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Transcript of Daiwa Investment Conference, Hong Kong - BASF · PDF file BASF Capital Market Story, October...

  • We create chemistry for a sustainable future

    Andrea Frenzel President South and East Asia, ASEAN and ANZ

    Daiwa Investment Conference Hong Kong November 7, 2017

  • BASF Capital Market Story, October 2017 2

    Cautionary note regarding forward-looking statements

    This presentation contains forward-looking statements. These forward-looking statements are based on current estimates and projections of the Board of Executive Directors and on currently available information. These forward-looking statements are not guarantees of the future developments and results outlined therein. Rather, they depend on a number of factors, involve various risks and uncertainties, and are based on assumptions that may not prove to be accurate. Such risk factors particularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASF Report is available online at basf.com/report. BASF does not assume any obligation to update the forward-looking statements contained in this presentation.

  • BASF Capital Market Story, October 2017 3

    Agenda

    At a glance1

    Strategic levers2

    Asia Pacific3

    Segments4

  • BASF Capital Market Story, October 2017 4

     Growth above chemical industry average – driven by innovative and sustainable products and solutions

     Unique Verbund concept – competitive advantage based on integrated sites, operational excellence and best-in-class technologies

     Broad and resilient portfolio – with global market access and strong customer relationships

     Earnings growth and strong cash flow generation – based on operational and financial strength

     Long-term value creation with progressive dividend policy – grow or at least maintain dividend at the previous year’s level

    BASF shares – an attractive investment

  • BASF Capital Market Story, October 2017 5

    Chemicals – a growth industry Global annual growth rate of ~3.6%*

    …more food needed by 2050

    …more primary energy consumption by 2050

    …of the world population will live in cities by 2050

    Agriculture Health & Nutrition

    Energy & Resources

    TransportationConstruction & Housing

    Consumer Goods

    …people by 2050

    Electrical & Electronics

    Chemistry as enabler to meet current and future needs 70% 50%~10 bn 30%

    * Forecast average annual real change 2017– 2019; BASF Report 2016, p. 121

  • BASF Capital Market Story, October 2017 6

    Broad and resilient portfolio 2016: Sales of €57.6 billion; EBITDA of €10.5 billion

    Percentage of sales 2016*

    * Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion

  • BASF Capital Market Story, October 2017 7

    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

    Europe

    South America, Africa, Middle East

    North America Sales €14,042 million EBIT €1,113 million Employees 17,583

    Sales €26,039 million EBIT €3,632 million Employees 70,784

    Sales €12,165 million EBIT €1,098 million Employees 18,156

    Sales €5,304 million EBIT €432 million Employees 7,307

    2016: Sales by location of customer; EBIT by location of company

  • BASF Capital Market Story, October 2017 8

    Verbund – unique competitive advantage Actively managed in line with market requirements

     Annual cost savings of more than €1 billion through integrated production  Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.

    Energy savings >€300 million p.a.

    People, Customers, Technology, Production

  • BASF Capital Market Story, October 2017 9

    BASF Group Q3 2017 Considerably higher sales and earnings

    Financial figures Q3 2017 Q3 2016 Change

    Sales €15.3 billion €14.0 billion 9%

    EBITDA before special items €2.8 billion €2.5 billion 12%

    EBITDA €3.0 billion €2.4 billion 23%

    EBIT before special items €1.8 billion €1.5 billion 16%

    EBIT €2.0 billion €1.5 billion 34%

    Net income €1.3 billion €0.9 billion 50%

    Reported EPS €1.45 €0.97 49%

    Adjusted EPS €1.40 €1.10 27%

    Operating cash flow €3.8 billion €2.5 billion 52%

    Sales development Volumes Prices Portfolio Currencies Q3 2017 vs. Q3 2016 4% 7% 1% (3%) 

  • BASF Capital Market Story, October 2017 10

    Stepwise increase of earnings level EBIT and EBITDA* billion €, 2001–2016

    3.7

    4.7 4.6

    7.0 7.2 8.4

    8.9

    7.7 6.5

    9.9

    11.2

    10.0 10.4

    11.0 10.6 10.5 9.7

    0

    2

    4

    6

    8

    10

    12

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q3 2017

    EBIT EBITDA

    0.7

    2.2 2.2

    4.5 4.8 5.5

    6.0

    4.6

    2.8

    6.7

    8.0 6.7 7.2

    7.6

    6.2 6.3 6.6

    CAGR EBITDA

    7% CAGR EBIT 16%

    * 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001–2009 as reported, without non-compensable foreign income taxes on oil production

    Avg. EBITDA level in depicted years

    9.7

  • BASF Capital Market Story, October 2017 11

    billion €, 2001–2016

    2.3 2.3

    4.9 4.6 5.3

    5.9 5.8 5.0

    5.7 6.5

    7.1 6.6

    8.1

    7.0

    9.4

    7.7 7.6

    0 1 2 3 4 5 6 7 8 9

    10

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q3 2017

    Free cash flowOperating cash flow

    -0.5 -0.1

    2.8 2.6 3.3 3.5 3.2

    2.5 3.2

    3.9 3.7

    2.6 3.2

    1.7

    3.6 3.6

    5.0

    6.3%

    Strong cash flow development

  • BASF Capital Market Story, October 2017 12

    Attractive dividend We want to grow or at least maintain dividend at the previous year’s level

    * Dividend yield based on share price at year-end

    Dividend per share €

    0.65 0.70 0.70 0.85

    1.00

    1.50

    1.95 1.95 1.70

    2.20

    2.50 2.60 2.70 2.80

    2.90

    0

    1

    2

    3

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

    Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% 4.0% 4.1% 3.4%

    3.00

  • BASF Capital Market Story, October 2017 13

    Delivering consistent, long-term value Current market capitalization: €83 billion*

    Average annual performance (with dividends reinvested)

    0 2 4 6 8 10 12 14

    Euro Stoxx 50

    DAX 30

    MSCI World Chemicals

    +5.0%

    BASF

    +6.6%

    +1.1%

    +10.6%

    Last 10 years October 2007 – September 2017

    0 2 4 6 8 10 12 14

    Last 3 years October 2014 – September 2017

    +11.3%

    +6.5%

    +10.6%

    +9.8%

    * As of September 29, 2017

  • BASF Capital Market Story, October 2017 14

     Sales growth – slightly faster than global chemical production

     Deliver attractive returns – earn a significant premium on cost of capital

     EBITDA growth – well above global chemical production

     Remain a strong cash provider – continuously generate high levels of free cash flow

     Progressive dividend policy – grow or at least maintain dividend at previous year’s level

    Financial targets for the coming years

  • BASF Capital Market Story, October 2017 15

     Innovations for a sustainable future

     Investments in organic growth

     M&A opportunities and portfolio pruning measures

    Our priorities

     Operational excellence and cost discipline

    We aim to grow sales and earnings faster than global chemical production in the coming years, driven by

  • BASF Capital Market Story, October 2017 16

    Outlook 2017 for BASF Group

    Assumptions 2017 Now Previous GDP growth +2.8% +2.5%

    Growth in industrial production +3.1% +2.5%

    Growth in chemical production* +3.4% +3.4%

    Exchange rate US$1.10 per euro US$1.10 per euro

    Oil price (Brent) US$50 per barrel US$50 per barrel

    * Excluding pharma

    Outlook 2017 Now Previous Sales Considerable increase Considerable increase EBIT before special items and EBIT Considerable increase Considerable increase EBIT after cost of capital Considerable increase Slight increase

  • BASF Capital Market Story, October 2017 17

    Agenda

    At a glance1

    Strategic levers2 ► Portfolio development ► Investments ► Innovation ► Sustainability ► Operational excellence

  • BASF Capital Market Story, October 2017 18

    Continuous global portfolio development

    target (in % of sales*)~50% ~50%

    Maintaining a balanced portfolio

    Divestment of businesses, e.g., due to loss of differentiation

    Divestment of businesses,

    e.g., due to lower market attractiveness

    Commoditization leads to restructur