BASF Capital Market Story · BASF Capital Market Story, November 2016. 2. 150 years. Cautionary...

BASF Capital Market Story, November 2016 1

BASF Capital Market Story

Ingo RoseDirector Investor Relations

BNY Mellon & Jefferies 2nd Annual Global ADR Conference

New York

November 28-29, 2016


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.


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

~€73.6 billion market capitalization on October 27, 2016

PerspectiveLudwigshafen,Germany

Antwerp,Belgium

Nanjing,China

Kuantan,MalaysiaGeismar,

LouisianaFreeport,Texas

Verbund site

Positioning

We create chemistry for a sustainable future

Performance


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


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* and supports sustainability


150 years

Q3 2016: Financial figures for BASF Group

Financial figures Q3 2016 Q3 2015 Change

Sales €14.0 billion €17.4 billion (20%)

EBITDA €2.4 billion €2.9 billion (15%)

EBIT before special items €1.5 billion €1.6 billion (5%)

EBIT €1.5 billion €1.9 billion (22%)

Net income €0.9 billion €1.2 billion (27%)

Reported EPS €0.97 €1.31 (26%)

Adjusted EPS €1.10 €1.07 +3%

Operating cash flow €2.5 billion €3.4 billion (25%)

Sales development Volumes Prices Portfolio Currencies

Q3 2016 vs. Q3 2015 4% (5%) (18%) (1%)


150 years

0

1

2

3

4

5

2007 2008 2009** 2010 2011 2012 2013 2014 2015 Q1-Q32016

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

2.9

Diagramm1

2007

2008

2009**

2010

2011

2012

2013

2014

2015

Q1-Q3 2016

Free Cash Flow

3.245

2.502

3.186

3.912

3.695

2.587

3.21

1.7

3.6

2.9

Sheet1

200720082009**201020112012201320142015Q1-Q3 2016

Free Cash Flow3.2452.5023.1863.9123.6952.5873.2101.73.62.9


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*: +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $45 per barrel (previous forecast: $40 per barrel)

* Excluding pharma

9

Business development

Path forward: Our priorities

Appendix – Q3 2016 reporting


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


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)

3.74.7 4.6

7.0 7.2

8.48.9

7.7

6.5

9.9

11.2

10.010.4

11.0 10.6

8.0

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1-Q32016

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

5.0

CAGREBITDA

7.9%CAGREBIT

16.6%


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: 2016–2018

DrivE program

Strategic lever: Operational excellenceDrivE with ~€1 billion earnings contribution

NEXT 2008-2011 DrivE 2016-2018

STEP 2012-2015

Diagramm1

2015201520152015

2018201820182018

Sheet1!#REF!

NEXT

STEP

NewPro

1000

1300

1000

1300

1000

Sheet1

201420152018

NEXT100010001000

STEP100013001300

NewPro1000


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* 2001–2015(indexed; CAGR 2001–2015)

Fixed Costs

CAGREBITDA

9%

CAGRSales

6%

CAGRFixed Costs3%


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 year’s 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


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 yearsNovember 2011 – October 2016

+12.5%

+8.3%

+11.7%

+9.9%

Last 10 yearsNovember 2006 – October 2016

BASF

+6.9%

+0.4%

+13.1%

Delivering consistent, long-term value

Diagramm1

MSCI World

DAX

Euro Stoxx

BASF

Ost

9.1%

12.0%

8.1%

6.9

5.5

0.4

13.1

Sheet1

MSCI WorldDAXEuro StoxxBASF

Ost6.95.500.413.1

16





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


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


150 years

Hyundai Motor and BASF showcase joint development of RN30 concept car

Body coating: Color Pro IC waterborne basecoat and iGloss® clearcoat

Fender and spoiler: Elastolit® rigid foam and reaction injection molding systems

Seat cover and steering wheel: unique surface technology valure™

Electronics and electric: Ultramid® advanced plastics for sophisticated components


150 years

Automotive 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

CAGR6.7%

Global vehicleproduction

CAGR shown for 2007 – 2015

CAGR

2.8%


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


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 salesin businesses with

limited fit and differentiation

potential

Portfolio development towards more market-driven and innovative businesses

* Closing expected in 2016


150 years

Provide a return on investment above the WACC

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


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 BASF’s

R&D pipeline 71% Performers


150 years

Four-Way Conversion Catalyst removes particulates

Trilon M® high-performance phosphate alternative

SLENTITE® high-performance insulation material

ecovio® biodegradable polymer solution

Green Sense® resource efficient concrete production

Solutions for a sustainable future

Acronal® MB – from biomass to dispersions


150 years

Sustainability goalsOverview

Procurement Goal 2020 2015

Sustainability performanceassessment of relevant suppliers 70% 31%

Employees Goal 2021 2015

Women in leadership positions 22-24% 19.5%

Long-term goal 2015

Non-German senior executives 35.6%

Senior executives with international experience >80% 82.9%

Production Goal 2025 2015Process safety incidents1) ≤0.5 2.1

Lost-time injury rate1) ≤0.5 1.4

Annual goal 2015

Health Performance Index >0.9 0.97

Product stewardship Goal 2020 2015

Risk assessment of products2) >99% 67.8%

Energy & climate protection Goal 2020 2015

Greenhouse gas emissions3) −40% −34.6%

Introduction of ISO 50001 energy management system4) 90% 39.5%

Water Goal 2025 2015

Sustainable water management at Verbund sites and water stress areas 100% 36.2%

Products & Solutions Goal 2020 2015

Proportion of “Accelerators”5) in product portfolio 28% 26.6%

1) per one million working hours2) for products >1 metric ton per year 3) per metric ton of sales products; excl. Oil & Gas, baseline 20024) at all relevant sites (primary energy demand, local energy prices)5) products with substantial contribution to sustainability


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

28





150 years

ChemicalsHigher volumes, but margin pressure in Petrochemicals and Intermediates

Intermediates662(6%)

Monomers1,405(8%)

Petrochemicals1,310(7%)

€3,377(7%)

EBIT before special items million €

633

249

465 467 497

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3


Q3 2016 vs. Q3 2015 5% (12%) 0% 0%

20162015

Sales Q3 2016 vs. Q3 2015million €

Diagramm1

Q3

Q4

Q1

Q2

Q3

EBIT bSI

633

249

465

467

497

Sheet1

Q3Q4Q1Q2Q3

EBIT bSI633249465467497


150 years

Performance Chemicals945(6%)

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

CareChemicals

1,175(4%)

€3,771(3%)Nutrition

& Health504+2%

Dispersions& Pigments

1,147(2%)


Q3 2016 vs. Q3 2015 2% (3%) (2%) 0%



20162015

319228

547503 464

0

200

400

600

Q3 Q4 Q1 Q2 Q3

Diagramm1

Q3

Q4

Q1

Q2

Q3

EBIT bSI

319

228

547

503

464

Sheet1

Q3Q4Q1Q2Q3

EBIT bSI319228547503464


150 years

Functional Materials & SolutionsSignificantly higher earnings on continued good demand in automotive and construction as well as lower fixed costs

Catalysts1,552+5%

Coatings790+5%

€4,6603%

Performance Materials1,712+2%

ConstructionChemicals

606(1%)



Q3 2016 vs. Q3 2015 8% (3%) (1%) (1%)


20162015

371 389456

535497

0

200

400

600

Q3 Q4 Q1 Q2 Q3

Diagramm1

Q3

Q4

Q1

Q2

Q3

EBIT bSI

371

389

456

535

497

Sheet1

Q3Q4Q1Q2Q3

EBIT bSI371389456535497


150 years

Agricultural SolutionsSignificantly higher earnings due to improved margins andlower fixed costs


Q3 2016 vs. Q3 2015 (4%) 0% 0% 1%


2016201520162015

1,077 1,049

0

200

400

600

800

1,000

1,200

Q3 Q3

(3%)

7

97

0

25

50

75

100

125

Q3 Q3

€90million



150 years

Oil & GasConsiderably lower sales and earnings due to disposalof gas trading business as well as lower prices

Sales development Volumes Prices/Currencies Portfolio

Q3 2016 vs. Q3 2015 3% (3%) (83%)

Natural Gas Trading

Exploration & Production

Net income

79

292

194

625

330

200

400

600

Q3 2015 Q3 2015 Q3 2016 Q3 2016

EBIT before special items, net income million €


371

2,939

618

667

0

1,000

2,000

3,000

4,000

5,000

Q3 Q320162015

(83%)

3,606

667

Natural Gas Trading

Exploration & Production

* Including transportation business

* Including transportation business

**


150 years

Review of “Other”

million € Q3 2016 Q3 2015

Sales 538 685EBIT before special items (233) (98)Thereof Corporate research costs (77) (104)

Costs of corporate headquarters (54) (53)

Foreign currency results, hedging andother valuation effects (101) 22

Other businesses 15 30

Special items (23) 26

EBIT (256) (72)


150 years

Cash flow Q1 – Q3 2016

million € Q1 – Q3 2016 Q1 – Q3 2015

Cash provided by operating activities 5,840 8,494Thereof changes in net working capital (393) 2,500

miscellaneous items (172) (497)Cash used in investing activities (2,776) (4,955)Thereof payments related to tangible / intangible assets (2,915) (4,387)

acquisitions / divestitures 212 227

Cash used in financing activities (1,898) (3,504)

Thereof changes in financial liabilities 837 (649)dividends (2,753) (2,900)


150 years

Strong balance sheet

24.1 27.6

15.215.8

31.529.7

Dec 312015

Sep 302016

2.2 3.53.1 3.59.5 9.8

9.7 9.8

46.3 46.5

Dec 312015

Sep 302016

Liquid funds

Accountsreceivable

Long-termassets

Inventories

Other assets

70.8 73.1 70.8 73.1

Otherliabilities

Financialdebt

Equity

Balance sheet September 30, 2016 vs. December 31, 2015 billion €

Total assets increased by €2.3 billion, mainly due to higher liquid funds

Inventories were stable

Provisions for pensions and similar obligations increased by €3.6 billion

Net debt declined by around €600 million to €12.3 billion

Equity ratio: 41%


150 years

Slide Number 1Cautionary note regarding �forward-looking statements We create chemistry �for a sustainable futureBASF today – a well-balanced portfolio�Total sales 2015: €70.4 billionVerbund: Unique competitive advantageQ3 2016: Financial figures for BASF GroupFree cash flow developmentSlide Number 8Slide Number 9Components of growth�Steady earnings growthStrategic lever: Operational excellence�DrivE with ~€1 billion earnings contributionStrong track record in operational excellence Slide Number 14Slide Number 15Slide Number 16The path forward: �Our prioritiesSlide Number 18Hyundai Motor and BASF showcase joint development of RN30 concept carAutomotive is a growth business for BASF Investments for organic growthPortfolio development towards more market-driven and innovative businessesStrategic lever: �Acquisitions Strategic lever: Sustainability �Sustainable Solution SteeringSolutions for a sustainable future�Sustainability goals�OverviewProfitability of BASF will grow faster than global chemical productionSlide Number 28Chemicals�Higher volumes, but margin pressure in Petrochemicals and IntermediatesPerformance Products�Significant increase in earnings driven by higher volumes, improved margins and lower fixed costs Functional Materials & Solutions�Significantly higher earnings on continued good demand in automotive and construction as well as lower fixed costsAgricultural Solutions�Significantly higher earnings due to improved margins and�lower fixed costsSlide Number 33Review of “Other” Cash flow Q1 – Q3 2016�Strong balance sheetSlide Number 37

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