Goldman Sachs 2020 Vision Chemicals Conference, London · Electronic chemicals Custom synthesis...

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

June 2012 2

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

June 2012 3

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

June 2012 4

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

6

Chemistry as enabler

June 2012

Key trends for the chemical industry

7

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

June 2012 8

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




Growth targets

Strategic levers

Fit for 2020

June 2012

Striving for strong profitable growth Medium-

and long-term sales target

11

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

June 2012

Striving for strong profitable growth All regions will deliver profitable growth

12

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.

33

~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

June 2012

Striving for strong profitable growth Doubling EBITDA by 2020

13

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




Growth targets

Strategic levers–

Portfolio development

–

Market approach–

Innovations for a sustainable future

–

Investments–

Acquisitions

–

Operational excellence

Fit for 2020

June 2012

We expand from chemicals to chemistry

Chemistry as key enabler for functionalized materials & solutions

Deep understanding of customer value chains required

15

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...

June 2012

Portfolio development towards more market driven and innovative businesses

16

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

June 2012

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%

June 2012

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

June 2012

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

June 2012

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

June 2012

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

June 2012 24

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

June 2012

€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

June 2012

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

27

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

June 2012

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

June 2012 3131

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




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)

June 2012 34

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