BASF posts strong results...BASF Capital Market Story September 2011 1 BASF posts strong results...
Transcript of BASF posts strong results...BASF Capital Market Story September 2011 1 BASF posts strong results...
1BASF Capital Market Story September 2011 1
BASF posts strong results
Markus Zeise
Director, Investor Relations
New York,
September 14, 2011
2BASF Capital Market Story September 2011
1 | Business review
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
3BASF Capital Market Story September 2011 3
Sales €18.5 billion +14%EBITDA €3.0 billion +5%EBITDA margin 16.3% 17.7%EBIT before special items (bSI) €2.2 billion +1%EBIT bSI adjusted for non-comp. oil taxes €2.2 billion +12%EBIT €2.2 billion +7%Net income €1.5 billion +23%EPS €1.59 +23% Adjusted EPS €1.75 +17%
Business performance
Q2’11
vs. Q2’10
BASF posts strong results Second quarter 2011 highlights
Robust sales and earnings growth in the chemicals business with volumes up 5%Excellent performance of the acquired former Cognis businessEarnings in Agricultural Solutions increased despite adverse weather conditionsSales growth in Oil & Gas was price driven. Net income rose by 74%
4BASF Capital Market Story September 2011
Strong segment performance in 1H 2011
Segment€
million
Sales Δ1H 2010
EBITDA EBITDA
margin
EBIT before SI
Δ1H 2010
Chemicals 6,668 +20% 1,773 26.6% 1,439 +25%
Plastics 5,616 +17% 980 17.5% 776 +24%
Performance Products 8,077 +34% 1,335 16.5% 1,067 +20%
Functional Solutions 5,584 +23% 496 8.9% 309 +12%
Agricultural Solutions 2,435 +3% 757 31.1% 674 +5%
Oil & Gas 5,916 +6% 1,310 22.1%* 1,076 (6%)
* Excluding non-compensable oil taxes: 17.4%
5BASF Capital Market Story September 2011 5
Important milestones in Q2 2011
Styrolution
Joint venture of BASF and INEOS to form the global market leader in styrenicsJoint venture contract signedFTC and EU antitrust approval receivedClosing subject to remaining approvals from antitrust authorities in other countries Closing of joint venture expected in Q4 2011
New TDI plant in Europe
TDI is a key component for polyurethane foams with growth rates above GDPBASF to expand its leading position in TDI with a new 300kt/a plant in Europe The world‘s largest single-train TDI plantSuperior technology and unique Verbund concept provide industry leading cost structureStart-up of production in 2014
6BASF Capital Market Story September 2011
*
Cash provided by operating activities less capex
(in 2005 before CTA)** 2009 adjusted for re-classification of settlement payments for currency
derivatives
Continuous strong cash flow
Cash Flow (billion €)
Cash provided by operating activitiesFree cash flow*
-1
0
1
2
3
4
5
6
7
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
3.0
1.8
**
H1
7BASF Capital Market Story September 2011
Average annual dividend increase of 14.5%(2001-2010)
Dividend yield above 3% in any given year since 2001
Attractive dividend yield of 3.7% in 2010*
3.9%
Key factsDividend per share (€)
2.20
0.65 0.70 0.700.85
1.00
1.50
1.95 1.951.70
0.0
0.5
1.0
1.5
2.0
2.5
2001 2004 2007 2010
0.50
1.00
1.50
2.00
3.1%
* Dividend yield based on share price at year-end
3.2% 3.1% 4.1% 3.8% 7.0%Yield* 3.7%
2.50
3.1% 3.9%
Attractive shareholder returns Record dividend
8BASF Capital Market Story September 2011
Delivering consistent, long-term value
Long-term performance September 2001 –
August 2011 (average annual performance with dividends reinvested)
+12.3%
-2.1%
+7.6%
-3 0 3 6 9 12 15
BASF
Euro Stoxx
50
DAX 30
MSCI World Chemicals
+1.1%
9BASF Capital Market Story September 2011
1 | Business review
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
10BASF Capital Market Story September 2011
Vertical and horizontal integration of production plants, energy and waste flows, logistics and site infrastructure
Know-how Verbund
Energy Verbund and combined heat and power plants lead to-
Savings of ∼2.6 million tons oil equivalent p.a.
-
Reduction of CO2
-emissions of ~6 million tons p.a.
10
Unique ‘Verbund’
concept Cost savings of >€500 million p.a. in Ludwigshafen alone
BASF site Ludwigshafen, Germany Verbund Concept
11BASF Capital Market Story September 2011
Fixed costs represent around 30% of total costs
Only slightly higher fixed costs, despite major acquisitions(Engelhard, Degussa Construction Chemicals, Ciba and Cognis)
Ciba and Cognis synergies as well as NEXT program will drive fixed costs down–
Cost synergies Ciba:>€450 million by 2012
–
Cost synergies Cognis:
€140 million by 2013
Stringent fixed cost management
Key facts
Fixed costs indexed EBITDA indexedSales indexed
BASF Group development 2001-2010
50
100
150
200
250
300
2001 2004 2007 2010
Index
~170%
~100%
~20%
Δ
12BASF Capital Market Story September 2011
> 500 individual projects to simplify processes, structures and production sites in all regions
Project timeline:2008-2011
Annual earnings contribution of €600 million in 2010 achieved
Targeted earnings contribution by 2012: ≥€1 billion
Completed restructuring programs
New efficiency program NEXT
Sustainable improvement of cost base Efficiency program NEXT on track
New
EXcellence
Targets
(NEXT)Annual earnings contribution (million €)
0
500
1,000
1,500
2,000
2,500
2003 2005 2007 2009 2012
13BASF Capital Market Story September 2011
1 | Business review
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
14BASF Capital Market Story September 2011
Leading positions in growth industries
and emerging markets
Ongoing portfolio
optimization
Excellent innovation platform
We strive to outperform global chemical production growth by at least 2 percentage points p.a.
Well positioned for profitable growth
Continue expansion in emerging markets, especially AsiaTranslate megatrends into business growth
Continue with active portfolio managementDrive portfolio closer to end customer
Product and system innovation as growth driversMegatrend innovations for long-term growth
Growth target:
15BASF Capital Market Story September 2011
Leading positions in growth industries and
emerging markets
15
16BASF Capital Market Story September 2011
Emerging markets Significant sales growth in emerging markets
Sales 2010 in emerging markets: €14.5 billion (27%)
Investments in emerging markets 2005-2010:€3 billion
Ongoing increase of - sales force- regional R&D
Emerging markets definition, according to Dow Jones:35 countries *
* Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Latvia, Kuwait, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, Sri Lanka, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates
Emerging MarketsNet sales in billion €BASF Group (w/o Oil & Gas)
0
10
20
30
40
50
60
2005 2010
CAGR 7%22%
27%CAGR 13%
Emerging Markets (Dow Jones definition)
Developed Markets
17BASF Capital Market Story September 2011
Emerging markets Recently announced major projects
MDI plant Chongqing, China Expansion Verbund site Nanjing*
Expansion Verbund site Kuantan*
Acrylic acid complex, Brazil Expanding gas production, Russia* 15% Stake in South Stream** Memoranda of Understanding signed
18BASF Capital Market Story September 2011
6.5
12.5
20
0
5
10
15
20
2005 2010* 2020
BASF’s profitable growth path in Asia Pacific
Sales by location of customers (in billion €)
* Excluding Cognis
+14% p.a.
Achievements 2005-2010
Sales growth +14% p.a.(vs. Asian market growth +10.5% p.a.)Record EBITDA of €1.7 billion in 2010, resulting in an EBITDA margin of 14%
Target 2011-2020
Well on track to double sales by 2020(based on sales of €9 billion in 2008)Outgrowing Asian Pacific chemical market by 2 percentage points p.a. through
–
Innovations out of Asia–
Investments 2011-2015: €2.3 billion–
Generating 70% of sales based on local manufacturing
–
Strengthening market focus through industry and customer target groups
19BASF Capital Market Story September 2011
Ongoing portfolio optimization
19
20BASF Capital Market Story September 2011
BASFcore
businesses
Powerful partnerships
Major acquisitions Major divestitures
Pharmaceuticals
Fibers
Printing systems
Polyolefins (Basell)
Polystyrene North America
Agchem generics
Premix
Crop protectionOil & Gas (Revus)Engineering Plastics Electronic ChemicalsCustom synthesisCatalysts (Engelhard)Construction Chem.Water-based resinsPigments (Ciba)Plastic additives (Ciba)Care Chem. (Cognis)Nutrition & Health (Cognis)
15 billion Euro(Sales)
9 billion Euro*
(Sales)
GazpromMonsantoPetronasShellSinopecTotal
* Not including
styrenics and fertilizer businesses
Selected transactions 2001
to date
Styrenics (Styrolution)(JV contract signed)
Fertilizers (Sale planned)
Pro-active portfolio management
Sale of shares in K+S(Proceeds for BASF ~€1 billion)
21BASF Capital Market Story September 2011
Cognis –
integration objectives
TargetsAchieve 20% EBITDA margin in the Performance Products segment by 2012Acquisition accretive as of 2012
CostsOne-time integration costs of €290 million until end of 2013 Inventory step-up of €120 millionCosts already incurred:−
2010: €80 million (thereof €60 million inventory step-up) −
H1/2011: €210 million (thereof €60 million inventory step-up)
SynergiesGenerate €275 million of additional EBIT p.a.−
€135 million p.a. growth synergies by the end of 2015−
€140 million p.a. cost synergies by the end of 2013
22BASF Capital Market Story September 2011
BASF + Cognis Improved market positions
PreviousBASF position
FutureBASF position
Personal care ingredients 3 1Home care ingredients 1 1
Functional nutritioningredients 6 3
Coating additives 7 3Heavy-duty driveline lubricants >
10 3
Mining chemicals 3 2
23BASF Capital Market Story September 2011
Active portfolio management pays off
Chemical activities
Agricultural Solutions
Oil & Gas, including non-deductible oil taxes
EBITDA by activity (in billion €, excluding Other)
0
2
4
6
8
10
12
2001* 2004 2007** 2010
Recent acquisitions reshaped portfolio–
Closer to end customers–
Innovation-driven–
Profitable growth above industry average
BASF’s EBITDA in 2010 (excluding Other) amounted to €11.7 billion
* Based on German GAAP**
As of 2007 according to new segment structure (excl. Styrenics and corporate costs)
Our diversified portfolio is a key strength
24BASF Capital Market Story September 2011
Excellent innovation platform
24
25BASF Capital Market Story September 2011
Electromobility
Xemium®Kaurit®
Light
CypoSol®
Elastopave®
Ecovio®
Natugrain®
TS X-SEED® PCI Geofug®
26BASF Capital Market Story September 2011 26
Focus on future markets BASF intensifying R&D around electromobility
Market trendsSustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility
BASF activitiesInvestment of three-digit million euro sum over the next five years for R&D and production of battery materials•
Current investment in innovative cathode materials plant in Elyria, Ohio to start up in mid-2012
Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteriesLightweight construction solutions and heat management systems further help to reduce energy consumption
Electromobility
–
leveraging BASF’s R&D and business platforms
27BASF Capital Market Story September 2011
Further increase in R&D spending planned for 2011
Innovation will spur further growth
Total R&D expenditures 2010 (billion €)
€1.5 billion R&D expenditures in 2010 (2009: €1.4 billion)
~9,600 employees in R&D
~3,000 projects and topics
Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners
Strong commitment to R&D
Corporate Research22%
Agricultural Solutions
26%
Functional
Solutions12%
Performance
Products19%
Chemicals9%
Plastics10%
€1.5
billion
Other2%
28BASF Capital Market Story September 2011
0,0 0,00
5
10
15
20
4.53.5
Innovation pipeline worth €21 billion
* New or improved products or new applications, max. 5 years on market, including Growth Clusters
The pipeline NPV of €21 billion is a bottom-up aggregation of all R&D projects
High success rate due to stringent R&D controlling via Phasegate process
Expected Commercial Value:~50% of NPV (probability-weighted)
In 2010, sales of new products (5 years or younger) exceeded the target of €6 billion
Target 2015: up to €8 billion sales with new products
R&D contributes significantly to earnings growth
14% Performance Products7% Plastics3% Chemicals
8% Functional Solutions
46% Agricultural Solutions
2% Oil & Gas20% Corporate Research
2009 2010
€19 bn€21 bn
Net present value by segments (billion €)
29BASF Capital Market Story September 2011
1 | Business review
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
30BASF Capital Market Story September 2011 30
We aim to grow sales on average by two percentage points per year faster than chemical production growthWe strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012
We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/€ of $1.40 (from $1.35)We assume that oil production in Libya will not restart during 2011 →EBIT before special items from our Libyan oil production for the
full year 2011
will be about €1 billion lower compared with 2010
(thereof about €700 million of non-compensable oil taxes)
Assumptions
Medium-term targets
Outlook 2011
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted for non-compensable oil taxes (2010: €7.2 billion)We expect to achieve a high premium on our cost of capital
Targets 2011
as of July
28, 2011 2nd Quarter
2011 Reporting
31BASF Capital Market Story September 2011
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about 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 with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.
Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
Forward-looking statements
32BASF Capital Market Story September 2011
33BASF Capital Market Story September 2011
BackupMacro-economic
assumptions
2011
34BASF Capital Market Story September 2011
Outlook BASF Group 2011 Expectations for global economy
2010
GDP 3.9%
Chemical production (excl. Pharma)
9.4%
Industrial production 7.4%
US$ / Euro 1.33
Oil price (US$ / bbl) 79.50
Forecast
2011
3-4%
5-6%
5-6%
1.40
110
as of July
28, 2011 (2nd
Quarter
2011 Reporting)
35BASF Capital Market Story September 2011
BackupBusiness development
Q2 2011
36BASF Capital Market Story September 2011 36
Chemicals Robust sales and earnings supported by price increases
Intermediates693+7%
Inorganics351
+8%
Petrochemicals2,348+18%
€3,392+14%
687617
537
765674
0
200
400
600
800
Q2 Q3 Q4 Q1 Q2
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 2% 20% 0% (8)%
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before special items (million €)
20112010
37BASF Capital Market Story September 2011 37
Plastics Strong demand in all product lines resulted in increased earnings
Polyurethanes1,498+7%
Performance
Polymers
1,330+12%
€2,828
+9%
349 371
285
393 383
0
200
400
Q2 Q3 Q4 Q1 Q2
Sales development Period Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 4% 12% 0% (7)%
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before special items (million €)
20112010
38BASF Capital Market Story September 2011 38
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 2% 6% 27% (5)%
Performance Products Strong earnings contributions from acquired Cognis business
471
370294
554513
0
100
200
300
400
500
600
Q2 Q3 Q4 Q1 Q2
PerformanceChemicals
908+13%
Care Chemicals1,353+100%
€4,095+30%
Paper Chemicals417(5)%
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before special items (million €)
Nutrition & Health480+29%
Dispersions
& Pigments
937
+9% 20112010
39BASF Capital Market Story September 2011 39
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 12% 8% 0% (7)%
Functional Solutions Strong demand from automotive drove earnings growth
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before special items (million €)
Catalysts1,500+22%
Construction Chemicals
5770%
Coatings689
+6%
€2,766+13%
165 158
33
142167
0
50
100
150
Q2 Q3 Q4 Q1 Q220112010
40BASF Capital Market Story September 2011 40
Agricultural Solutions High global demand for agricultural products drove volume growth
320 331
0
100
200
300
400
Q2 Q2
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before special items (million €)
20112010
0200400600800
1,0001,2001,400
Q2 Q220112010
0%+3%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 6% 0% 0% (6)%
1,211 1,205
41BASF Capital Market Story September 2011 41
148257
0
200
400
600
Q2 Q2
Oil & Gas Higher oil and gas prices compensated for lower volumes
Exploration &
Production563(34)%
Natural Gas
Trading
1,898+25%
€2,461
+4%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q2’11 vs. Q2’10 (18)% 22% 0%
63
EBIT bSI
Natural Gas TradingEBIT bSI
Exploration & Production Net income
Q2’11 segment sales
(million €) vs. Q2’10 EBIT before
special
items/ Net income
(million
€)
20112010
420269
515
332
95
Non-compensable
oil
taxes
209
42BASF Capital Market Story September 2011 42
Review of “Other”
Million € Q2 2011 Q2 2010Sales 1,714 1,471thereof Styrenics 811 785*
EBIT before special items (163) (301)thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses
(87) (59)
(118)
76
(78) (55)
(198)
67
Special items 27** (106)
EBIT (136) (407)
* Since January 1, 2011, Styrenics only includes the carved-out styrenics
businesses; the previous year’s values were adjusted accordingly
** Incl. €68 million from repeal of fine imposed by the EU on Ciba in 2009
43BASF Capital Market Story September 2011 43
Operating cash flow in H1 2011
Million € H1 2011 H1 2010Cash provided by operating activities 3,038 2,721thereof Changes in net working capital (1,178) (1,355)
Cash provided by investing activities 81 (599)thereof Payments related to tangible / intangible assets (1,265) (889)
Cash used in financing activities (2,764) (2,054)thereof Changes in financial liabilities
Dividends (486)
(2,278)(292)
(1,762)
Operating cash flow at €3.0 billion despite reclassification of €887 million gain from the sale of K+S stakeFree cash flow at €1.8 billion Net debt amounted to €12.3 billion, a reduction of €1.3 billion since end of 2010
First half 2011
44BASF Capital Market Story September 2011 44
Financial highlights
Million € Q2 2011 Q2 2010 Δ% Q1 2011 Δ%Sales
changes due to - volumes - prices - portfolio - currencies
18,461 16,214 +14%
+2% +13% +5% (6)%
19,361 (5)%
EBITDA 3,015 2,867 +5% 3,365 (10)%
EBIT before
special
items 2,237 2,206 +1% 2,732 (18)%
EBIT before special items
adjusted
for
non-compensable
oil
taxes 2,237 1,997 +12% 2,452 (9)%
Special items (20) (127) - (182) -
EBIT 2,217 2,079 +7% 2,550 (13)%
Net income 1,454 1,183 +23% 2,411 (40)%
EPS (€) 1.59 1.29 +23% 2.62 (39)%
Adjusted EPS (€) 1.75 1.50 +17% 1.94 (10)%
45BASF Capital Market Story September 2011 45
Balance sheet review
Balance sheet June 30, 2011 vs. end of 2010 (billion €)
Liquid funds
Accounts
receivable
Long-term
assets
22.7
15.0
21.7
34.5
10.2
1.5
Other
liabilities
Financial
debt
Stock-
holders’
Equity
Jun 30
2011
Jun 30
2011
Dec 31
2010
Dec 31
2010
59.3
32.5
10.9
1.8
59.3
23.0
14.1
22.2
Inventories
Other assets
9.5
4.6
8.7
4.5
59.459.4
Long-term assets decreased by €2.0 billion amongst others due to the sale of shares in K+S
Inventories increased by €0.8 billion reflecting the expansion of our business and raw material inflation
Net debt decreased by €1.3 billion to €12.3 billion
Accounts receivable were up by €0.7 billion as a result of the expansion of our business
Equity ratio at 39% (up 1 percentage point)
46BASF Capital Market Story September 2011
BackupBusiness overview
2010
47BASF Capital Market Story September 2011
Excellent segment performance 2010
Segment€
million
Sales Δvs. 2009
EBITDA EBITDA
margin
EBIT before SI
Δvs. 2009
Chemicals 11,377 +51% 3,000 26.4% 2,302 +126%
Plastics 9,830 +38% 1,721 17.5% 1,284 +123%
Performance Products 12,288 +31% 2,162 17.6% 1,554 +123%
Functional Solutions 9,703 +36% 861 8.9% 467 +123%
Agricultural Solutions 4,033 +11% 938 23.3% 749 (4%)
Oil & Gas 10,791 (5%) 2,977 27.6%* 2,430 +6%
* Excluding non-compensable oil taxes: 18.5%
48BASF Capital Market Story September 2011
BackupCapital expenditures
49BASF Capital Market Story September 2011
FunctionalSolutions
6%
Other (Infrastructure, R&D)
12%
By region
Oil & Gas* 35%
Chemicals15%
Alternative sitesunder review
2%South America, Africa, Middle East4%
North America14%
Europe**63%
By segment
AgriculturalSolutions4%
Plastics14%
Asia Pacific17%
€12.6
billion
€12.6
billionPerformance
Products14%
Planned capital expenditures 2011-2015
** Thereof ~€4.4 billion for Oil & Gas* Excluding investments in Nord Stream