1 BASF Capital Market Story

47
1 BASF Capital Market Story Ingo Rose Director Investor Relations Roadshow Minneapolis, Madison, Milwaukee August 4-5, 2016

Transcript of 1 BASF Capital Market Story

  • BASF Capital Market Story, August 2016 1BASF Capital Market Story

    Ingo RoseDirectorInvestor Relations

    Roadshow Minneapolis, Madison,Milwaukee

    August 4-5, 2016

  • BASF Capital Market Story, August 2016 2

    150 years

    Cautionary note regarding forward-looking statements

    This presentation may contain forward-looking statements that are subject to risks anduncertainties, including those pertaining to the anticipated benefits to be realized from theproposals described herein. Forward-looking statements may include, in particular, statementsabout 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 and assumptions with respect to future events and financialperformance. Actual financial performance could differ materially from that projected in theforward-looking statements due to the inherent uncertainty of estimates, forecasts andprojections, and financial performance may be better or worse than anticipated. Given theseuncertainties, readers should not put undue reliance on any forward-looking statements. Theinformation contained in this presentation is subject to change without notice and BASF doesnot undertake any duty to update the forward-looking statements, and the estimates andassumptions associated with them, except to the extent required by applicable laws andregulations.

  • BASF Capital Market Story, August 2016 3

    150 years

    Chemistry as an enabler BASF has superior growth

    opportunities: sustainable innovations investments emerging markets

    The #1 chemical company 70.4 billion sales, 6.7

    billion EBIT bSI in 2015 #1-3 in ~70% of businesses,

    present in almost all countries

    6 integrated Verbund sites, production in 60 countries

    A track record of strong sales and earnings growth

    >3.5% dividend yield in every single year from 2006-2015

    ~66 billion market capitalization on July 25, 2016

    PerspectiveLudwigshafen,Germany

    Antwerp,Belgium

    Nanjing,China

    Kuantan,MalaysiaGeismar,

    LouisianaFreeport,Texas

    Verbund site

    Positioning

    We create chemistry for a sustainable future

    Performance

  • BASF Capital Market Story, August 2016 4

    150 years

    Percentage of sales 2015*

    * Not depicted here: ~4% of Group sales reported as Other ** Natural Gas Trading has been divested on Sep. 30, 2015.

    BASF today a well-balanced portfolioTotal sales 2015: 70.4 billion

  • BASF Capital Market Story, August 2016 5

    150 years

    Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of waste

    Example Ludwigshafen site:avoidance of 7 million metric tons of freight p.a.= 280,000 fewer truckloads

    Shared use of on-site facilities: fire department, security, waste water treatment and analytics

    Verbund: Unique competitive advantage

    * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.

    Verbund generates >1 billion p.a. global cost savings* & supports sustainability

  • BASF Capital Market Story, August 2016 6

    150 years

    Financial figures Q2 2016 Q2 2015 Change

    Sales 14.5 billion 19.1 billion (24%)

    EBITDA 2.8 billion 3.0 billion (7%)

    EBIT before special items 1.7 billion 2.0 billion (16%)

    EBIT 1.7 billion 2.0 billion (16%)

    Net income 1.1 billion 1.3 billion (14%)

    Reported EPS 1.19 1.38 (14%)

    Adjusted EPS 1.30 1.49 (13%)

    Operating cash flow 2.3 billion 2.8 billion (17%)

    Sales development Volumes Prices Portfolio Currencies

    Q2 2016 vs. Q2 2015 2% (7%) (16%) (3%)

    Q2 2016: Financial figures for BASF Group

  • BASF Capital Market Story, August 2016 7

    150 years

    0

    1

    2

    3

    4

    5

    2007 2008 2009** 2010 2011 2012 2013 2014 2015 1HJ2016

    Free cash flow development

    * Cash provided by operating activities less capex ** 2009 adjusted for re-classification of settlement payments for currency derivatives

    Free cash flow*(in billion )

    3.2

    2.5

    3.2

    3.9 3.7

    2.6

    3.2

    1.7

    3.6

    1.4

    H1

    Diagramm1

    3.245

    2.502

    3.186

    3.912

    3.695

    2.587

    3.21

    1.7

    3.6

    1.4

    Free Cash Flow

    Sheet1

    200720082009**2010201120122013201420151HJ 2016

    Free Cash Flow3.2452.5023.1863.9123.6952.5873.2101.73.61.4

  • BASF Capital Market Story, August 2016 8

    150 years

    Outlook 2016 for BASF Group confirmed

    Outlook 2016 Sales will be considerably below prior year due to the divestiture of the natural gas trading

    and storage activities and the lower oil and gas prices. We expect EBIT before special items to be slightly below the previous year level due to

    significantly lower earnings in Oil & Gas.

    Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production (excl. pharma): +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $40 per barrel

  • BASF Capital Market Story, August 2016 9

    Business development

    Path forward: Our priorities

    Appendix Q2 2016 reporting

  • BASF Capital Market Story, August 2016 10

    150 years

    Components of growth

    * 2010, 2011 indicative, adjusted for IFRS 10 & 11

    59.6

    70.4+10.5 -1.4

    +2.6 -0.9

    20

    40

    60

    80

    2010 2015

    Volumes

    PricesFX M&A

    Sales* analysis 2010 2015 (in billion )

    (in billion ) Net sales 2010 Volumes Prices FX M&A Sales CAGR 2010 - 2015

    BASF Group w/o Oil & Gas 51.4

    +2.8 (+1.1% CAGR) -0.9 +2.6 +1.6 +2.3%

    Oil & Gas 8.2 +7.7 (+14.2% CAGR) -0.5 +0.0 -2.5 +9.6%

    3.4%

    CAGR

  • BASF Capital Market Story, August 2016 11

    150 years

    Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in Oil & Gas Refinish coatings Surface treatment*

    BASFcore business

    Strong partnerships

    Gazprom Monsanto Petronas Shell Sinopec Statoil Total Yara

    Selected transactions 2010 until today

    Acquisitions

    ~ 5.2 billion salesin emerging and innovation-driven

    businesses

    Divestitures

    Styrenics Fertilizers Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Polyolefin catalysts Industrial coatings*

    ~ 20 billion sales*in businesses with

    limited fit and differentiation

    potential

    Portfolio development towards more market-driven and innovative businesses

    * Closing expected in 2016

  • BASF Capital Market Story, August 2016 12

    150 years

    Steady earnings growth

    * 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 2009 as reported, without non-compensable foreign income taxes on oil production

    EBIT and EBITDA*(in billion , 2001 - 2015)

    3.7

    4.7 4.6

    7.0 7.2

    8.48.9

    7.7

    6.5

    9.9

    11.2

    10.010.4

    11.010.6

    0

    2

    4

    6

    8

    10

    12

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

    EBITEBITDA

    0.7

    2.2 2.2

    4.5 4.85.5

    6.0

    4.6

    2.8

    6.7

    8.06.7 7.2

    7.6

    6.2

    CAGREBITDA

    7.9%CAGREBIT

    16.6%

  • BASF Capital Market Story, August 2016 13

    150 years

    50

    100

    150

    200

    250

    300

    350

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

    Strong track record in operational excellence

    EBITDA

    Sales

    * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

    BASF Group* 20012015(indexed; CAGR 20012015)

    Fixed Costs

    CAGREBITDA

    9%

    CAGRSales

    6%

    CAGRFixed Costs3%

  • BASF Capital Market Story, August 2016 14

    150 years

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    2006 2009 2012 2015

    2.90

    We want to grow or at least maintain our dividend at the previous years level

    Dividend of 2.90 per share, an increase of 3.6%

    Dividend yield of 4.1% in 2015

    Dividend yield above 3.5%in any given year since 2006

    4.6%

    Attractive shareholder return

    Key facts 2015

    Dividend per share ()

    0.50

    1.00

    1.50

    2.00

    * Dividend yield based on share price at year-end

    4.1% 3.8% 7.0% 3.9% 3.7%Yield* 3.7%

    2.50

    3.5%

    3.00

    4.0% 4.1%

    1.50

    1.95 1.951.70

    2.202.50 2.60 2.70

    Dividend policy

    2.80

  • BASF Capital Market Story, August 2016 15

    150 years

    Average annual performance with dividends reinvested

    0 3 6 9 12 15

    Euro Stoxx 50

    DAX 30

    MSCI World Chemicals

    +5.5%

    Last 5 yearsJuly 2011 June 2016

    +3.9%

    +3.2%

    +5.6%

    +5.7%

    Last 10 yearsJuly 2006 June 2016

    BASF

    +6.9%

    +0.7%

    +12.4%

    Delivering consistent, long-term value

    Diagramm1

    6.9

    5.5

    0.7

    12.4

    Ost

    9.1%

    12.0%

    8.1%

    Sheet1

    MSCI WorldDAXEuro StoxxBASF

    Ost6.95.500.712.4

  • BASF Capital Market Story, August 2016 16

    Business development

    Path forward: Our priorities

    Appendix Q2 2016 reporting

  • BASF Capital Market Story, August 2016 17

    150 years

    Grow sales and earnings faster than global chemical production, driven by

    Continued focus on innovations

    Capital expenditures

    Acquisitions

    Operational excellence and Verbund advantages

    Focus on cash generation/conversion

    Continue with our progressive dividend policy

    Focus on pruning our portfolio

    Maintain industry-leading position in sustainability

    The path forward: Our priorities

  • BASF Capital Market Story, August 2016 18

    150 years

    Managing volatility: BASF almost perfectly hedged on hydrocarbon price changesBASF production and consumption of oil and gas(in million boe, 2015)

    BASF hydrocarbon consumption almost equals hydrocarbon production

    Production of oil, liquids and gas Consumption of oil derivatives and gas

    153

    >100

    Naturalgas

    Oil and liquids

    Natural gas for energy and as raw material

    Naphtha and other oil-based raw materials

    40

    113

  • BASF Capital Market Story, August 2016 19

    150 years

    0

    100

    200

    300

    400

    500

    2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

    2013 2014 2015

    EBITDA margin Chemicals / oil price(indexed, 2001 = 100)

    Chemicals with stable profitability, little correlation to oil price

    EBITDA margin Chemicals(as % of sales)

    Oil price

    * Without Catalysts (now part of Functional Materials & Solutions segment)

  • BASF Capital Market Story, August 2016 20

    150 years

    Strategic lever: Continuous portfolio development

    Specialties and solutions

    Differentiated commodities

    target(in % of sales*)

    ~ 50% ~ 50%

    Maintaining a balanced portfolio

    Divestment of businesses, e.g., due to loss of differentiation

    Divestment of businesses, e.g., due to

    lower market attractiveness

    Commoditization leads to restructuring

    Growth fields

    Innovation pipeline

    Acquisitions

    * Excluding Oil & Gas sales

    Attractive markets Differentiation by process

    technologies and integration

    Attractive markets Differentiation by customer

    proximity and innovations

  • BASF Capital Market Story, August 2016 21

    150 years

    Provide a minimum return on investment of 8% p.a. after tax

    Are EPS accretive by year three at the latest

    Financial acquisition criteria

    Generate profitable growth above the industry average

    Are innovation-driven

    Offer a special value proposition to customers

    Reduce earnings cyclicality

    Strategic acquisition criteria

    We want to acquire businesses which

    Strategic lever: Acquisitions

  • BASF Capital Market Story, August 2016 22

    150 years

    BASF to acquire ChemetallTransaction highlights

    Purchase price of US$3.2 billion (debt free)

    All-cash offer, financing secured

    Expected closing of transaction by the end of 2016

    Synergies on industry-typical level

    EPS accretive in year 1 excluding integration costs, in year 2 including integration costs

    Transaction will significantly enhance BASF Coatings position as complete solutions provider

    Chemetall a global technology and innovation leader in metals surface treatment

  • BASF Capital Market Story, August 2016 23

    150 years

    Chemetall a global leader in surface treatment products and services

    FiguresFacts

    Sales2015: US$845 million 2016E*: US$851 million2017E*: US$895 million

    EBITDA2015: US$202 million2016E*: US$217 million2017E*: US$231 million

    EBITDA margin2015: 24%2016E*: 25%2017E*: 26%

    CAGR sales(2007 2015) ~7% (at constant exchange rates)

    Key customer industries

    Automotive, aerospace, coil,metal forming

    Regional sales~50% Western Europe~30% North America~20% Emerging markets, mainly Asia

    Employees ~2,500 (~50% sales professionals)

    Sites 21 production sites in all regions10 R&D sites

    One of the strongest globally managed brands in the sector

    Proprietary manufacturing technologies, rigorous product quality and performance standards

    Leading market positions in the automotive, aerospace and cold forming segments

    Long-standing, service-intensive customer relationships

    Significant global presence and record of accelerated expansion in emerging markets

    Track record of strong growth and high profitability

    * average analysts estimates

  • BASF Capital Market Story, August 2016 24

    150 years

    Chemetall complements BASFs portfolio, adding highly attractive surface treatment

    Chemetall

    Pre-treatment

    In-depth customer insights across wide industry range

    Recognized technology leader in metal surface treatment

    Complete portfolio beyond pure surface treatment

    BASF

    Coatings

    Excellent customer access and approvals especially in automotive

    Well recognized customer service offering in coatings

    Chemical know-how and strong R&D platforms within BASF Group

    Complete surface treatment provider

    Offer full solution competence to customers across wide range of industries

    Benefit from convergence of pre-treatment and coatings, offering superior product and process solutions

    Develop superior application processes leveraging joint expertise

    +

  • BASF Capital Market Story, August 2016 25

    150 years

    Chemetall an excellent strategic fit for BASF Coatings

    Technology adjacency

    Compelling combination of surface treatment and coatings technologies Creates unmatched solution competence for customers

    Access to key growth markets

    Superior access to growth industries (e.g. automotive, aerospace) Global footprint with local production, technical centers in China and India

    Downstream solution business

    Complex formulation businesses based on application know-how Customer centricity, product quality and technical service as differentiators

    Enhanced technology basis

    Growth opportunities through combining broad technical and application competence with BASFs chemistry and formulation know-how

    Strong and robust financials

    Excellent track record of growth above market and attractive margins Asset light business model with strong free cash flow conversion

    Industry-leading expert team

    High-quality resources and technical expertise ~1,200 sales professionals with in-depth application and process know-how

  • BASF Capital Market Story, August 2016 26

    150 years

    Strategic lever:Capital expenditures

    Differentiated commodities With proprietary technology and/or Verbund advantages

    Focus on: emerging markets backward integration in the U.S. upgrading our asset base in Europe

    Specialties and solutions Incremental investments for new products Regional expansion of businesses

    Oil & Gas Focus investment budget by active portfolio optimization to secure free cash flow Keep reserve-to-production ratio of approx. 10 years

  • BASF Capital Market Story, August 2016 27

    150 years

    Investments for organic growth

    Performance Products16%

    Oil & Gas24%

    19.5billion

    FunctionalMaterials &Solutions12%

    Capex budget 2016-2020

    Other14%

    Chemicals30%

    Capex budget 2016-2020

    Asia Pacific18%

    19.5billion

    South America*9%

    North America26%

    Europe46%

    AgriculturalSolutions4%

    Other1%

    by segment by region

    * Including Africa and Middle East

  • BASF Capital Market Story, August 2016 28

    150 years

    Strategic lever: Innovations Allow for creativity

    Balance incremental und disruptive innovations

    Manage innovation pipeline efficiently on all levels

    Build on our global R&D Verbund

    Leverage external collaborations even more

    Align R&D activities with business models:

    Differentiated commodities Focus on improving processes and addressing raw material change Launch selected product innovations

    Specialties and solutions Develop new, tailored offerings in close collaboration with customers Pursue solution-oriented approach

    Keep annual R&D spending at ~3% of sales*

    * Without Oil & Gas

  • BASF Capital Market Story, August 2016 29

    150 years

    1.95 billion R&D expendituresin 2015; to be maintained in 2016

    ~10,000 employees in R&D

    ~3,000 projects

    Ranked No.1 in thePatent Asset Index

    ~1,000 new patents in 2015

    Research Verbund: Cooperations with more than 600 excellent partners from universities, start-upsand industry

    Strong commitment to innovationInnovations for a sustainable future

    Key facts

    1.61.7

    1.8 1.9 1.95

    0.0

    0.5

    1.0

    1.5

    2.0

    2011 2012 2013 2014 2015

    R&D expenditures (billion )

    Chemicals11%

    Performance Products20%

    Functional Mat. & Sol.20%

    Agricultural Solutions26%

    Oil & Gas2%

    Corporate Research21%

    2.0

    1.5

    1.0

    0.5

    0

  • BASF Capital Market Story, August 2016 30

    150 years

    0

    50

    100

    150

    BASF Competitors

    FWCCombines functionality of a 3-way conversion catalyst with integrated filter on a ceramic substrate

    Reduces gaseous emissionsPrecious metal-based catalytic coating removes exhaust gases from engine emissions**

    Removes particulatesFilters & combusts particulates

    Complies with emissions limitsHelps automakers meet new Euro 6c regulatory standards

    FWC introduced in 2013 Sustains BASFs leading technology position

    Leading position: Global mobile emissions catalysts patents*

    * 2009 2013 ** Hydrocarbons, carbon monoxide, nitrogen oxides *** https://www.basf.com/en/company/news-and-media/science-around-us/catalytic-converter.html

    FWC reduces emission of gaseous pollutants and particulates

    HC

    CO

    NOx

    N2

    H2O

    CO2

    Particulates

    Innovation: Four-Way Conversion Catalyst (FWC)

  • BASF Capital Market Story, August 2016 31

    150 years

    InnovationAutomotive is a growth business for BASF

    * Excl. precious metals, coatings refinish business;

    BASF sales to Automotive vs. global vehicle production(indexed)

    50%

    75%

    100%

    125%

    150%

    175%

    2007 2008 2009 2010 2011 2012 2013 2014 2015

    BASF salesto Automotive

    CAGR

    6.7%

    Global vehicleproduction

    CAGR shown for 2007 2015

    CAGR

    2.8%

  • BASF Capital Market Story, August 2016 32

    150 years

    Innovation: Green SenseConcrete for sustainable construction

    BASFs Green Sense Concrete system consists of:

    1) Innovative admixture products

    2) Concrete mix services

    3) Eco-efficiency analysis

    Replaces up to 70% of cement with recycled materials

    Superior eco-efficiency

    Applied in the construction of landmark projects, e.g. One World Trade Center, NYC

    Envi

    ronm

    enta

    l Im

    pact

    ReferenceConcrete

    High Low

    Low

    Total Cost of Ownership

    Hig

    h

  • BASF Capital Market Story, August 2016 33

    150 years

    Innovation: Trilon MChelating agent for more sustainable detergents and cleaners

    Trilon M alternative to phosphate for automatic dish washing High sustainability performance: bio-degradable and

    eco-friendly Fast growing global market demand driven by

    regulatory changes and consumer demand 2010: Capacity expansion to 120,000 tons 2015: Startup of a new Trilon M world-scale plant in

    Theodore, Alabama

    Compared with alternative chelating agents Trilon M Is readily bio-degradable Meets eco-label requirements Has better eco-toxicology profile Shows high performance

  • BASF Capital Market Story, August 2016 34

    150 years

    BASF Crop ProtectionEngagement in digital agronomic decision support

    BASF invests in digital farming tools for improved decision support on the farm To focus on connecting data, technology and

    people To improve productivity and sustainability

    First tools are launched Maglis: New agricultural platform; offering a range

    of practical and intuitive tools for gathering, interpreting and monitoring of crop management information

    Tools: Maglis Crop Plan; Maglis Customer Navigator; Maglis Sustainability Assessment*

  • BASF Capital Market Story, August 2016 35

    150 years

    2.2% 0.2%

    Novel methodology to screen and steer our portfolio*

    26.6% Accelerators: outgrow their markets

    by 2-10% deliver margins >10%

    above the average represent >60% of BASFs

    R&D pipeline 71% Performers

  • BASF Capital Market Story, August 2016 36

    150 years

    0

    1,000

    2,000

    3,000

    4,000

    2015 2018

    Annual earnings contribution(in million )

    Targeted annual earnings contribution of 1 billion from end of 2018 on

    Optimization of processes and structures in all regions, e.g. manufacturing incremental capacities productivity increase

    Project timeline: 20162018

    DrivE program

    Strategic lever: Operational excellenceDrivE with ~1 billion earnings contribution

    NEXT 2008-2011 DrivE 2016-2018

    STEP 2012-2015

    Diagramm1

    2015100013002015

    2018100013001000

    Sheet1!#REF!

    NEXT

    STEP

    NewPro

    Sheet1

    201420152018

    NEXT100010001000

    STEP100013001300

    NewPro1000

  • BASF Capital Market Story, August 2016 37

    150 years

    Profitability of BASF will grow faster than global chemical production

    Sales growthSlightly faster than the global chemical production

    EBITDA growthWell above global chemical production

    Remain a strong cash providerContinuously generate high levels of free cash flow

    Financial targets for the coming years

    Deliver attractive returnsEarn a significant premium on cost of capital

    Progressive dividend policy We want to grow or at least maintain our dividend

  • BASF Capital Market Story, August 2016 38

    Business development

    Path forward: Our priorities

    Appendix Q2 2016 reporting

  • BASF Capital Market Story, August 2016 39

    150 years

    ChemicalsHigher volumes, but continuing margin pressure

    Intermediates680(8%)

    Monomers1,371(13%)

    Petrochemicals1,322(20%)

    3,373(15%)

    EBIT before special items million

    548633

    249

    465 467

    0

    200

    400

    600

    800

    Q2 Q3 Q4 Q1 Q2

    Sales development Volumes Prices Portfolio Currencies

    Q2 2016 vs. Q2 2015 4% (17%) 0% (2%)

    20162015

    Sales Q2 2016 vs. Q2 2015million

    Diagramm1

    548

    633

    249

    465

    467

    EBIT bSI

    Sheet1

    Q2Q3Q4Q1Q2

    EBIT bSI548633249465467

  • BASF Capital Market Story, August 2016 40

    150 years

    Performance Chemicals958(10%)

    CareChemicals

    1,178(3%)

    3,846(6%)Nutrition

    & Health497(11%)

    Dispersions& Pigments

    1,213(3%)

    304 319

    228

    547503

    0

    200

    400

    600

    Q2 Q3 Q4 Q1 Q2

    Sales development Volumes Prices Portfolio Currencies

    Q2 2016 vs. Q2 2015 2% (3%) (3%) (2%)

    EBIT before special items million

    20162015

    Sales Q2 2016 vs. Q2 2015million

    Performance ProductsSignificant increase in earnings driven by lower fixed costs, improved margins and higher volumes

    Diagramm1

    304

    319

    228

    547

    503

    EBIT bSI

    Sheet1

    Q2Q3Q4Q1Q2

    EBIT bSI304319228547503

  • BASF Capital Market Story, August 2016 41

    150 years

    Functional Materials & SolutionsConsiderable earnings increase supported by all divisions

    Catalysts1,508 (11%)

    Coatings800(2%)

    4,703(4%)

    Performance Materials1,766(1%)

    458

    371 389456

    535

    0

    200

    400

    600

    Q2 Q3 Q4 Q1 Q2

    ConstructionChemicals

    629+1%

    EBIT before special items million

    Sales development Volumes Prices Portfolio Currencies

    Q2 2016 vs. Q2 2015 5% (6%) 0% (3%)

    20162015

    Sales Q2 2016 vs. Q2 2015million

    Diagramm1

    458

    371

    389

    456

    535

    EBIT bSI

    Sheet1

    Q2Q3Q4Q1Q2

    EBIT bSI458371389456535

  • BASF Capital Market Story, August 2016 42

    150 years

    Agricultural SolutionsDecrease in sales and earnings due to lower volumes and currency headwinds

    1,678 1,459

    3,576 3,239

    0

    1,000

    2,000

    3,000

    4,000

    Q2 2015 Q2 2016 H1 2015 H1 2016

    (9%)

    365 320

    939 911

    0

    200

    400

    600

    800

    1,000

    Q2 2015 Q2 2016 H1 2015 H1 2016

    (12%)

    Sales Q2 2016 vs. Q2 2015/H1 2016 vs. H1 2015million

    EBIT before special items Q2 2016 vs. Q2 2015/H1 2016 vs. H1 2015million

    (13%)

    Sales development Volumes Prices Portfolio Currencies

    Q2 2016 vs. Q2 2015 (8%) 1% 0% (6%)

    (3%)

  • BASF Capital Market Story, August 2016 43

    150 years

    Oil & GasSignificantly lower sales and earnings

    Natural Gas Trading

    Exploration & Production

    Net income

    Sales development Volumes Prices/Currencies Portfolio

    Q2 2016 vs. Q2 2015 2% (3%) (82%)

    143

    288

    94250

    1000

    200

    400

    600

    Q2 2015 Q2 2015 Q2 2016 Q2 2016

    EBIT before special items, net income million

    Sales Q2 2016 vs. Q2 2015million

    431

    2,964

    617

    704

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    Q2 Q220162015

    Salesmillion

    (83%)

    3,668

    704

    Natural Gas Trading

    Exploration & Production

  • BASF Capital Market Story, August 2016 44

    150 years

    Review of Other

    million Q2 2016 Q2 2015

    Sales 485 757

    EBIT before special items (212) (63)

    Thereof Corporate research costs (88) (102)Costs of corporate headquarters (56) (64)Foreign currency results, hedging andother measurement effects (116) 151

    Other businesses 33 30Special items 65 (20)

    EBIT (147) (83)

  • BASF Capital Market Story, August 2016 45

    150 years

    Cash flow in 1st half 2016

    million H1 2016 H1 2015

    Cash provided by operating activities 3,339 5,143Thereof changes in net working capital (1,045) 877

    miscellaneous items (122) (32)Cash used in investing activities (1,988) (3,331)Thereof payments related to tangible/intangible assets (1,979) (2,845)

    acquisitions/divestitures 51 (15)

    Cash used in financing activities (1,814) (1,033)

    Thereof changes in financial liabilities 944 1,723dividends (2,768) (2,803)

  • BASF Capital Market Story, August 2016 46

    150 years

    Strong balance sheet

    Total assets increased by 1.3 billion on higher trade accounts receivable and deferred taxes

    Inventories were stable at 9.7 billion

    Provisions for pension obligations increased by 3.3 billion

    Net debt at 14.1 billion Equity ratio: 40%

    24.1 27.3

    15.215.9

    31.529.0

    Dec 31,2015

    June 30,2016

    2.2 1.83.1 3.6

    9.5 10.6

    9.7 9.7

    46.3 46.5

    Dec 31,2015

    June 30,2016

    Liquid funds

    Accountsreceivable

    Long-termassets

    Inventories

    Other assets

    70.8 72.2 70.8 72.2

    Otherliabilities

    Financialdebt

    Equity

    Balance sheet June 30, 2016 vs. December 31, 2015 billion

  • BASF Capital Market Story, August 2016 47

    150 years

    Slide Number 1Cautionary note regarding forward-looking statements We create chemistry for a sustainable futureBASF today a well-balanced portfolioTotal sales 2015: 70.4 billionVerbund: Unique competitive advantageQ2 2016: Financial figures for BASF GroupFree cash flow developmentSlide Number 8Slide Number 9Components of growthPortfolio development towards more market-driven and innovative businessesSteady earnings growthStrong track record in operational excellence Slide Number 14Slide Number 15Slide Number 16The path forward: Our prioritiesManaging volatility: BASF almost perfectly hedged on hydrocarbon price changesChemicals with stable profitability, little correlation to oil priceStrategic lever: Continuous portfolio development Strategic lever: Acquisitions BASF to acquire Chemetall Transaction highlightsChemetall a global leader in surface treatment products and servicesChemetall complements BASFs portfolio, adding highly attractive surface treatmentChemetall an excellent strategic fit for BASF CoatingsStrategic lever:Capital expendituresInvestments for organic growthStrategic lever: Innovations Slide Number 29Slide Number 30Innovation Automotive is a growth business for BASF Innovation: Green Sense Concrete for sustainable constructionInnovation: Trilon MChelating agent for more sustainable detergents and cleanersBASF Crop ProtectionEngagement in digital agronomic decision supportStrategic lever: Sustainability Sustainable Solution SteeringStrategic lever: Operational excellenceDrivE with ~1 billion earnings contributionProfitability of BASF will grow faster than global chemical productionSlide Number 38ChemicalsHigher volumes, but continuing margin pressureSlide Number 40Functional Materials & SolutionsConsiderable earnings increase supported by all divisionsAgricultural SolutionsDecrease in sales and earnings due to lower volumes and currency headwindsSlide Number 43Review of Other Cash flow in 1st half 2016Strong balance sheetSlide Number 47