT before special items (163) (301)thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effectsStyrenics, fertilizers, other businesses
(87)(59)
(118)
76
(78)(55)
(198)
67
Special items 27** (106)
EBIT (136) (407)
* Since January 1, 2011, Styrenics only includes the carved-out styrenics businesses; the previous year’s values were adjusted accordingly
** Incl. €68 million from repeal of fine imposed by the EU on Ciba in 2009
Page 29
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 13: Review of “Other”]
In “Other”, sales grew in styrenics, fertilizers and other businesses.
EBIT before special items improved by 138 million Euros to minus
163 million Euros mainly due to better operating results as well as
favorable currency and valuation effects.
Special items in “Other” amounted to plus 27 million Euros. They
contained 68 million Euros of income resulting from the repeal of
the fine imposed by the EU on Ciba in 2009 in relation to heat
stabilizers.
Page 30
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 14
Operating cash flow in H1 2011
Million € H1 2011 H1 2010Cash provided by operating activities 3,038 2,721thereof Changes in net working capital (1,178) (1,355)
Cash provided by investing activities 81 (599)thereof Payments related to tangible / intangible assets (1,265) (889)
Cash used in financing activities (2,764) (2,054)thereof Changes in financial liabilities
Dividends (486)
(2,278)(292)
(1,762)
Operating cash flow at €3.0 billion despite reclassification of €887 million gain from the sale of K+S stakeFree cash flow at €1.8 billion Net debt amounted to €12.3 billion, a reduction of €1.3 billion since end of 2010
First half 2011
Page 31
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
[Chart 14: Operating cash flow in H1 2011]
Let me now briefly conclude with our cash flow.
Cash provided by operating activities at around 3.0 billion Euros in
the first half of 2011 was 317 million Euros higher than in the same
period of the previous year. This can primarily be attributed to
increased earnings. Working capital rose between January and
June 2011 reflecting the growth in our business, higher raw material
costs as well as higher natural gas injection in our storage facilities.
Cash provided by investing activities amounted to 81 million Euros.
In March, the sale of shares in K+S resulted in a cash inflow of 972
million Euros with a net gain of 887 million Euros. CAPEX amounted
to 1.3 billion Euros including the investments in the OPAL-pipeline,
the capacity expansion of Ecoflex/Ecovio and the ongoing extension
of our Verbund site in Nanjing.
Financing activities led to a cash outflow of 2.8 billion Euros, mainly
due to a 486 million Euros reduction in financial liabilities and 2.3
billion Euros of dividend payments to shareholders of BASF SE and
minority shareholders in Group companies.
Since the end of 2010, we reduced net debt by 1.3 billion Euros to
12.3 billion Euros.
Thank you for your attention. We are now happy to take your
questions.
40BASF 4Q/FY’2010 Conference | February 24th, 2011
Page 32
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 1616
Back-Up
BASF 2nd Quarter 2011 Analyst Conference Call 17
Financial highlights
Million € Q2 2011 Q2 2010 Δ% Q1 2011 Δ%Sales
changes due to- volumes- prices- portfolio- currencies
18,461 16,214 +14%
+2%+13%+5%(6)%
19,361 (5)%
EBITDA 3,015 2,867 +5% 3,365 (10)%
EBIT before special items 2,237 2,206 +1% 2,732 (18)%
EBIT before special itemsadjusted for non-compensable oil taxes 2,237 1,997 +12% 2,452 (9)%
Special items (20) (127) (84)% (182) (89)%
EBIT 2,217 2,079 +7% 2,550 (13)%
Net income 1,454 1,183 +23% 2,411 (40)%
EPS (€) 1,59 1,29 +23% 2,62 (39)%
Adjusted EPS (€) 1,75 1,50 +17% 1,94 (10)%
Page 33
BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 18
Balance sheet review
Balance sheet June 30, 2011 vs. end of 2010 (billion €)
Liquid funds
Accountsreceivable
Long-termassets
22.7
15.0
21.7
34.5
10.2
1.5
Otherliabilities
Financialdebt
Stock-holders’Equity
Jun 312011
Jun 312011
Dec 312010
Dec 312010
59.3
32.5
10.9
1.8
59.3
23.0
14.1
22.2
Inventories
Other assets
9.5
4.6
8.7
4.5
59.459.4
Long-term assets decreased by €2.0 billion amongst others due to the sale of shares in K+S
Inventories increased by €0.8 billion reflecting the expansion of our business and raw material inflation
Net debt decreased by €1.3 billion to €12.3 billion
Accounts receivable were up by €0.7 billion as a result of the expansion of our business
Equity ratio at 39% (up 1 percentage point)
BASF 2nd Quarter 2011 Analyst Conference Call 19
Cognis – integration objectives
TargetsAchieve 20% EBITDA margin in the Performance Products segment by 2012Acquisition accretive as of 2012
CostsOne-time integration costs of €290 million until end of 2013 Inventory step-up of €120 millionCosts already incurred:− 2010: €80 million (thereof €60 million inventory step-up) − H1/2011: €210 million (thereof €60 million inventory step-up)
SynergiesGenerate €275 million of additional EBIT− €135 million growth synergies by the end of 2015− €140 million cost synergies by the end of 2013