Agricultural Solutions – Profitable Growth with … Solutions – Profitable Growth with...
Transcript of Agricultural Solutions – Profitable Growth with … Solutions – Profitable Growth with...
Agricultural Solutions – Profitable Growth with Innovative Products
Markus HeldtPresident Crop Protection
15th Credit SuisseAg Productivity Conference
March 10, 2010
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Agricultural Solutions – a cornerstone in BASF’s portfolio
* Styrenics reported under ‘Other’
Total sales BASF Group in 2009:€50.7 billion
Chemicals
15%
Plastics*
14%
Performance Products18%
Inorganics
Petrochemicals
Intermediates
PerformanceChemicals
Dispersions &Pigments
PerformancePolymers
Polyurethanes CareChemicals
FunctionalSolutions14%
ConstructionChemicals
Coatings
Catalysts
AgriculturalSolutions7%CropProtection
Oil & Gas
22%Exploration & ProductionandNatural Gas Trading
Paper Chemicals
Why is Agricultural Solutions so important in our portfolio?
Agriculture is the only industry sector that has not been severely affected by the current economic crisis
Independent from chemical cycle
Above average contribution to BASF’s profitability
Market of high attractiveness driven by innovations
Highly promising pipeline
Cost synergies & excellent know-how transferby using Verbund advantages
Light in tangible fixed assets
Strong performing and resilient business
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Strategy: Growth through innovation
Concentration on high value markets
Strong R&D investment to safeguard sustainable high profitability:
- Continuous development of new active ingredients to strengthen our pipeline
- Focus on innovative products optimally addressing the needs of our customers
Develop innovative business models/new market segments (e.g. Plant Health, SeedSolutions®, Pest Control Solutions)
Investment in capacity expansions
Focused acquisitions to balance our portfolio (e.g. Sorex acquisition)
Growth through innovation
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Record performance in 2009Excellent growth despite challenging market conditions
OutlookResults 2009Strategy Growth segments R&D pipeline New products
million € FY 2009 FY 2008 Δ%Sales* 3,646 3,409 7
8
EBIT** 776 706 10
EBIT after cost of capital** 336 265 27
Assets (as of December 31) 4,681 4,352 8
Research and development expenses 355 325 9
Capex 175 87 102
EBITDA** 980 906
* sales change at constant exchange rates and continued portfolio in FY 2009: +4%(Volumes 0%, prices +5%, portfolio +1%, currencies +1%)
** before special items
26.926.623.2
20.1
26.927.6
21.3
0
5
10
15
20
25
30
2003 2004* 2005 2006 2007** 2008 2009
Committed to ambitious profitability target BASF remains benchmark in industry
OutlookResults 2009Strategy Growth segments R&D pipeline New productsResults 2009Strategy Growth segments R&D pipeline
*2004 onwards reporting according to IFRS-guidelines; **2007 onwards corporate cost excluded
EBITDA margin before special itemsin %
Sales (in million €) 3,176 3,354 3,298 3,079 3,137 3,409 3,646
706 776526EBIT before specialitems (in million €) 294 666 671 378
Sales by region 2009Higher prices drove sales growth
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Total sales 2009 to third parties Key facts
Europe & North America:Lower application of crop protection products based on late season start; higher pricing.Asia Pacific:Strong volume growth in emerging markets of China and India.South America, Africa, Middle East:High disease pressure resulted in high fungicide demand. Recovery of sugarcane market droveinsecticide business.
Asia Pacific378 (+11%)
Europe1,520 (+1%)
South America,Africa, Middle East
838 (+9%)
North America910 (+4%)
€3,646
In brackets growth at constant exchange rates and continued portfolio in % vs. prior year
in million €
400
700
0
200
400
600
800
2006 2009
Sales in BRIC* countries Average crop protection expenditures
Source: int. estimates, FAO; *Average UK, France, Germany, Italy, Spain
Strong sales growth in BRIC countriesGlobal demand and technification drive rapid growth
OutlookResults 2009Strategy Growth segments R&D pipeline New products
+20%
* Brazil, Russia, India, China
West Europe* / USBRIC
in million € in €/ha
0 50 100 150 200
wheat
corn
soybean
Sales by indication 2009Strong performance of fungicides
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Sales by indication
in million € Fungicides:Price increases in Europe and North America and strong demand in South America Herbicides:Lower demand for herbicides in North America offset by growth in Asia and Europe Insecticides:Positive effects from recovery of sugarcane market in Brazil and acquired business of Sorex Group in Europe and North America
Fungicides1,708 (+9%)
Herbicides1,165 (+0%)
Insecticides/Other773 (+2%)
€3,646
In brackets growth at constant exchange rates and continued portfolio in % vs. prior year
… in total profitability
2009
Top 10 active ingredientsFocus on high value innovative products
OutlookResults 2009Strategy Growth segments R&D pipeline New products
60%
70%
Share of Top 10 active ingredients
In 2009 our Top 10 active ingredients accounted for:
- 60% of total sales- 70% of total profitability
Portfolio with clear focus on high value innovative products
Young Top 10 portfolio: Average launch year 1991
Portfolio
50%
…in total sales
2009
60%
2003
2003
BASF outperforms market in highgrowth segments
*CAGR 2001-08Source: Internal source (CAGR, Profitability)
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Above average growth* segments vs. BASF profitability
Strong performance in high growth segments
Above average growth segments represent 30% of our sales in 2009
Focus on segments with above average profitability
Investment directed to successful portfolio development
Portfolio managementProfitability vs. BASF‘s Ø
profitabilityin %
BASF growthMarket growth0 50 100 150 200
Sugarcane H
Cereals F
Grapes F
Sugarcane I
Soybean F
Corn F
SeedSolutions® business
*CAGR 2003-08 Source: PMD
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Global seed treatment market 2008: €1.5bn Seed treatment at BASF
in million €
20082003
Growth rate* Protection and support of the germinating seed by pre-planting applicationsAttractive and fast growing market driven by high value GMO seed
BASF is a global player since 2003
Current market position: #3
BASF grows by leveraging Verbund technologies through innovative product offers
Product launches planned in SeedProtection, SeedVitalityand SeedTechnology
+10%
+5%
+20%
+13%
+2%
0 500 1.000 1.500
Asia
LAM
NAFTA
Europe
Global
0
50
100
150
200
250
Strong growth in SeedSolutions® segment
OutlookResults 2009Strategy Growth segments R&D pipeline New products
BASF SeedSolutions® sales 2003-2009
Since 2003 BASF has more than doubled the sales in this highly profitable market (CAGR: 17%)
New technologies and product launches will support sustainable growth in all regions
BASF seed treatment business and R&D activities focus on soybeans, corn, cereals and vegetables
Strong performancein € million
TARGET
+17%
201520092003
70
175
Fungicides Insecticides
>250
Agricultural Solutions is a strongly innovation driven business
OutlookResults 2009Strategy Growth segments R&D pipeline New products
R&D spending in 2010 planned on similar level
Total R&D expenditures 2009
Oil & Gas1%
Corporate Research
23%Agricultural
Solutions25%
PerformanceProducts20%
FunctionalSolutions12%
Chemicals9%Plastics9%
€1.4billion
Other1%
in billion €
Strong commitment to R&DCrop Protection
OutlookResults 2009Strategy Growth segments R&D pipeline New products
R&D expenditures Crop Protection Strategy
in million €
2006 2009
In 2009, intentional increase of R&D expenditures for innovative productsSafeguarding sustainable profitability by investing each year about 9-10% of sales in R&DFocus on high value products and marketsLeading position driven by innovative portfolio and continuous development of new active ingredients and formulations
+6%
0
100
200
300
400
Powerful R&D pipeline – peak sales potential increased by €100 million
* Launched: First registration in major market in 2002 (or elder than 5 years to current year), In launch: First registration in major market 1 to 5 years prior to current yearIn development: First registration in major market in current year or within next 5 years after current year
** thereof products launched and in launch reached >70% in 2009*** One of the herbicide tolerance projects is also included in the BPS pipeline communication
In development
In launch
Launched
Phase*
Field cropsTopramezone (H), F 500® seed treatment (F)
Field cropsTritosulfuron (H)
Specialty crops1 Insecticide
Specialty cropMetaflumizone (I)
Field crops, specialty cropsMetrafenone (F), Orysastrobin (F)
2005-2009
Field crops1 Herbicide (Kixor™), 2 Herbicide tolerance projects***
€700 million
Field crops, specialty crops, seed treatment2 Fungicides
2010-2015
Non-cropChlorfenapyr (I) €1,500 million**
Field crops, specialty crops F 500® (F), Boscalid (F), Dimoxystrobin (F),
2002-2004
Peak sales potential
Marketsegments
ProjectsLaunch year
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Total € 2,200 million
Kixor™– novel herbicide sets benchmark Upgraded peak sales potential
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Projected global weed control market
Highly attractive weed control market
BASF offers broad herbicide portfolio
Kixor™: highly effective against all important broadleaf weeds in key crops - important glyphosate
resistance management tool- Market launch during
growing season 2010
Peak sales potential further increased by €100 million
Key factsin billion €
will be sold in both the selective and non-selective herbicide markets
selective herbicides (conventional market)non-selective herbicides and herbicide trait fees (GMO market)
Kixor™ global peak sales potential: >€200 million
0
5
10
15
20
2007 2008 2013 2018 2020
-50
50
150
250
350
2006 2009
Fungicide Boscalid – further increase of global peak sales potential
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Sales development Boscalid
New mode of action for efficient disease control
Originally developed for specialty crop market
Now strongly growing in field crops
Boscalid is used in - >100 crops- >70 countries- >200 indications
Peak sales potential further increased by €50 million
Key facts
Global peak sales potential: >€300 million
SpecialtyCrops
+ 40%
p.a.
FieldCrops
+ 5% p.a.
100(index)
180(index)
AgCelence® – pioneering a new market segment Plant Health
OutlookResults 2009Strategy Growth segments R&D pipeline New products
® delivers incremental value through a range of benefits beyond established disease control
Better stress tolerance: high water use efficiencyBetter growth performance: e.g. higher nitrogen uptakePlant strength: seedling vigor, uniform emergence, plant vigor
Yield increase of >10%results in higher return on investmentHigh quality crops
Production efficiency:harvest efficiency, storability, processability
AgCelence® Plant health effects Benefits for the farmer
Beyond efficient disease control, treated crops show:
Standard
0
100
200
300400
500
2007 2008 2009 2010 FC
0
100
200
300
2007 2008 2009 2010 FC
AgCelence® launched globallyIncreasing R&D efforts
AgCelence® will represent agrowing share of fungicide sales in the futureF500® is the core active ingredient of our Plant Health conceptF500® total peak sales potential €700 million
AgCelence® – helping farmers around the globe
Key facts
OutlookResults 2009Strategy Growth segments R&D pipeline New products
North America: Incremental AgCelence® sales
South America: Incremental AgCelence® sales
CAGR +35%
100
250
CAGR +69%480
in %
(index)
(index)
100(index)
(index)in %
Our R&D investments are paying offStrong track-record of launching innovative products
Innovation is key to success
OutlookResults 2009Strategy Growth segments R&D pipeline New products
R&D expenses 2009: €355 million (25% of BASF’s total R&D expenditures)
Continued sales growth with innovative new active ingredients launched since 2002
Compound annual growth rate 2002-2009 at 30%
High vitality of portfolio: In 2009 sales share of active ingredients launched since 2002 amounts to 30%
0
200
400
600
800
1,000
2002 2009
Sales in million €
CAGR 30%
30%
1,000
Active ingredients launched since 2002
Share of innovative new active ingredients in total sales
6%
Agricultural Solutions – a cornerstone in BASF’s portfolio
* Styrenics reported under ‘Other’
Total sales BASF Group in 2009:€50.7 billion
Chemicals
15%
Plastics*
14%
Performance Products18%
Inorganics
Petrochemicals
Intermediates
PerformanceChemicals
Dispersions &Pigments
PerformancePolymers
Polyurethanes CareChemicals
FunctionalSolutions14%
ConstructionChemicals
Coatings
Catalysts
AgriculturalSolutions7%CropProtection
Oil & Gas
22%Exploration & ProductionandNatural Gas Trading
Paper Chemicals
Plant Biotechnology
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Future nutrition of growing world populationPlant biotechnology pipeline taps into huge market potential
* Value generated through the plant biotech trait across the respective value chain; 1 Partner CTC; 2 Partner: KWS
Development Discovery Stage I Stage II Stage III Stage IVIdentifying
genes & proof of concept
up to 6 years
Look forproof of
concept IIup to 4 years
Early product development
up to 3 years
Advancedproduct
development up to 2 years
Pre-Launch
up to 3 years
Market Value*
Superior agricultural productivity
Better andhealthier nutrition/feed
Plants as renewable raw materials
Improved amino acid
High oil
Healthier fatty acids (Omega-3&6)
Amylopectin
Herbicide tolerance
Fungal resistance
Yield & stress(corn, soybean, cotton, canola)
< $100 million
> $2 billion
< $100 million
$100-200 million
$300–500 million
Yield & stress(sugarcane1, sugar-beet2)
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Crop Protection – Outlook 2010
Key factors affecting business development in 2010:- Remaining channel inventory- Development of important currencies (USD, JPY, BRL)
- Volatility and level of soft commodity prices - Weather conditions Positive momentum from- Launch of our new blockbuster herbicide Kixor™- Volume ramp-up of F500® in the AmericasExpansion of business in emerging marketsPrudent credit management strictly in place, esp. in emerging markets (Latin America, Eastern Europe)Continued high commitment to R&D
Profitable growth targeting 25% EBITDA margin
OutlookResults 2009Strategy Growth segments R&D pipeline New products
Rising sales despite challenging market conditionsAim to maintain high earnings level