Goldman Sachs 2020 Vision Chemicals Conference, …...Biopolymer for enhanced oil recovery...
Transcript of Goldman Sachs 2020 Vision Chemicals Conference, …...Biopolymer for enhanced oil recovery...
June 2012
We add value as one company
Goldman SachsEuropean Chemicals 2020 Vision Conference
Dr. Kurt BockChairman of the Board of Executive Directors
LondonJune 18, 2012
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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
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The leading chemical company worldwide
- Sales 2011: €73.5 billion
- EBIT before special items 2011: €8.4 billion
- ~111,000 employees
Customers in >200 countries and in virtually all industries
# 1-3 market position in over 75% of businesses
Unique Verbund concept for integrated production
- Six Verbund sites in all major regions
- Production sites in 41 countries
Highly experienced management team- Senior executives from 36 countries
BASF today - The Chemical Company
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Dispersions & PigmentsPerformance ChemicalsCare ChemicalsNutrition & HealthPaper Chemicals
Crop Protection
InorganicsPetrochemicalsIntermediates
Chemicals
Functional SolutionsPerformance Products
Agricultural Solutions Oil & GasExploration & Production and Natural Gas Trading
Percentage of sales 2011*
BASF today – a well-balanced portfolio Total sales 2011: €73.5 billion
Performance PolymersPolyurethanes
Plastics
* not depicted here: 9% of Group sales reported as ‚Other‘
June 2012
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
5BASF Strategy: We create chemistry__November 2011
BASF strategic principles
Growth targets
Strategic levers
Fit for 2020
June 2012
Demographic challenges set the stage for the future of the chemical industry
Nine billion people in 2050 but only one earth
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Chemistry as enabler
June 2012
Key trends for the chemical industry
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Integrated chemical companies remain cornerstone
Emerging markets players grow quickly
Raw material players invest further downstream
Competitive landscape will change
Use opportunities from sustainability
Increase resource efficiency
Renewables as raw materials
Stakeholder dialog
Sustainability as strategic driver
Chemistry as enabler
Chemical products replace traditional materials
Create innovative sustainable solutions
Innovation gains in importance
Growth will accelerate
Industrial production > GDP
Chemicalproduction > GDP
Emerging markets will outgrow developed markets
Chemical industry remains an attractive growth industry
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Our purpose
We create chemistry for a sustainable future.
June 2012
Our strategic principles
We add value as one company.
We innovate to make our customers more successful.
We drive sustainable solutions.
We form the best team.
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June 2012
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
10BASF Strategy: We create chemistry__November 2011
BASF strategic principles
Growth targets
Strategic levers
Fit for 2020
June 2012
Striving for strong profitable growth Medium-
and long-term sales target
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Sales* in billion €
64
2010 Target 2020
Target 2015
Investments
Acquisitions
CAGR ~6%
Innovations
Investments
AcquisitionsInnovations
~85
~115
We will outperform chemical production by 2 percentage points p.a.* Potential impact of IFRS changes not included
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Striving for strong profitable growth All regions will deliver profitable growth
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Regional sales targets 2020 (by location of customers)
in billion €
North America
2010 2020
13
~5.5% p.a.~22
South America, Africa, Middle East
~8% p.a.
5 ~11
Europe
~4.5% p.a.
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~53
Asia Pacific
~8% p.a.
13~29
2010 2020
2010 20202010 2020
19%*20%*46%*52%*
25%*20%*10%*8%*
* Percentage of total sales
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Striving for strong profitable growth Doubling EBITDA by 2020
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EBITDA* in billion €
2010 Target 2020
Target 2015
11.1
CAGR ~7.5%~23
~15Op. Excellence
Growth
Acquisitions
Op. Excellence
Growth
Acquisitions
* Assumptions 2010-2020: Exchange rate $/€
Ø
1.40, Oil price Ø
$110/bbl
June 2012
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
14BASF Strategy: We create chemistry__November 2011
BASF strategic principles
Growth targets
Strategic levers–
Portfolio development
–
Market approach–
Innovations for a sustainable future
–
Investments–
Acquisitions
–
Operational excellence
Fit for 2020
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We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutions
Deep understanding of customer value chains required
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New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
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Portfolio development towards more market driven and innovative businesses
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Crop protectionEngineering plastics Electronic chemicalsCustom synthesisCatalystsConstruction chemicalsWater-based resinsPigmentsPlastic additivesOil & Gas Personal care & food
BASF core business
Strong partnerships
GazpromMonsantoPetronasShellSinopecTotal
Selected transactions 2001 −
today
Acquisitions
~ €15bn sales ~ €10bn sales*
Divestitures
PharmaFibersPrinting systems PolyolefinsPolystyrene Americas Agro generics Vitamins premixFertilizers Styrenics (transferred into Styrolution JV on Oct. 1, 2011)
* without Styrenics
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Moving downstream towards customer industries
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* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation
** Sales excluding Oil & Gas
Functionalized Materials & SolutionsCustomized ProductsClassical Chemicals
2020in % of sales**
Chemical Industry First customer industries*
2010 in % of sales**
~ 40%
~30% ~ 70%
2001 in % of sales**
~ 50%
~ 60%
~ 50%
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Building on our cross-divisional customer industry approach
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BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2010)**
* Excluding Oil & Gas and Other
** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other
> 15 %
< 10 %
< 10 %
> 15 %
Inorganics Petro-chemicals
Construction Chemicals
Dispersions & Pigments
Catalysts Intermediates Coatings Care Chemicals
Performance Polymers
Poly- urethanes
Performance Chemicals
Paper Chemicals
Consumer goods
Transportation
Construction
Energy & Resources
June 2012
Combining cross-divisional technology competencies with customer know-how
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E-textiles
Solar roof with transparent
organic solar panels and
OLED modules
Multifunctional seat
Infrared-reflective coating
Infrared-reflective film
High performance foams
Lightweight tridion cell
All-plastic wheel
Smart forvision – Joint concept car of Daimler and BASF
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PotentialIncreased incremental oil recovery of up to 10% on waterflooding. Sales potential to be defined after completion of trials
ApproachLeverage BASF’s Verbund knowhow in white biotechnology for Oil & Gas productionProprietary biopolymer from Schizophyllum fungus allows for enhanced oil recovery due to its high viscosifying efficiencyBiopolymer is stable in high temperature and high salinity reservoirs
Current activitiesSchizophyllan biopolymer to be produced at BASF Ludwigshafen via fermentation. First trial in mature Wintershall oil field starting in 2012 (Bockstedt, Germany)
Cross-divisional approach Biopolymer for enhanced oil recovery
Schizophyllan biopolymer
Schizophyllum commune
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Cross-divisional approach ecovio biodegradable plastic in paper applications
Business potential 2020Market size: opportunity to substitute > 200 kt of various productsSales potential for BASF: ~€40 million(ecovio FS Paper for extrusion coating)Additional business opportunities in wet-end applications under evaluation (e.g. paper strength improvement)
ConceptLeverage BASF know-how on biodegradable plastics and paper chemicals to offer sustainable solutions for packaging and foodservice ware
Current activitiesecovio FS Paper launched in various markets since 2010Business Model for sustainable „Closed System“throughout whole value chain (incl. waste management) R&D-projects for additional applications and solutions
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June 2012
Chemistry as an enabler for many customer industries
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Sustainability in customer industries will drive our innovative growth fields
Health & Nutrition
Consumer GoodsConstructionTransportation Electronics Energy &
ResourcesAgriculture
Customerindustries
Energy management
Water solutions
Wind energy
Rare earth metals
recycling
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Heat management
Functional crop care
Medical OrganicElectronics
GrowthFields*
* Including growth fields still under evaluation
Ongoing inflow of new growth fields
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Growth Fieldexamples
Business potential 2020
Market size: >€20 billionBASF sales potential:>€500 million
Market size: ~€20 billionBASF sales potential: >€800 million
Market size: ~€11 billion gross trait valueBASF sales potential: €1.8 billion gross trait sales before partner share
Existing Activities
New global business unit for battery chemicals & materials Electrode material plant being built in Ohio. Acquired Novolyte, Merck’s electrolytes, Ovonik, equity position in Sion Power R&D network with academiaSites in US, China, Europe
BASF expertise and portfolio (high-performance flocculants, desalination and antifouling chemicals….)Acquired inge water-technologies (membranes) to offer module systems
BASF as Trait Technology Partner of leading trait and seed companiesYield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat)
Targets Become the leading supplier of battery materialsTarget customers: Battery producers
Leading supplier of innovative water solutionsForward integration into membrane technologies
Contribute to more efficient agriculture, healthier nutritionMake Plant Biotechnology an operating division within the Agricultural Solutions segment
Batteries for mobility Plant biotechnologyWater solutions
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Innovations for a sustainable future BASF growth field examples
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Innovation will spur further growth
€1.6 billion R&D expenditures in 2011 (2010: €1.5 billion)
~10,100 employees in R&D
~2,800 projects
Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners
24%
1%
Corporate Research23%
Agricultural Solutions
26%
Functional Solutions12%
Performance Products21%
Chemicals8%
Plastics9%
€1.6 billion
Oil & Gas1%
Increase R&D spending to €1.7 billion in 2012
Total R&D expenditures 2011 in billion €
Strong commitment to R&D
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€7 billion EBITDA targeted from innovations in 2020
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Sales and EBITDA from innovations in billion €
2015 2020
~10
~30
Sales from innovations launched within last 5 years
Sales from innovations launched within last 10 years
~2.5
~7EBITDA from innovations launched within last 5 years
EBITDA from innovations launched within last
10 years
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Growth above market with increasing share from emerging markets
*BASF definition: Developed markets include EU15, Norway,
Switzerland, North America, Japan, Australia, New Zealand
** Sales excluding Oil & Gas
2020in % of sales**
2010 in % of sales
(€53bn**)
2001 in % of sales
(€28 bn**)
Emerging marketsDeveloped markets*
~ 66%
~55% ~ 45%
~ 78%
~ 34%
~ 22%
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June 2012
Investments will boost future organic growth
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Future investments in €
billlion
Thereof investments in emerging markets
Total investments
35-45%
15-20
30-40%
~15
2006 –
2010 2011 –
2015 2016 –
2020
10.9
~20%
June 2012 28* Memorandum of Understanding signed
Major investment projects
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Acquisitions will contribute to profitable growth in the future
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Provide a minimum return on investment of 8% after tax
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 …
June 2012
Strong focus on operational excellence
BASF Group 2002–2011 Index
30
50
100
150
200
250
300
2002 2005 2008 2011
CAGR 2002 – 2011
10 %
10 %
4 %
EBITDA
Sales
Fixed costs
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Annual earnings contribution in €
million
0
1,000
2,000
3,000
2012 2015
Former cost saving programs NEXT STEP
Project timeline: 2012–2015Measures to optimize processes and structures in all regions, e.g.−
manufacturing, maintenance−
supply chain−
engineering, best-cost country sourcingFixed cost savings and margin improvementsOne-time costs & investments: ~€1 billionTargeted annual earnings contribution: ~€1 billion by end of 2015, thereof €100 million in 2012 (run-rate)
NEXT Program
STrategic
Excellence
Program ‘STEP’
Annual earnings contribution of €1 billion will be achieved in 2012Achieved by end 2011: >€ 800 million
New operational excellence program STEP: Earnings contribution ~€1 billion
June 2012
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
32BASF Strategy: We create chemistry__November 2011
BASF strategic principles
Growth targets
Strategic levers
Fit for 2020
June 2012
Key financial targets 2015 / 2020
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Grow at least 2 percentage points above chemical production
Earn a premium on cost of capital of at least €2.5 billion on average p.a.
Profitability targetsGrowth targets
2015
2020
Sales ~€85 billion
Sales ~€115 billion
EBITDA ~€15 billionEPS ~€7.50
Double EBITDA to ~€23 billion (compared with 2010)
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