BASF Coatings Division: Focusing on growth and value

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BASF Investor Day Automotive September 5, 2012 Coatings

BASF’s Coatings Division: Focusing on growth and value

Markus Kamieth President Coatings Division September 05, 2012

2BASF Investor Day Automotive September 5, 2012 Coatings

Coatings – focusing on growth and value

Chemicals18%

Coatings4%

Plastics15%

Performance Products21%

Other9%

Agricultural Solutions6%

Functional Solutions15%

Oil & Gas16%

€73.5billion

BASF Group sales 2011

3BASF Investor Day Automotive September 5, 2012 Coatings Coatings

1 | BASF – a leading player in Coatings

2 | Strategic focus on automotive


Coatings – smart combination of different functional layers

Clearcoat Transparent protection

BasecoatColor, metallic effect

Primer Finish quality, stone chip resistance

E-coatCorrosion protection

Pre-treatmentBody

Steel, aluminum

Example: Automotive OEM Coating


BASF’s Coatings Division: Focused on key industries

For interior and exterior use in buildings

E-coat, primer, basecoat and clearcoat

Sealer, primer, basecoat and clearcoat

Coil coatings for steel and aluminum, coatings for wind turbine rotor blades

OEM coatings

Refinish coatings

Industrial coatings: Coil and wind energy

Decorative paints


Data source: BASF internal data

~17.0

6.6

2.2

6.9

1.3

~20.4

2.5

7.7

8.7

1.5 Decorative paints**

OEM coatings

Industrial coatings*

Refinish coatings

CAGR

5% p.a.

Coatings demand (in € billion)

4% CAGR4% CAGR

4% CAGR

6% CAGR

BASF Coatings strategic relevant market

BASF’s Coatings Division: Focused on attractive market segments

* BASF is active in coil and wind segment of the industrial coatings market ** Brazil


Balanced sales with a focus on growing markets and segmentsBy industry 2011

Refinishcoatings

22%

Industrial coatings8%

Decorative Paints23%

OEM coatings

47%

€2.8billion

North America

13%

Asia17%

South America, Africa & M.E.28%

Europe42%

By region 2011

€2.8billion

~ 45% of sales in emerging markets


Regional automotive production development by 2015 (in mio. units)

BASF manufacturing sites in 2011BASF R&D centers in 2011

North America

2011 20151 2011 2015

Europe, Africa, Middle East

23 268

3

Global presence brings customer proximity

South America

4 63

1

3

42011 2015

37

53Asia Pacific

13 173


Global player in automotive OEM and refinish coatings markets

€6.6 billion

PPG

DuPont*

Refinish coatings market in 2011

BASF in refinish coatings

BASF10%

Source: BASF internal

BASF19%

PPG

DuPont*

OEM coatings market in 2011

Globally # 2 China # 1Leader in topcoats and process solutionsSupplier to all major OEMs

BASF in OEM coatings

Others

Nippon Paint Kansai Paint

Others€6.9 billion

Globally # 3Focus on profitable premium segmentPioneer in waterborne technologyQualified by all major OEMs

*DuPont announced divestment of its Performance Coatings business to Carlyle group on August 30, 2012


Coatings – a consistent cash generator for BASF Group

EBITDA (indexed)Sales* (in € billion)


Clear levers for profitable growth

Leverage operational excellence

Enhance and broaden innovation platform

Strengthen leading positions and

expand in selected regions and segments

Consistently outperforming coatings market growth


Significant investments in emerging markets

>50% of investments until 2017 will be in Asia Pacific

2012: New Technical Center Thailand

2014: New Basecoat plant China2012: New Laboratory India

2012: New Laboratory Mexico



2 | Strategic focus on automotive

2a | OEM coatings


What makes BASF successful in Automotive OEM coatings?

Key success factors

Process innovator – BASF is the global leader in integrated processes

Product innovator – Competence in all layers: BASF is the global leader in topcoats (basecoat and clearcoat)

Partnership with customers – From design to assembly

Automotive OEMs

Automotive suppliers

Globally #2

Globally #2


Process innovator Our invention of the “Integrated process” is an industry trend

Conventional coating-process

Oven

E-coat

Oven

Primer Basecoat

Flash- off Oven

Clearcoat

Key facts

Pioneer with Daimler (1997)

BASF is the leader in integrated processes

BASF targets >30% market share by 2015

2011: JV with Henkel to develop leap-frog technology, combining pre-treatment and e-coat

Customer benefits

Reduction of capital investment

Energy savings

“Integrated process”

Oven

E-coat Innovative Basecoat

Flash- off Oven

Clearcoat


BASF Coatings – driving sustainabilityProcess and product innovations

Significant energy savings

Conventional coatings process

Integrated process

Waterbased coatings process reduces VOC by 66%

VOC* in kg/car (average)

-66%-66%

Thereof paint shop

Total energy consumption of car production

Integrated processes save up to 17% of the total energy required for car production

8.4 2.8

100%

83%-25%

-17%-17%

Conventional coatings process

Waterbased coatings process

* VOC = Volatile Organic Compounds


Product innovator We are No.1 in topcoats

43%

20%

14%

23%

Avg. usage per car (by value)

Basecoat

Clearcoat

Primer

E-coat

Topcoats (basecoat and clearcoat) are the most valuable layers on a car body

iGlossBenchmark in protection

Cathoguard 800/900Environmentally friendly

XColors Innovative color trends


Partnership with key OEM customers Close relationship from concept to market

2012: Tech Day SAIC R&D Center

IAA Frankfurt 2011: smart forvision

2012: Zhengzhou Nissan R&D Award

2010: Start-up partner for Hyundai Russia


Key facts

Market leader in China and BRIC

Pioneer in China: since 1997; new OEM coatings production planned in 2014

China growth fueled by investment in integrated processes – until 2015, >16 new OEM plants will require this technology

29% of BASF OEM coatings sales came from BRIC countries in 2011

Objective: grow our sales share from BRIC countries to >35% until 2015

Growth opportunities We are well-positioned in BRIC, particularly in China

0

10

20

30

40

50

2011 2015

BRIC production forecast (Light vehicles in million)

41

26

BrazilIndia Russia China

+11%+10%

CAGR

12% p.a.

+11%

+14%

Data source: LMCA



2 | Strategic focus on profitable growth

2b | Refinish coatings


Premium A segment makes up 60% of automotive refinish marketMarket share of segments in refinish coatings 2011 (in %)

Car age < 5 years, OEM and insurer drivenA

Car age > 10 years, owner drivenC

CBA segment segmentsegment

Car age < 5-10 years, insurer and owner drivenB


What makes BASF successful in Refinish coatings?

Key success factors

Process innovation –leader in the integrated process

Product innovation –leader in waterborne technology

Premium brands and distribution network

Automotive refinish coatings

Globally #3


Process innovator Integrated process in refinish

New BASF process

Current process

Clearcoat

Basecoat

Sealer

Primer

Substrate

Clearcoat

Basecoat

DTM sealer

Substrate

Key facts

Market launch of direct-to-metal (DTM) sealer in 2011

Market potential for refinish integrated system until 2020 is €100 million

Customer benefit

Process time saving of up to 50%

Up to 15% material consumption savings


Product innovator Leader in waterborne technology

Rising share of BASF Refinish Coatings waterborne sales

Key facts

BASF Refinish Coatings is pioneer in waterborne technology

Current roll-out of waterborne basecoat in North America

Foster introduction in BRIC Countries

In 2011 waterborne products accounted for ~30% of BASF Refinish Coatings total sales

In 2015 we expect to achieve >35% of BASF Refinish Coatings sales from waterborne products

Increasing regulations worldwide push demand for waterborne technologies

BASF Refinish Coatings waterborne products sales

BASF Refinish Coatings total sales


Premium brand primarily sold in:Australia, BRIC, Europe, South Africa

In the market since 1919

Premium brand primarily sold in:North America, Europe, Japan

In the market since 1898

Premium brands One premium brand by country


Growth opportunities Targeting new markets with value-for-money brands

Key facts

Value-for-money brand

– Provides access to new markets for BASF Refinish Coatings

– Strengthens our dealers’ market position and dealer network

– Facilitates additional sales of BASF Refinish Coatings premium brands

Market potential in selected countries is~€800 million

Target: Value-for-money brands will account for >10% of BASF Refinish Coatings sales in 2015

B brand sold in Mexico

B brand sold in Australia, China, South Africa, Turkey


BASF’s Coatings Division targets 2015

Operational targets

OEM:– Remain No. 1 in topcoats and integrated process– Grow sales share in BRIC countries by 20 percent

Refinish:– Expand leading position in waterborne technologies– Grow in B-segment, with focus on Asia


BASF’s Coatings Division targets 2015

Financial targets

Grow sales to more than 3.6 billion euros by 2015

Steadily increase operating profitability

Continue to generate a premium on cost of capital

29BASF Investor Day Automotive September 5, 2012 Coatings 29

BASF Coatings Division: Focusing on growth and value

Investor Relations

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