BASF Corporate Strategy ... 10. November 2018 | BASF Capital Market Story. 15% 2% 14%. 16% 49% 4%....

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Transcript of BASF Corporate Strategy ... 10. November 2018 | BASF Capital Market Story. 15% 2% 14%. 16% 49% 4%....

  • BASF Corporate Strategy Dr. Hans-Ulrich Engel, Chief Financial Officer Premium Review Conference 2018, Paris November 28, 2018

  • 2 November 2018 | BASF Capital Market Story

    Cautionary note regarding forward-looking statements

    This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in the Opportunities and Risks Report from page 111 to 118 of the BASF Report 2017. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.

  • 3 November 2018 | BASF Capital Market Story

    Agenda

    At a glance1

    Corporate Strategy2

    Segments3

  • 4 November 2018 | BASF Capital Market Story * Excluding Oil & Gas ** With normalized margins for isocyanates in 2017

    EBITDA before special items* EBIT before special items*

    7.1 7.6 8.0

    8.1 8.7

    10.6

    8.0

    4.8 5.2 5.6 5.4

    5.8

    7.5

    5.7

    0

    2

    4

    6

    8

    10

    12

    2012 2013 2014 2015 2016 2017 Q1-Q3 2018

    EBIT before special items* and EBITDA before special items* billion €, 2012–2017

    Proven ability to achieve earnings growth above global chemical production of 3.7% per year

  • 5 November 2018 | BASF Capital Market Story

    Strong free cash flow development

    Cash flows from operating activities and free cash flow billion €, 2012–2017

    * Excluding Oil & Gas

    Free cash flow* Capital expenditures*

    4.7

    5.8

    4.6

    7.7

    6.5 7.1

    5.1

    1.8 2.2

    0.8

    3.6 3.4

    4.0

    3.1

    0

    2

    4

    6

    8

    10

    2012 2013 2014 2015 2016 2017 Q1-Q3 2018

    Cash flows from operating activities*

  • 6 November 2018 | BASF Capital Market Story

    Return on capital employed well above cost of capital

    Cost of capital rateROCE*

    Return on capital employed %, 2012–2017

    ROCE* 12.5% 12.3% 13.2% 12.3% 13.8% 15.4%

    0%

    5%

    10%

    15%

    2012 2013 2014 2015 2016 2017

    * ROCE: EBIT generated by the operating divisions as a percentage of the average cost of capital basis, excluding Oil & Gas

  • 7 November 2018 | BASF Capital Market Story

    Today’s challenge

    BASF’s business grows below global chemical production

    90

    100

    110

    120

    130

    2012 2013 2014 2015 2016 2017

    BASF organic volume growth 2.3%

    Global chemical production 3.7%

    Volume growth* indexed (2012 = 100); CAGR 2012–2017

    * Excluding Oil & Gas

  • 8 November 2018 | BASF Capital Market Story

    Global trends provide opportunities for growth in the chemical industry

    0%

    5%

    10%

    15%

    20%

    25%

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    2015 2050

    Climate change: Strong reduction of GHG emissions necessary to achieve 2°C global warming target

    Demographic change: Rising number of seniors

    Digitalization is surging

    0 10 20 30 40 50

    2016 2050

    Electromobility drives demand for battery materials

    billion people 60+ share of population gigatons CO22.5

    2.0

    1.5

    1.0

    0.5

    0.0

    0

    10

    20

    30

    40

    50

    2010 2012 2014 2016 2018 2020

    people 60+

    share of population+130%

    0

    200

    400

    600

    800

    1,000

    2017 2025

    > +300%

    cathode active materials demand, kilotons

    -70%

    digital universe, zettabytes Population growth billion people

    0

    2

    4

    6

    8

    10

    2015 2050

    +32%

    Chemical growth 2017–2030 coming mainly from Asia Pacific

    64% China

    2% South America

    10% North America

    5% Middle East, Africa

    7% Europe

    13% Rest of Asia Pacific

    Sources: UN, IEA, UBS foresight, BASF

    share of absolute growth

  • 9 November 2018 | BASF Capital Market Story

    Rising incomes, demand for innovative solutions and digitalization are the main growth drivers for BASF in the future

    Emerging markets  Population growth  Rising incomes  Expanding middle

    class

    Advanced markets  Differentiated

    consumer needs  Aging populations  Focus on sustainability Growth industries

     Nutrition  Beauty and care  Additives  Digitalization  Electromobility  Materials and surface

    enhancement  Chemicals

  • 10 November 2018 | BASF Capital Market Story

    15%

    2%

    14%

    16%

    49%

    4%

    Real chemical production excluding pharmaceuticals billion US$

    China is the major growth driver for global chemical production

    Global GDP CAGR: +2.9%

    China

    Rest of Asia Pacific

    Middle East, Africa

    Europe

    South America

    North America

    CAGR* +3.1%

    China CAGR +4%

    Rest of Asia Pacific CAGR +2%

    Middle East, Africa CAGR +3%

    Europe CAGR +1%

    South America CAGR +2%

    North America CAGR +2%

    2030: ~5,700

    18%

    3%

    16%

    17%

    41%

    5%

    2017: ~3,800

    Source: BASF * Real chemical production excluding pharmaceuticals

  • 11 November 2018 | BASF Capital Market Story

    Global market access through regional presence

    Kuantan

    Hong Kong Nanjing

    Freeport

    Florham Park

    Geismar

    Ludwigshafen Antwerp

    São Paulo

    Regional centers Selected sites Verbund sites Selected research and development sites

    Asia Pacific

    South America, Africa, Middle East

    North America Sales €15,357 million EBIT €1,236 million Employees 18,295

    Sales €14,343 million EBIT €2,209 million Employees 18,256

    Sales €5,016 million EBIT €52 million Employees 7,286

    2017 restated figures: Sales by location of customer; EBIT by location of company

    Europe Sales €26,507 million EBIT €4,090 million Employees 71,653

    .

  • 12 November 2018 | BASF Capital Market Story

    What will we do differently?

    Sharpen our portfolio and strengthen the Verbund

    Intensify customer focus to accelerate growth

    Focus capital allocation on organic growth

    Drive growth particularly in largest market China

    Set the tone with CO2-neutral growth

    Transform our organization to be more agile and customer-focused

  • 13 November 2018 | BASF Capital Market Story

    Innovation – with impact

    Sustainability – live our purpose

    Operations – be the leader

    Digitalization – leverage across the company

    Portfolio – businesses with customer relevance

    People – drive high performance

    Focusing our strengths to drive customer success

    Our customers will have a

    new experience with BASF

  • 14 November 2018 | BASF Capital Market Story

    New segment structure strengthens performance- and market-orientation and provides more transparency

    Surface Technologies*

    Chemicals

    Materials

    Nutrition & Care

    Agricultural Solutions

    Industrial Solutions

    Other Verbund

    Petrochemicals, Intermediates

    Performance Materials, Monomers

    Catalysts, Coatings

    Care Chemicals, Nutrition & Health

    Agricultural Solutions

    Oil & Gas, Construction Chemicals*

    Dispersions & Pigments, Performance Chemicals

    * Target picture, until signing of a transaction agreement, Construction Chemicals will be reported under Surface Technologies

  • 15 November 2018 | BASF Capital Market Story

    Each new segment has a clear and compelling path forward

    * Percentage of EBITDA before special items in 2017; Other: minus €0.4 billion ** Target picture, until signing of a transaction agreement, Construction Chemicals will be reported under Surface Technologies

    Chemicals Materials Industrial Solutions

    Surface Technologies**

    Nutrition & Care

    Agricultural Solutions

    Share* 25% 35% 12% 10% 9% 12%

    Core theme Verbund Advanced materials Additives platform

    Surface modification platform

    Consumer ingredients

    Integrated offering of seeds, crop protection, digital

    Innovation focus Improved or new processes Applications, biomaterials Formulations

    Battery materials, surface effects

    Biotechnology, formulations

    Crop protection, seeds, digital farming

    Capex relevance

    M&A relevance

    Sustainability ChemCycling Bio-based materials More from less

    Low-emission mobility

    Bio-based and natural, traceability

    Better with le